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Indiana University, BloomingtonBUS A202Ch08 - with answers

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A202 Managerial Accounting Sample Exam Questions Chapter 8 1. Which statement below regarding budgets is false? A. A budget is a plan for using the company's resources B. Strategic plans focus on... long-term plans C. In a centralized decision-making environment, the manager delegates decision making to individuals with relevant experience and knowledge. D. Firms spend considerable time and effort in preparing a revenue budget, as its accuracy is crucial in putting together a good master budget E. The purposes of budgets include planning and control 2. The production budget is used to derive the budgets for which of the following? A. Materials budget B. Labor budget C. Overhead budget D. Materials and Labor Budget E. Materials, Labor, and Overhead Budget 3. Derek makes doors for residential homes. Derek's year end is December 31. He wants to end the year with 250 finished doors in inventory. There were 125 doors in finished goods on December 1. Derek budgeted 800 units of production for the month of December. The budgeted selling price per door is $175. What did Derek budget for revenue for the month of December? A. $118,125 B. $140,000 C. $108,750 D. $161,875 E. None of the above Determine bud sales units: Bud sales + Desired EI = Total reqts - BI = Bud production Bud sales + 250 - 125 = 800 Bud sales = 675 Bud revenue = bud sales units x bud selling price = 675 x $175 = $118,1254. PL Inc provides you with the following information for one of its products Budgeted sales in units January 4,000 February 3,000 March 5,000 Budget assumes ending inventory equals 25% of the following month's sales What is the budgeted production in units for February? A. 1,250 units B. 4,250 units C. 2,500 units D. 3,500 units E. None of the above Budgets sales + Desired end inventory = Total requirements - Beg inventory = Bud production 3,000 + (25% x 5,000) - (25% x 3,000) = 3,500 units 5. CS Inc is preparing its budget for next year. Below are the assumptions being used: 20,000 units will be sold at $52 per unit Average selling price per unit will exceed the average purchase by 30% Merchandise on hand will equal 25% of the following year's cost of goods sold Labor will be 1 hour per 20 units @ $25 per hour Fixed expenses (which include $5,000 for depreciation) will equal 6% of budgeted revenues What is the budgeted profit before taxes? A. $152,600 B. $110,400 C. $217,600 D. $165,600 E. None of the above Revenue budget: $52 x 20,000 = $1,040,000 Material budget: SP = 130% x cost = $52 / 130% = $40 x 20,000 = $800,000 Labor budget: 1 x $25 x (20,000 / 20) = $25,000 Fixed expenses budget: $1,040,000 x 6% = $62,400 Budgeted PBIT: $1,040,000 - $800,000 - $25,000 - $62,400 = $152,600 [Show More]

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