Question :
Objective 6.4
1) Financial planning models ________.
A) not used in the : 1212108
Objective 6.4
1) Financial planning models ________.
A) are not used in the budgeting process
B) are not useful for sensitivity analysis
C) are mathematical representations of the relationships affecting the budget process
D) are used for nonfinancial aspects of budgeting
2) Financial planning software packages assist management with ________.
A) assigning responsibility to various levels of management
B) identifying the target customer
C) sensitivity analysis in their planning and budgeting activities
D) achieving greater commitment from lower management
3) ERP systems store vast quantities of information about the materials, machines and equipment, labor, power, maintenance, and setups needed to manufacture different products. This helps simplify the budgeting process as ERP systems ________.
A) can quickly calculate the manufacturing and nonmanufacturing costs based on a given sales quantity
B) automatically identify and record changes in processes involved in producing products
C) identify which underlying assumptions are likely to change
D) always use a rolling budget ensuring that a budget is always available for a specified future period
4) When performing a sensitivity analysis, if the selling price per unit is increased, then the ________.
A) per unit fixed administrative costs will increase
B) per unit direct materials purchase price will increase
C) total volume of sales will increase
D) total costs for sales commissions and other nonmanufacturing variable costs will increase
5) Sensitivity analysis helps managers evaluate risks ________.
A) by showing the effects of changes to the original data or an underlying assumption
B) by identifying inconsistencies in underlying assumptions and actual conditions
C) by removing the effects of foreign currency exposure and other uncontrollable factors
D) by identifying gaps in the production process using information on setups needed to manufacture products
Answer the following questions using the information below:
Kramer Enterprises reports year-end information from 2015 as follows:
Sales (160,000 units)$960,000
Cost of goods sold 640,000
Gross margin320,000
Operating expenses260,000
Operating income $60,000
Kramer is developing the 2016 budget. In 2016 the company would like to increase selling prices by 12.5%, and as a result expects a decrease in sales volume of 9%. All other operating expenses are expected to remain constant. Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost.
6) What is budgeted sales for 2016?
A) $1,080,000
B) $1,000,000
C) $982,800
D) $873,600
7) What is budgeted cost of goods sold for 2016?
A) $720,000
B) $582,400
C) $691,200
D) $640,000
8) Should Kramer increase the selling price in 2016?
A) Yes, because operating income increases for 2016.
B) Yes, because sales revenue increases for 2016.
C) No, because sales volume decreases for 2016.
D) No, because gross margin decreases for 2016.
Answer the following questions using the information below:
Violet Sales Corp, reports the year-end information from 2016 as follows:
Sales (35,000 units)$280,000
Cost of goods sold 105,000
Gross margin 175,000
Operating expenses 150,000
Operating income$ 25,000
Violet is developing the 2016 budget. In 2016 the company would like to increase selling prices by 3.5%, and as a result expects a decrease in sales volume of 15%. All other operating expenses are expected to remain constant. Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost.
9) What is budgeted sales for 2016?
A) $291,200
B) $246,330
C) $302,400
D) $322,000
10) What is budgeted cost of goods sold for 2016?
A) $89,250
B) $98,250
C) $15,750
D) $257,040