Question 1  

Julia’s Candy Co. reports the following information from its sales account and sales budget:

SalesMay    $105,000

        June          93,000

Expected Sales     July        $90,000

                    August         110,000

                     September  120,000

Cash sales are normally 25% of total sales and all credit sales are expected to be collected in the month following the date of sale. The total amount of cash expected to be received from customers in September is:

$ 30,000 

$ 82,500 

$ 112,500      

$ 120,000 

$ 202,500

Question 2

Which of the following budgets must be completed before a cash budget can be prepared?

Capital expenditures budget 

Sales budget 

Merchandise purchases budget 

General and administrative expense budget 

All of the above

Question 3

The master budget includes:

Operating budgets 

A capital expenditures budget 

A budgeted income statement 

A cash budget 

All of the above

Question 4

Bentels Co. desires a December 31 ending inventory of 2,840 units. Budgeted sales for December are 4,000 units. The November 30 inventory was 1,800 units. Budgeted purchases are:

5,040 units   

1,240 units 

6,840 units 

4,000 units 

5,800 units

Question 5

The standard materials cost to produce 1 unit of Product M is 6 pounds of material at a standard price of $50 per pound. In manufacturing 8,000 units, 47,000 pounds of material were used at a cost of $51 per pound. What is the total direct material cost variance?

$48,000 unfavorable 

$51,000 favorable 

$51,000 unfavorable 

$ 3,000 favorable   

$ 3,000 unfavorable

Question 6

Actual fixed overhead for Kapok Company during March was $92,780. The flexible budget for fixed overhead this period is $89,000 based on a production level of 5,000 units. If the company actually produced 4,200 units what is the fixed overhead spending variance for March?

$3,780 favorable 

$800 unfavorable 

$14,240 unfavorable 

$3,780 unfavorable   

$14,240 favorable

Question 7

Kabuki Company’s policy is to have 16% of the next month’s sales as desired ending inventory. Estimated sales are shown in the table below. Given this data, what is Kabuki’s estimated purchases for April?

                                                        March     April          May

Expected Sales Units                                9,400        8,900   7,300

8,584 

9,176 

8,644     

9,256 

9,000

Question 8

The usual starting point for preparing a master budget is forecasting or estimating:

Expenditures 

Sales 

Production 

Income 

Cash payments

Question 9

The sum of the variable overhead spending variance, the variable overhead efficiency variance, and the fixed overhead spending variance is the:

Production variance 

Quantity variance 

Volume variance 

Price variance 

Controllable variance

Question 10

A department store has budgeted sales of 12,000 men’s suits in September. Management wants to have 6,000 suits in inventory at the end of the month to prepare for the winter season. Beginning inventory for September is expected to be 4,000 suits. What is the dollar amount of purchase of suits? Each suit has a cost of $75.

$ 750,000 

$ 900,000 

$ 1,050,000   

$ 1,200,000 

$ 1,350,000