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Question 1

1 out of 1 points
The following information pertains to the January operating budget for Casey
Corporation, a retailer:

For January, budgeted gross margin is ________.


Selected Answer:
$61,200
Answers: $142,800

$61,200
$45,000
$81,600
Response Feedback: $204,000 - (0.7 $204,000) = $61,200
Question 2
1 out of 1 points
Which of the following statements is true about activity-based budgeting?
Selected
Answer: activity-based budgeting provides more detailed information than cost-
based budgeting
Answers:
activity-based budgeting provides more detailed information than cost-
based budgeting
activity-based budgeting is simpler to implement than cost-based
budgeting
activity-based budgeting is cheaper than cost-based budgeting
activity-based budgeting estimates total costs more accurately than cost-
based budgeting
Question 3
1 out of 1 points
For next year, Roberto, Inc., has budgeted sales of 24,000units, targeted ending finished
goods inventory of 950 units, and beginning finished goods inventory of 1350 units. All
other inventories are zero. How many units should be produced next year?
Selected Answer:
23,600 units
Answers: 24,400 units
24,000 units

23,600 units
26,300 units
Response Units to be produced next year = 24,000 units (estimated sales) + 950
Feedback:
units (budgeted ending inventory) - 1350 units (opening inventory) =
23,600 units
Question 4
1 out of 1 points
Activity-based budgeting would separately estimate ________.
Selected Answer:
the cost of a setup activity
Answers: the cost of overhead for a department
a plant-wide cost-driver rate

the cost of a setup activity


All of these answers are correct.
Question 5
1 out of 1 points
Which of the following is most likely to be a cost driver for the variable portion of
marketing costs?
Selected Answer:
number of units units sold
Answers: increase in revenues attributable to such marketing
number of units produced

number of units units sold


percentage of markup on cost
Question 6
1 out of 1 points
Rolling budgets help management to ________.
Selected Answer:
focus on the upcoming budget period
Answers: rigidly administer the budget

focus on the upcoming budget period


deal with a 5-year time frame
better review the past calendar year
Question 7
1 out of 1 points
In which order are the following developed? First to last:

Selected Answer:
DABC
Answers:
DABC
DCAB
CABD
ABDC
Question 8
1 out of 1 points
Kason, Inc., expects to sell 21,000 pool cues for $13 each. Direct materials costs are $4,
direct manufacturing labor is $5, and manufacturing overhead is $0.87 per pool cue. The
following inventory levels apply to 2016:

On the 2016 budgeted income statement, what amount will be reported for sales?
Selected Answer:
$273,000
Answers: $312,000
$326,300

$273,000
$287,300
Response Feedback: 21,000 units sold $13 per pool cue = $273,000
Question 9
1 out of 1 points
Meridian Industries manufactures and sells two models of watches, Prime and Luxuria. It
expects to sell 3500 units of Prime and 1700 units of Luxuria in 2016.The following
estimates are given for 2016:
Meridian had an inventory of 230 units of Prime and 75 units of Luxuria at the end of
2015. It has decided that as a measure to counter stock outages it will maintain ending
inventory of 350 units of Prime and 210 units of Luxuria.

Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of
$10. There were 100 units of Crimpson in stock at the end of 2015.The management
does not want to have any stock of Crimpson at the end of 2016.

What is the total budgeted cost of goods sold for Meridian Industries in 2016?
Selected Answer:
$1,155,000
Answers: $1,585,000
$1,326,000
$1,172,000

$1,155,000
Response Budgeted cost of goods sold for Prime = [3500 units (Estimated sales)
Feedback:
$160 (Cost per unit)] = $560,000. Budgeted cost of goods sold for Luxuria
= [1700 units (Estimated sales) $350 (Cost per unit)] = $595,000. Total
cost of goods sold = $560,000 + $595,000 =$1,155,000.
Question 10
1 out of 1 points
Juan Sugita Manufacturing expects to produce and sell 13,500 units of Big, its only
product, for $20 each. Direct material cost is $3 per unit, direct labor cost is $10 per unit,
and variable manufacturing overhead is $7 per unit. Fixed manufacturing overhead is
$27,000 in total. Variable selling and administrative expenses are $2 per unit, and fixed
selling and administrative costs are $3,000 in total. According to generally accepted
accounting principles, inventoriable cost per unit of Big would be ________.
Selected Answer:
$22.00 per unit
Answers: $13.00 per unit
$20.00 per unit

$22.00 per unit


$15.00 per unit
Response The inventoriable cost as per GAAP is $22.00 ($3 + $10 + $7 + ($27,000 /
Feedback:
13,500 units)). As per GAAP, variable and fixed selling and administrative
overhead costs are not inventoriable.
Question 11
1 out of 1 points
The sales forecast should be primarily based on ________.
Selected Answer:
input from sales managers and sales representatives
Answers:
input from sales managers and sales representatives
input from the board of directors
statistical analysis
production capacity
Question 12
1 out of 1 points
Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is
analyzed as follows:

What is the projected decline in operating income if the direct materials costs of T-Shirts
increase to $5.50 per unit and direct labor costs of Sweatshirts increase to $13.00 per
unit?
Selected Answer:
$236,500.00
Answers: $660,500.00

$236,500.00
$145,000.00
$91,500.00
Response Feedback: (61,000 $1.50) + (25,000 $5.80) = $236,500.00
Question 13
1 out of 1 points
Elton, Inc., expects to sell 6000 ceramic vases for $21 each. Direct materials costs are
$2, direct manufacturing labor is $10, and manufacturing overhead is $4 per vase. The
following inventory levels apply to 2016:

What are the 2016 budgeted production costs for direct materials, direct manufacturing
labor, and manufacturing overhead, respectively?
Selected Answer:
$12,400; $62,000; $24,800
Answers: $8000; $0; $18,400
$12,000; $60,000; $24,000

$12,400; $62,000; $24,800


$8000; $40,000; $16,000
Response Budgeted cost for direct materials = $12,400 [6200 units $2].
Feedback:
Budgeted cost for direct manufacturing labor = $62,000 [6200 units
$10].
Budgeted manufacturing overhead = $24,800 [6200 $4].
Question 14
0 out of 1 points
Meridian Industries manufactures and sells two models of watches, Prime and Luxuria. It
expects to sell 3600 units of Prime and 2000 units of Luxuria in 2016.The following
estimates are given for 2016:

Meridian had an inventory of 250 units of Prime and 115 units of Luxuria at the end of
2015. It has decided that as a measure to counter stock outages it will maintain ending
inventory of 380 units of Prime and 240 units of Luxuria.

Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of
$12. There were 140 units of Crimpson in stock at the end of 2015.The management
does not want to have any stock of Crimpson at the end of 2016.

What is the amount budgeted for purchase of Crimpson in 2016?


Selected Answer:
$25,500
Answers: $24,000
$44,760
$25,500

$23,820
Question 15
1 out of 1 points
Costs such as supervision, depreciation, maintenance, supplies, and power. are included
in the ________.
Selected Answer:
manufacturing overhead budget
Answers: revenues budget

manufacturing overhead budget


capital expenditures budget
distribution costs budget
Question 16
1 out of 1 points
Juan Sugita Manufacturing expects to produce and sell 12,000 units of Big, its only
product, for $20 each. Direct material cost is $4 per unit, direct labor cost is $11 per unit,
and variable manufacturing overhead is $11 per unit. Fixed manufacturing overhead is
$24,000 in total. Variable selling and administrative expenses are $1 per unit, and fixed
selling and administrative costs are $3,000 in total. According to generally accepted
accounting principles, inventoriable cost per unit of Big would be ________.
Selected Answer:
$28.00 per unit
Answers: $15.00 per unit
$26.00 per unit

$28.00 per unit


$16.00 per unit
Response The inventoriable cost as per GAAP is $28.00 ($4 + $11 + $11 + ($24,000
Feedback:
/ 12,000 units)). As per GAAP, variable and fixed selling and
administrative overhead costs are not inventoriable.
Question 17
1 out of 1 points
Orange Corporation has budgeted sales of 21,000 units, targeted ending finished goods
inventory of 6000 units, and beginning finished goods inventory of 4000 units. How
many units should be produced next year?
Selected Answer:
23,000 units
Answers:
23,000 units
21,000 units
27,000 units
31,000 units
Response Number of units to be produced next year = 21,000 units (estimated sales)
Feedback:
+ 6000 units (budgeted ending inventory) - 4000 units (opening inventory)
= 23,000 units.
Question 18
1 out of 1 points
Wallace Company provides the following data for next year:

The gross profit rate is 30% of sales. Inventory at the end of December is $22,600and
target ending inventory levels are 30% of next month's sales, stated at cost.

What is the amount of purchases budgeted for February?


Selected Answer:
$84,420
Answers: $28,560

$84,420
$114,660
$79,800
Response Budgeted purchases for February = $84,420 ($79,800* $23,940 +
Feedback:
$28,560**)
*$114,000 (100% 30%) = $79,800
**$136,000 (100% 30%) 30% = $28,560
Question 19
1 out of 1 points
Tiger Pride produces two product lines: T-shirts and Sweatshirts. Product profitability is
analyzed as follows:

What is the projected decline in operating income if the direct materials costs of T-Shirts
increase to $3.50 per unit and direct labor costs of Sweatshirts increase to $15.00 per
unit?
Selected Answer:
$294,700.00
Answers:
$294,700.00
$97,500.00
$197,200.00
$737,500.00
Response Feedback: (65,000 $1.50) + (34,000 $5.80) = $294,700.00
Question 20
0 out of 1 points
Kason, Inc., expects to sell 26,000 pool cues for $13 each. Direct materials costs are $4,
direct manufacturing labor is $4, and manufacturing overhead is $0.82 per pool cue. The
following inventory levels apply to 2016:

What are the 2016 budgeted costs for direct materials, direct manufacturing labor, and
manufacturing overhead, respectively?
Selected Answer:
$104,000; $104,000; $21,320
Answers: $104,000; $104,000; $21,320

$113,600; $113,600; $23,288


$108,400; $108,400; $22,222
$100,000; $100,000; $20,500
Question 21
1 out of 1 points
Furniture, Inc., estimates the following number of mattress sales for the first four months
of 2016:

Finished goods inventory at the end of December is 6600 units. Target ending finished
goods inventory is 20% of the next month's sales.

How many mattresses should be produced in the first quarter of 2016?


Selected Answer:
90,640 mattresses
Answers: 98,480 mattresses

90,640 mattresses
67,080 mattresses
58,320 mattresses
Response Feedback:

Question 22
1 out of 1 points
________ include a budgeted statement of cash flows and a budgeted balance sheet.
Selected Answer:
Financial budgets
Answers:
Financial budgets
Operating budgets
Revenue budgets
Production budgets
Question 23
1 out of 1 points
Which of the following information is required by a company's manager while preparing
a manufacturing overhead costs budget?
Selected Answer:
estimated expense for maintenance of factory building
Answers: rent expense for lease of office building

estimated expense for maintenance of factory building


estimated incentives to be paid to marketing personnel
estimated expense for office supplies
Question 24
1 out of 1 points
Furniture, Inc., estimates the following number of mattress sales for the first four months
of 2016:

Finished goods inventory at the end of December is 7200 units. Target ending finished
goods inventory is 10% of the next month's sales.

How many mattresses need to be produced in January 2016?


Selected Answer:
21,480 mattresses
Answers: 34,700 mattresses
35,880 mattresses
20,300 mattresses

21,480 mattresses
Response Number of mattresses to be produced in January = [25,000 units
Feedback:
(Estimated sales) + 3680 units (Budgeted ending inventory for January
10%) - 7200 units (Beginning inventory)] = 21,480 mattresses.
Question 25
1 out of 1 points
Elton, Inc., expects to sell 8000 ceramic vases for $21 each. Direct materials costs are
$2, direct manufacturing labor is $10, and manufacturing overhead is $4 per vase. The
following inventory levels apply to 2016:

On the 2016 budgeted income statement, what amount will be reported for cost of goods
sold?
Selected Answer:
$128,000
Answers:
$128,000
$134,400
$144,000
$121,600
Response Feedback: Cost of goods sold is $128,000 [8000 ($2 + $10 + $4)].
Question 26
1 out of 1 points
Wallace Company provides the following data for next year:

The gross profit rate is 35% of sales. Inventory at the end of December is $21,600and
target ending inventory levels are 20% of next month's sales, stated at cost.

What is the amount of purchases budgeted for January?


Selected Answer:
$72,130
Answers: $79,300
$93,730
$64,870

$72,130
Response Budgeted purchases for January = $72,130 ($79,300* $21,600 +
Feedback:
$14,430**)
$122,000 (100% 35%) = $79,300
**$111,000 (100% 35%) 20% = $14,430
Question 27
1 out of 1 points
The following information pertains to the January operating budget for Casey
Corporation, a retailer:

For January, the amount budgeted for the nonmanufacturing costs budget is ________.
Selected Answer:
$19,700
Answers: $88,340
$177,700

$19,700
$10,600
Response Feedback: $3400 + $5700 + $10,600 = $19,700
Question 28
0 out of 1 points
Meridian Industries manufactures and sells two models of watches, Prime and Luxuria. It
expects to sell 4000 units of Prime and 1900 units of Luxuria in 2016.The following
estimates are given for 2016:

Meridian had an inventory of 230 units of Prime and 95 units of Luxuria at the end of
2015. It has decided that as a measure to counter stock outages it will maintain ending
inventory of 390 units of Prime and 230 units of Luxuria.
Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of
$10. There were 150 units of Crimpson in stock at the end of 2015.The management
does not want to have any stock of Crimpson at the end of 2016.

What is the amount budgeted for purchase of Crimpson in 2016?


Selected Answer:
$20,350
Answers: $20,350
$41,600
$19,000

$18,850
Question 29
1 out of 1 points
Kason, Inc., expects to sell 26,000 pool cues for $12 each. Direct materials costs are $4,
direct manufacturing labor is $6, and manufacturing overhead is $0.82 per pool cue. The
following inventory levels apply to 2016:

On the 2016 budgeted income statement, what amount will be reported for cost of goods
sold?
Selected Answer:
$281,320
Answers: $267,254
$295,386

$281,320
$310,534
Response The cost per unit is $10.82 ($4 + $6 + $0.82). Therefore, the total cost of
Feedback:
goods sold is $281,320 ($10.82 26,000).
Question 30
1 out of 1 points
Budgeted production equals ________.
Selected
Answer: budgeted unit sales + targeted ending finished goods inventory -
beginning finished goods inventory
Answers: beginning finished goods inventory + budgeted unit sales - targeted
ending finished goods inventory
targeted ending finished goods inventory + beginning finished goods
inventory - budgeted unit sales

budgeted unit sales + targeted ending finished goods inventory -


beginning finished goods inventory
budgeted unit sales + targeted ending finished goods inventory +
beginning finished goods inventory