Question 1

The financial budget includes all of the following EXCEPT the:

Accepted Answer

The budgeted income statement is part of the operating budget, not the financial budget. The financial budget focuses on cash flows and financial position, which includes the cash budget, budgeted cash flow statement, and budgeted balance sheet.

Question 2

Which of the following statements is TRUE about the operating budget?

Accepted Answer

The operating budget includes various components related to the day-to-day operations of a business, such as the operating expenses budget.

Question 3

Which of the following describes the inventory, purchases, and cost of sales budget?

Accepted Answer

The inventory, purchases, and cost of sales budget is used to plan and ensure that the company maintains adequate inventory levels to meet sales demands.

Question 4

Argyle Company is preparing the operating budget for the first quarter of 2013. They forecast sales of $50 000 in January, $60 000 in February, and $70 000 in March. Variable and fixed expenses are as follows:
Variable: Power cost (40% of Sales)
Miscellaneous expenses (5% of Sales)
Fixed: Salary expense: $8 000 per month Rent expense: $5 000 per month
Depreciation expense: $1 200 per month Power cost/fixed portion: $800 per month
Miscellaneous expenses/fixed portion: $1 000 per month
How much is the total operating expense for March?

Accepted Answer

The answer of Argyle Company is preparing the operating budget...

Question 5

Argyle Company forecasts sales of $50 000 in January, $60 000 in February, $70 000 in March, and $75 000 in April. The inventory balance at 1 January is $12 000. Cost of sales is budgeted at 40% of sales revenue. Argyle wishes to have inventory levels at the end of each month equal to 60% of the cost of sales for the following month, plus a "safety cushion" of $1 000. How much should be budgeted for inventory purchases in January?

Accepted Answer

The correct answer is A.The budgeted cost of sales for February is $60,000 x 40% = $24,000. The desired ending inventory for February is $24,000 x 60% + $1,000 = $15,400. The beginning inventory for February is $12,000. Therefore, the budgeted inventory purchases for January must be $15,400 - $12,000 = $23,400.

Question 6

Liu Electronics budgeted sales of $400 000 for the month of November; cost of sales is equal to 65% of sales. Beginning inventory for November was $80 000 and ending inventory for November should be $72 000. How much are the budgeted purchases for November?

Accepted Answer

The answer of Liu Electronics budgeted sales of $400 000...

Question 7

Argyle Company forecasts sales of $50 000 in January, $60 000 in February, $70 000 in March, and $75 000 in April. The inventory balance at 1 January is $12 000. Cost of sales is budgeted at 40% of sales revenue. Argyle wishes to have inventory levels at the end of each month equal to 60% of cost of sales for the following month, plus a "safety cushion" of $1 000. How much should be budgeted for inventory purchases in February?

Accepted Answer

To calculate February's inventory purchases:  1. Calculate February's cost of sales: $60,000 * 40% = $24,000.  2. Calculate March's cost of sales: $70,000 * 40% = $28,000.  3. Desired ending inventory for February: 60% of March's cost of sales + $1,000 = 0.6 * $28,000 + $1,000 = $17,800.  4. Beginning inventory for February: Ending inventory of January = 60% of February's cost of sales + $1,000 = 0.6 * $24,000 + $1,000 = $15,400.  5. Inventory purchases for February: Desired ending inventory + Cost of sales for February - Beginning inventory = $17,800 + $24,000 - $15,400 = $26,400.

Question 8

A department store has budgeted cost of sales of $36 000 for its men's suits in March. Management also wants to have $15 000 of men's suits in inventory at the end of March to prepare for the summer season. Beginning inventory of men's suits for March is expected to be $9 000. What dollar amount of men's suits should be purchased in March?

Accepted Answer

Purchases = Cost of goods sold + Ending inventory - Beginning inventory= $36,000 + $15,000 - $9,000= $42,000

Question 9

Lan Corporation had beginning inventory of $42 000 and expects cost of sales of $96 000 units during the month. Desired ending inventory is $31 000. How much inventory should Lan Corporation purchase?

Accepted Answer

The answer of Lan Corporation had beginning inventory of $42...

Question 10

Which of the following statements is TRUE about the capital expenditures budget?

Accepted Answer

The answer of Which of the following statements is TRUE...

Question 11

In order to prepare a budgeted income statement, several other budgets need to be prepared first. Which of the following is NOT one of the budgets needed to prepare the budgeted income statement?

Accepted Answer

Capital expenditures are not needed to prepare a budgeted income statement.

Question 12

Bartholomew Manufacturing Company is preparing the operating budget for the first quarter of 2013. They forecast sales of $50 000 in January, $60 000 in February, and $70 000 in March. Cost of sales is budgeted at 40% of Sales. Variable and fixed expenses are as follows: Variable: Miscellaneous expenses : 20% of Sales Fixed: Salary expense: $11 000 per month
Rent expense: $5 000 per month
Depreciation expense: $1 200 per month
Miscellaneous expenses/fixed portion: $3 300 per month
How much is the operating net profit/(loss)for January?

Accepted Answer

The answer of Bartholomew Manufacturing Company is preparing the operating...

Question 13

Budgeted operating expenses for the current year include the expiration of insurance that was paid for in a previous period.

Accepted Answer

Budgeted operating expenses will include the expiration of insurance that was previously paid for as it is a recurring expense item.

Question 14

Which of the following describes the operating expenses budget?

Accepted Answer

The operating expenses budget captures the variable and fixed expenses of the business, detailing the costs necessary to run the company.

Question 15

Argyle Company is preparing the operating budget for the first quarter of 2013. They forecast sales of $50 000 in January, $60 000 in February, and $70 000 in March. Variable and fixed expenses are as follows:
Variable: Power cost (40% of Sales)
Miscellaneous expenses (5% of Sales)
Fixed: Salary expense: $8 000 per month Rent expense: $5 000 per month
Depreciation expense: $1 200 per month Power cost/fixed portion: $800 per month
Miscellaneous expenses/fixed portion: $1 000 per month
How much is the total operating expense for January?

Accepted Answer

The answer of Argyle Company is preparing the operating budget...

Question 16

Argyle Company is preparing the operating budget for the first quarter of 2013. They forecast sales of $50 000 in January, $60 000 in February, and $70 000 in March. Variable and fixed expenses are as follows:
Variable: Power cost (40% of Sales)
Miscellaneous expenses (5% of Sales)
Fixed: Salary expense: $8 000 per month Rent expense: $5 000 per month
Depreciation expense: $1 200 per month Power cost/fixed portion: $800 per month
Miscellaneous expenses/fixed portion: $1 000 per month
How much is the total operating expense for February?

Accepted Answer

The total operating expense for February includes variable expenses (Power cost: 40% of $60,000 = $24,000; Miscellaneous expenses: 5% of $60,000 = $3,000) and fixed expenses (Salary: $8,000; Rent: $5,000; Depreciation: $1,200; Power cost/fixed: $800; Miscellaneous/fixed: $1,000). Adding these gives $24,000 + $3,000 + $8,000 + $5,000 + $1,200 + $800 + $1,000 = $43,000.

Question 17

Which of the following statements is TRUE about the financial budget?

Accepted Answer

The financial budget includes the cash budget and the budgeted balance sheet, which are essential components for planning a company's financial position.

Question 18

Argyle Company forecasts Sales of $50 000 in January, $60 000 in February, $70 000 in March, and $75 000 in April. The inventory balance at 1 January is $12 000. Cost of sales is budgeted at 40% of sales revenue. Argyle wishes to have inventory levels at the end of each month equal to 60% of the cost of sales for the following month, plus a "safety cushion" of $1 000. How much should be budgeted for inventory purchases in March?

Accepted Answer

The answer of Argyle Company forecasts Sales of $50 000...

Question 19

Bartholomew Manufacturing Company is preparing the operating budget for the first quarter of 2013. They forecast sales of $50 000 in January, $60 000 in February, and $70 000 in March. Cost of sales is budgeted at 40% of Sales. Variable and fixed expenses are as follows: Variable: Miscellaneous expenses : 20% of Sales Fixed: Salary expense: $11 000 per month
Rent expense: $5 000 per month Depreciation expense: $1 200 per month
Miscellaneous expenses/fixed portion: $3 300 per month
How much is the operating net profit/(loss)for March?

Accepted Answer

The answer of Bartholomew Manufacturing Company is preparing the operating...

Question 20

Bartholomew Manufacturing Company is preparing the operating budget for the first quarter of 2013. They forecast sales of $50 000 in January, $60 000 in February, and $70 000 in March. Cost of sales is budgeted at 40% of Sales. Variable and fixed expenses are as follows: Variable: Miscellaneous expenses : 20% of Sales Fixed: Salary expense: $11 000 per month
Rent expense: $5 000 per month
Depreciation expense: $1 200 per month
Miscellaneous expenses/fixed portion: $3 300 per month
How much is the operating net profit/(loss)for February?

Accepted Answer

The answer of Bartholomew Manufacturing Company is preparing the operating...

Quiz 19: Introduction to Managerial Accounting and the Master Budget

The financial budget includes all of the following EXCEPT the:

Which of the following statements is TRUE about the operating budget?

Which of the following describes the inventory, purchases, and cost of sales budget?

Liu Electronics budgeted sales of $400 000 for the month of November; cost of sales is equal to 65% of sales. Beginning inventory for November was $80 000 and ending inventory for November should be $72 000. How much are the budgeted purchases for November?

Lan Corporation had beginning inventory of $42 000 and expects cost of sales of $96 000 units during the month. Desired ending inventory is $31 000. How much inventory should Lan Corporation purchase?

Which of the following statements is TRUE about the capital expenditures budget?

In order to prepare a budgeted income statement, several other budgets need to be prepared first. Which of the following is NOT one of the budgets needed to prepare the budgeted income statement?

Budgeted operating expenses for the current year include the expiration of insurance that was paid for in a previous period.

Which of the following describes the operating expenses budget?

Which of the following statements is TRUE about the financial budget?