BA2 Practice Test 2

If a company has no production resource limitations, in which order would the following budgets be prepared?

1 Material usage budget

2 Sales budget

3 Material purchase budget

4 Finished goods inventory budget

5 Production budget

6 Material inventory budget

• 5, 4, 1, 6, 3, 2

• 2, 4, 5, 1, 6, 3

• 2, 4, 5, 1, 3, 6

• 2, 5, 4, 1, 6, 3

Each unit of product Alpha requires 3 kg of raw material. Next month's production budget for product Alpha is as follows

Opening inventories:

Raw materials 15,000 kg

Finished units of Alpha 2,000 units

Budgeted sales of Alpha 60,000 units

Planned closing inventories:

Raw materials 7,000 kg

Finished units of Alpha 3,000 units

The number of kilograms of raw materials that should be purchased next month is

• 172,000

• 175,000

• 183,000

• 191,000

RD Co is in the process of preparing its budgets for 20X2. The company produces and sells a single product, Z. The budgeted sales units for 20X2 are expected to be as follows: (Photo)

The company expects to sell 7,000 units in January 20X3. It is company policy to hold a closing inventory balance of finished goods equal to 20% of the following month's sales. The production budget for Quarter 4 is (Do not use any punctuation)

F Co has realised that it will have a temporary cash shortage before it receives the money for a very large order. Which TWO of the following actions would be appropriate for F Co to take? (Select 2 options)

• Replace non-current assets

• Arrange an overdraft

• Pay suppliers early

• Implement better credit control procedures

• Increase inventory

The principal budget factor is the:

• Factor that limits the activities of the organisation and is often the starting point in budget preparation

• Budgeted revenue expected in a forthcoming period

• Main budget into which all subsidiary budgets are consolidated

• Overestimation of revenue budgets and underestimation of cost budgets, which operates as a safety factor against risk

Bertram Manufacturing Co produces a single product. Sales of the product in the next four-week period are expected to be 280 units. At the beginning of the period an inventory level of 30 units is expected, although the budgeted closing inventory level is five units. Each unit of the product requires 2 hours of grade O labour and 3 hours of grade R labour. Grade O labour is paid $15 per hour, whereas grade R labour receive a guaranteed weekly wage of $280. Just one raw material is used in production of the product. A unit of the product requires 7 kg of raw material. The expected price per kg of the raw material is $50.

The budget production level is

Bertram Manufacturing Co produces a single product. Sales of the product in the next four-week period are expected to be 280 units. At the beginning of the period an inventory level of 30 units is expected, although the budgeted closing inventory level is five units. Each unit of the product requires 2 hours of grade O labour and 3 hours of grade R labour. Grade O labour is paid $15 per hour, whereas grade R labour receive a guaranteed weekly wage of $280. Just one raw material is used in production of the product. A unit of the product requires 7 kg of raw material. The expected price per kg of the raw material is $50.

The budgeted cost for grade O labour is $

Misty Co's budgetary control report for last month is as follows:

(Indicate favourable or adverse variance with + or - respectively, do not use other punctuation)

A flexible budget is:

• A budget that, by recognising different cost behaviour patterns, is designed to change as the volume of activity changes

• A budget for a defined period of time, which includes planned revenues, expenses, assets, liabilities and cash flow

• A budget that is continuously updated as actual results are reported, adding further forecast periods

• A budget of semi-variable production costs only

• 115,000

• 120,000

• 136,000

• 160,000