MA - Budgeting

What are the main purposes of budgeting?

to give authority to spend

to control expenditure

to aid decision making

• (i) only

• (i) and (ii) only

• (ii) only

• (i), (ii) and (iii)

Who does the budget committee contain?

(i) Purchasing manager

(ii) The chief executive

(iii) Sales manager

(iv) Production manager

• (i) and (ii) only

• (iii) and (iv) only

• (i), (ii) and (iii) only

• All of the above

A budget manual will include which of the following?

(i) An organisation chart

(ii) A budget timetable

(iii) Copies of budget forms

(iv) Key assumptions to be used in the budget

• (ii), (iii) and (iv)

• (ii) and (iv)

• (iii) and (iv)

• All of the above

Which of the following is NOT a purpose of budgeting?

• Planning

• Co-ordination

• Consultation

• Communication

What is the formula to calculate the production budget?

• Sales budget + opening inventory — closing inventory

• Sales budget — opening inventory + closing inventory

• Sales budget — opening inventory — closing inventory

• Sales budget + opening inventory + closing inventory

A process has a normal loss of 10% and budgeted output is 4,500 litres for the period.

Opening inventory of raw material is 600 litres and is expected to increase by 20% by the end

of the period.

What is the material usage budget?

• 4,500 litres

• 5,000 litres

• 5,133 litres

• 5,120 litres

What is the formula to calculate the material usage budget?

• Production budget multiplied by the standard material quantity per unit

• Sales budget multiplied by the standard material quantity per unit

• Production budget less opening inventory plus closing inventory

• Production budget plus opening inventory less closing inventory

What would be the principal budget factor for a footwear retailer?

• The cost item taking the largest share of total expenditure

• The product line contributing the largest amount to sales revenue

• The product line contributing the largest amount to business profits

• The constraint that is expected to limit the retailer's activities during the budget period

What is the production volume required for the forthcoming period to meet the sales

demand?

• 3,050 units

• 2,450 units

• 2,300 units

• 2,150 units

What is the total overhead budget?

• $12,200

• $12,000

• $11,590

• $10,980