Challenge Game 5

Which TWO of the following factors would motivate managers to achieve targets?

• A top-down budgeting approach

• A bottom-up budgeting approach

• Setting ideal standards and targets

• Incentive schemes

Which of the following statements about the participation of junior management in the budget setting process is NOT true?

• It increases their commitment to budgets

• It improves their morale and motivation

• It speeds up the budget setting process

• It incorporates their knowledge into budgets

Which of the following statements about the top-down approach to budgeting are true?

(1) The approach is characterised by the participation of lower-level personnel

(2) It imposes budgets on junior managers

(3) Budgets will be more realistic than using a bottom-up approach

• 1 and 2

• 2 and 3

• 2 only

• 1 only

Which of the following factors is LEAST likely to motivate managers to achieve higher levels of performance?

• Shares in the company

• Setting achievable targets higher than expected achievement

• A top-down approach to budgeting

• Offering only non-financial rewards

Which TWO of the following statements about management incentive schemes are true?

• Rewards must be offered in cash

• Rewards must have a monetary value

• Rewards must depend on achieving targets

• The main aim of a reward scheme is to motivate managers

Budgeted sales of X for March are 18,000 units. At the end of the production process for X, 10% of production units are scrapped as defective.

Opening inventories of X for March are budgeted to be 15,000 units and closing inventories will be 11,400 units. All inventories of finished goods must have successfully passed the quality control check.

Calculate the budgeted production for X for March, in units?

• 12,960

• 14,400

• 15,840

• 16,000

Which TWO of the following could be seasonal variations in a time series using the multiplicative model?

• +60

• 95%

• -95%

• 105%

A time series model of sales volume has the trend, Y=5,000 + 4,000 x, where x is the quarter number.

The first quarter of 20X6= quarter 17, the second quarter of 20X6= quarter 18, etc.

Seasonal variations have been calculated as follows:

Quarter  1 +3,000

Quarter 2 +1,000

Quarter 3  -1,500

Quarter 4 -2,500

What would be the time series forecast of sales units for the third quarter of 20X7?

5 years ago an item was costing $10.

The relevant index number 5 years ago was 125.

The same index now stands at 220.

What is the current cost of the item, in 2 decimal places?

Question 10

In 2008 a company purchased 10,000 kg of material for a total cost of $25,000.

In 2011 they purchased 12,000 kg of the same material and paid a total of $38,000

What is the 2011 price index for this material (with 2008 as base year)?