Principles of Accounting II | Module 11 - Chapter 21

A variant of fiscal-year budgeting whereby a 12-month projection into the future is maintained at all times is termed ___ budgeting.

• flexible

• continuous

• zero-based

• incremental

Flexible budgeting builds the effect of changes in level of activity into the budget system.

• True

• False

Which of the following is an integrated set of operating and financial budgets for a period of time?

• master budget

• cash budget

• production budget

• sales budget

The first budget customarily prepared as part of an entity's master budget is the ___ budget.

• production

• cash

• sales

• direct materials purchases

The budget that summarizes future plans for the acquisition of fixed assets is the ___ budget.

• direct materials purchases

• production

• sales

• capital expenditures

The capital expenditures budget summarizes plans for acquiring fixed assets.

• True

• False

Part of the cash budget is based on information drawn from the capital expenditures budget.

• True

• False

Motorcycle Manufacturers, Inc., projected sales of 78,000 machines for the year. The estimated January 1 inventory is 6,500 units, and the desired December 31 inventory is 6,000 units. The budgeted production for the year is

• 78,500 units

• 70,000 units

• 77,500 units

• 70,500 units

Miller and Sons' static budget for 10,000 units of production includes $50,000 for direct materials, $44,000 for direct labor, variable utilities of $5,000, and supervisor salaries of $24,000. A flexible budget for 12,000 units of production would show

• the same cost structure in total

• direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $29,000

• total variable costs of $148,000

• direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $24,000

Carillon's Department Stores is planning its staffing for the upcoming holiday season. From past history, the store determines that it needs one additional salesclerk for each $15,000 in daily sales. The average daily sales is anticipated to increase by $135,000 from Black Friday until Christmas Eve, or 27 shopping days. Each additional salesclerk will work a six-hour shift and will be paid $16 per hour. The amount to budget for additional salesclerks for the holiday season is

• $14,580

• $23,328

• $31,104

• $209,952