WorksheetsMA - Ch-13 Budgeting
Total questions: 40
Worksheet time: 1hrs 2mins
Which of the following may be considered to be objectives of budgeting?
(i) Co-ordination
(ii) Communication
(iii) Expansion
(iv) Resource allocation
All of them
(i), (ii) and (iv)
(ii), (iii) and (iv)
(ii) and (iv)
What does the statement 'sales is the principal budget factor' mean?
The level of sales will determine the level of cash at the end of the period
The level of sales will determine the level of profit at the end of the period
The company's activities are limited by the level of sales it can achieve
Sales is the largest item in the budget
T Co manufactures a single product and an extract from their flexed budget for production costs is as follows.
What would the total production cost allowance be in a budget flexed at the 83% level of activity? (to the nearest $)
$9,688
$8,688
$7,588
$6,588
Which of these statements is untrue?
Spreadsheets make the calculation and manipulation of data easier and quicker
Spreadsheets are very useful for word-processing
Budgeting can be done very easily using spreadsheets
Spreadsheets are useful for plotting graphs
The formula =C2-C3 will give the contents of which cell in the drop down list?
C3
C2
C4
C1
What would be the formula for March net profit?
=D2–D3
=B6+C6
=D4–D5
=D3*D8
What will be the formula to go in G8?
=G6/G2*100
=G4/100*G6
=G2/G6*100
=G6/G4*100
A company manufactures a single product. In a computer spreadsheet the cells F1 to F12 contain the budgeted monthly sales units for the twelve months of next year in sequence, with January sales in cell F1 and finishing with December sales in F12. The company policy is for the closing inventory of finished goods each month to be 10% of the budgeted sales units for the following month.
Which of the following formulae will generate the budgeted production (in units) for March next year?
=[F3 + (0.1*F4)]
=[F3 – (0.1*F4)]
=[(1.1*F3) – (0.1*F4)]
=[(0.9*F3) + (0.1*F4)]
Misty Co's budgetary control report for last month is as follows:
What was the volume variance for last month?
$4,755(A)
$2,725 (A)
$4,755 (F)
$2,725 (F)
Misty Co's budgetary control report for last month is as follows:
What was the expenditure variance for last month?
$7,480(F)
$2,725 (F)
$7,480(A)
$2,725 (A)
The following question is taken from the July to December 2014 exam period.
The standard cost card for a company’s only product is given below:
For a period, budgeted production and sales were 8,000 units, whilst actual production and sales were 6,000 units.
What is the flexed budget profit?
$62,000
$72,000
$96,000
$102,000
The following question is taken from the January to June 2016 exam period.
Budgeted costs and revenues for an output level of 4,000 units are given below. It is known that after an output level of 5,000 units there is a step up in fixed costs of $1,000:
What is the flexed budget profit at an output level of 6,000 units?
$47,000
$48,000
$55,000
$56,000
The following question is taken from the July to December 2016 exam period.
The following spreadsheet shows the calculation of a company’s profit.
Which formula would calculate contribution?
B2 – B3
B5 – B6
B8 + B7
B8 + B7 + B4
The following question is taken from the July to December 2017 exam period.
The following spreadsheet shows a profit centre's variances against budget for a period. Some figures have been omitted (omitted figures are labelled ????)
What figure should appear in cell E5?
-2,400
2,400
-3,000
3,000
What does a master budget comprise?
The budgeted statement of profit or loss
The budgeted cash flow, budgeted statement of profit or loss and budgeted statement of financial position
The budgeted cash flow
The entire set of budgets prepared
If a company has no production resource limitations, in which order would the following budgets be prepared?
(i) Material usage budget (iv) Finished goods inventory budget
(ii) Sales budget (v) Production budget
(iii) Material purchase budget (vi) Material inventory budget
(v), (iv), (i), (vi), (iii), (ii)
(ii), (iv), (v), (i), (vi), (iii)
(ii), (iv), (v), (i), (iii), (vi)
(ii), (v), (iv), (i), (vi), (iii)
Sales volume from the sales budget Material purchases from the purchases budget Budgeted change in finished goods inventory Standard direct labour cost per unit
1. Sales volume from the sales budget
2. Material purchases from the purchases budget
3. Budgeted change in finished goods inventory
4. Standard direct labour cost per unit
1, 2
1, 3
3, 4
1, 4
When preparing a production budget, what does the quantity to be produced equal?
Sales quantity + opening inventory of finished goods + closing inventory of finished goods
Sales quantity – opening inventory of finished goods + closing inventory of finished goods
Sales quantity – opening inventory of finished goods – closing inventory of finished goods
Sales quantity + opening inventory of finished goods – closing inventory of finished goods
The quantity of material in the material purchases budget is greater than the inferred from quantity of material in the material usage budget. Which of the following statements can be this situation?
Wastage of material occurs in the production process
Finished goods inventories are budgeted to increase
Raw materials inventories are budgeted to increase
Raw materials inventories are budgeted to decrease
A company plans to sell 24,000 units of product R next year. Opening inventory of R is expected to be 2,000 units and PQ Co plans to increase inventory by 25 per cent by the end of the year. How many units of product R should be produced next year?
24,500 units
24,600 units
23,500 units
22,500 units
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
How many kilograms of raw materials should be purchased next month?
176,000 kgs
174,000 kgs
165,000 kgs
175,000 kgs
Budgeted sales of X for December 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 December 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. What is the production budget for X for December?
15,000 units
16,000 units
14,000 units
13,000 units
A company manufactures a single product, M. Budgeted production output of product M during August is 200 units. Each unit of product M requires 6 labour hours for completion and PR Co anticipates 20 per cent idle time. Labour is paid at a rate of $7 per hour. What is the direct labour cost budget for August?
$6,720
$8,400
$10,080
$10,500
Each unit of product Echo takes five direct labour hours to make. Quality standards are high, and 8% of units are rejected after completion as sub-standard. Next month's budgets are as follows.
Opening inventories of finished goods 3,000 units
Planned closing inventories of finished goods 7,600 units
Budgeted sales of Echo 36,800
All inventories of finished goods must have successfully passed the quality control check.
What is the direct labour hours budget for the month?
190,440 hours
207,000 hours
223,560 hours
225,000 hours
Budgeted production in a factory for next period is 4,800 units. Each unit requires five labour hours to make. Labour is paid $10 per hour. Idle time represents 20% of the total labour time.
What is the budgeted total labour cost for the next period?
$192,000
$240,000
$288,000
$300,000
Which of the following statements are true?
(i) A flexed budget allows businesses to evaluate a manager's performance more fairly
(ii) A fixed budget is useful for defining the broad objectives of the organisation (iii) Relying on fixed budgets alone would usually give rise to massive variances
(i) and (iii) only
(i) and (ii) only
(ii) and (iii) only
(i), (ii) and (iii)
The following details have been extracted from the receivables collection records of C Co.
Invoices paid in the month after sale 60%
Invoices paid in the second month after sale 25%
Invoices paid in the third month after sale 12%
Bad debts 3%
a
b
c
d
The following details have been extracted from the receivables collection records of C Co.
Invoices paid in the month after sale 60%
Invoices paid in the second month after sale 25%
Invoices paid in the third month after sale 12%
Bad debts 3%
Invoices are issued on the last day of each month.
Customers paying in the month after sale are entitled to deduct a 2% settlement discount. Credit sales values for June to September are budgeted as follows.
June July August September
$35,000 $40,000 $60,000 $45,000
What is the amount budgeted to be received from credit sales in September?
$46,260
$49,480
$50,200
$50,530
BDL plc is currently preparing its cash budget for the year to 31 March 20X8. An extract from its sales budget for the same year shows the following sales values.
$
March 60,000
April 70,000
May 55,000
June 65,000
40% of its sales are expected to be for cash. Of its credit sales, 70% are expected to pay in the month after sale and take a 2% discount; 27% are expected to pay in the second month after the sale, and the remaining 3% are expected to be bad debts.
What is the value of sales receipts to be shown in the cash budget for May 20X7?
$60,532
$61,120
$66,532
$86,620
Each unit of product Zeta requires 3 kg of raw material and 4 direct labour hours. Material costs $2 per kg and the direct labour rate is $7 per hour.
The production budget for Zeta for April to June is as follows.
The closing inventory budgeted for June is 3,900 kg.
Material purchases are paid for in the month following purchase. What is the figure to be included in the cash budget for June in respect of payments for purchases?
$25,100
$48,800
$50,200
$50,600
Wages are paid 75% in the month of production and 25% in the following month. What is the figure to be included in the cash budget for May in respect of wages?
$233,000
$221,000
$231,000
$232,000
An extract from a company's sales budget is as follows:
$
October 224,000
November 390,000
December 402,000
Ten per cent of sales are paid for immediately in cash. Of the credit customers, 30 per cent pay in the month following the sale and are entitled to a one per cent discount. The remaining customers pay two months after the sale is made.
What is the value of sales receipts shown in the company's cash budget for December?
$285,567
$286,620
$290,430
$312,830
Extracts from a company's budget are as follows:
August September
Production units 12,600 5,500
Fixed production overhead cost incurred $9,440 $7,000
The standard variable production overhead cost per unit is $5. Variable production overhead is paid 70 per cent in the month incurred and 30 per cent in the following month.
Fixed production overhead cost is paid in the month following that in which it is incurred and includes depreciation of $2,280 per month.
What is the payment for total production overhead cost shown in the cash budget for September?
$32,220
$42,870
$45,310
$45,310
The following extract is taken from the production cost budget of S Co.
Production (units) 2,000 3,000
Production cost ($) 11,100 12,900
What is the budget cost allowance for an activity level of 4,000 units?
$7,200
$7,500
$13,460
$14,700
The following details have been extracted from the payables' records of X Co:
Invoices paid in the month of purchase 25%
Invoices paid in the first month after purchase 70%
Invoices paid in the second month after purchase 5%
Purchases for July to September are budgeted as follows:
July $250,000
August $300,000
September $280,000
For suppliers paid in the month of purchase, a settlement discount of 5% is received. What is the amount budgeted to be paid to suppliers in September?
$278,500
$280,000
$289,000
$292,500
Which of the following control actions could be taken to help eliminate an adverse direct labour efficiency variance?
(i) Employ more highly skilled labour
(ii) Ensure stricter supervision of labour workers
(iii) Ask employees to work paid overtime
(i) and (iii) only
(i) and (ii) only
(i), (ii) and (iii)
(ii) and (iii) only
department is a division of W Plc. X department usually has a quarterly wages cost of $4,500,000. Quarterly material costs are usually around $2,000,000. W Plc made a central decision to award all employees a wages increase of 2%.
Which of the following variances for the latest quarter are worth investigating?
(i) Direct material price variance $400 (A)
(ii) Labour rate variance $90,000 (A)
(iii) Sales volume variance $4,000,000 (F)
(i) and (iii) only
(i) and (ii) only
(i), (ii) and (iii)
(iii) only
Which of the following BEST describes the purpose of a flexible budget?
To ensure managers are motivated
To facilitate control by establishing a budget relevant to actual activity levels
To facilitate control by preventing discretionary expenditure
To enable accurate reforecasting when actual costs are known
The following statements relate to fixed budgets and flexible budgets.
(i) If production levels far exceed those anticipated, relying on a fixed budget is likely to result in massive variances
(ii) Flexible budgets assist management control by providing dynamic, comparable information
(iii) Flexible budgets are always superior to fixed budgets
Which statements are true?
(i) only
(i) and (ii) only
(ii) and (iii) only
(i), (ii) and (iii)
The following question is taken from the January to June 2014 exam period.
An accountant wishes to use the following spreadsheet to calculate budgeted production units
Which formula should be entered in cell B5?
=B3-C4+B4
=B3-B4
=B3+C4
=B3+C4-B4
