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    Set D (MC), Question and Answers Chapter 20 - Budgeting

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    John Carlos Doringo
    The document contains 40 multiple choice questions about budgeting concepts. The questions cover topics like production estimates, direct materials requirements, sales estimates, calculating units to produce, and cash collections from sales. Correct answers are provided for each question.

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    Set D (MC), Question and Answers Chapter 20 - Budgeting

    Uploaded by

    John Carlos Doringo
    389 views4 pages
    The document contains 40 multiple choice questions about budgeting concepts. The questions cover topics like production estimates, direct materials requirements, sales estimates, calculating units to produce, and cash collections from sales. Correct answers are provided for each question.

    Original Title

    Set D [MC], Question and Answers; Chapter 20 - Budgeting

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    The document contains 40 multiple choice questions about budgeting concepts. The questions cover topics like production estimates, direct materials requirements, sales estimates, calculating units to produce, and cash collections from sales. Correct answers are provided for each question.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    389 views4 pages

    Set D (MC), Question and Answers Chapter 20 - Budgeting

    Uploaded by

    John Carlos Doringo
    The document contains 40 multiple choice questions about budgeting concepts. The questions cover topics like production estimates, direct materials requirements, sales estimates, calculating units to produce, and cash collections from sales. Correct answers are provided for each question.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 4

    Chapter 20 — Budgeting (MULTIPLE CHOICE)

    31. Production estimates for August are as follows:

    Estimated inventory (units), August 1 12,000


    Desired inventory (units), August 31 9,000
    Expected sales volume (units), August 75,000

    For each unit produced, the direct materials requirements are as follows:

    Direct material A ($5 per lb.) 3 lbs.


    Direct material B ($18 per lb.) 1/2 lb.

    The total direct materials purchases of materials A and B required for August production
    is:
    a. $1,080,000 for A; $1,296,000 for B
    b. $1,080,000 for A; $648,000 for B
    c. $1,125,000 for A; $675,000 for B
    d. $1,170,000 for A; $702,000 for B
    ANS: B DIF: 3 OBJ: 04

    32. Based on the following production and sales estimates for May, determine the number of units
    expected to be manufactured in May.

    Estimated inventory (units), May 1 10,000


    Desired inventory (units), May 31 15,000
    Expected sales volume (units):
    South region 30,000
    West region 40,000
    North region 20,000
    Unit sales price $10

    a. 85,000
    b. 90,000
    c. 95,000
    d. 105,000
    ANS: C DIF: 3 OBJ: 04

    33. Which of the following budgets provides the starting point for the preparatio n of the direct
    labor cost budget?
    a. Direct materials purchases budget
    b. Cash budget
    c. Production budget
    d. Sales budget
    ANS: C DIF: 1 OBJ: 04
    34. Production and sales estimates for April are as follows:

    Estimated inventory (units), April 19,000


    Desired inventory (units), April 30 18,000
    Expected sales volume (units):
    Area A 3,500
    Area B 4,750
    Area C 4,250
    Unit sales price $20

    The number of units expected to be manufactured in April is:


    a. 11,500
    b. 10,000
    c. 12,500
    d. 13,500
    ANS: A DIF: 3 OBJ: 04

    35. Production and sales estimates for April are as follows:

    Estimated inventory (units), April 1 9,000


    Desired inventory (units), April 30 8,000
    Expected sales volume (units):
    Area A 3,500
    Area B 4,750
    Area C 4,250
    Unit sales price $20

    The budgeted total sales for April is:


    a. $200,000
    b. $230,000
    c. $270,000
    d. $250,000
    ANS: D DIF: 3 OBJ: 04
    36. If the expected sales volume for the current period is 7,000 units, the desired ending inventory is
    400 units, and the beginning inventory is 300 units, the number of units set forth in the
    production budget, representing total production for the current period, is:
    a. 6,900
    b. 7,000
    c. 7,200
    d. 7,100
    ANS: D DIF: 3 OBJ: 04

    37. Production estimates for July are as follows:

    Estimated inventory (units), July 1 8,500


    Desired inventory (units), July 31 10,500
    Expected sales volume (units), July 76,000

    For each unit produced, the direct materials requirements are as follows:

    Direct material A ($5 per lb.) 3 lbs.


    Direct material B ($18 per lb.) 1/2 lb.

    The number of pounds of materials A and B required for July productio n is:
    a. 216,000 lbs. of A; 36,000 lbs. of B
    b. 216,000 lbs. of A; 72,000 lbs. of B
    c. 234,000 lbs. of A; 39,000 lbs. of B
    d. 225,000 lbs. of A; 37,500 lbs. of B
    ANS: C DIF: 3 OBJ: 04

    38. Production estimates for July are as follows:

    Estimated inventory (units), July 1 8,500


    Desired inventory (units), July 31 10,500
    Expected sales volume (units), July 76,000

    For each unit produced, the direct materials requirements are as follows:

    Direct material A ($5 per lb.) 3 lbs.


    Direct material B ($18 per lb.) 1/2 lb.

    The total direct materials purchases of materials A and B required for July production is:
    a. $1,080,000 for A; $648,000 for B
    b. $1,080,000 for A; $1,296,000 for B
    c. $1,170,000 for A; $702,000 for B
    d. $1,125,000 for A; $675,000 for B
    ANS: C DIF: 3 OBJ: 04
    39. The budget that summarizes future plans for the acquisition of fixed assets is the:
    a. direct materials purchases budget
    b. production budget
    c. sales budget
    d. capital expenditures budget
    ANS: D DIF: 1 OBJ: 05

    40. O'Neill Co. has $296,000 in accounts receivable on January 1, 2000. Budgeted sales for January
    are $860,000. O'Neill expects to sell 20% of its merchandise for cash. Of the remaining 80% of
    sales on account, 75% are expected to be collected in the month of sale and the remainder the
    following month. The January cash collections from sales are:
    a. $812,000
    b. $688,000
    c. $468,000
    d. $984,000
    ANS: D DIF: 3 OBJ: 05

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