Question 1: Heath Company has beginning inventory of 21,000 units and expected sales of 48,000 units. If the desired ending inventory is 15,500 units, how many units should be produced?
a. 27,000
b. 42,500
c. 45,000
d. 53,000
Question 2: A department store has budgeted cost of sales of $36,000 for its men's suits in March. Management also wants to have $15,000 of men's suits in inventory at the end of March to prepare for the summer season.
Beginning inventory of men's suits for March is expected to be $9,000. What dollar amount of men's suits should be purchased in March?
a. $42,000
b. $45,000
c. $51,000
d. $60,000
Question 3: Which of the following is not an advantage of the budgeting process?
a. The budget process aids in performance evaluation.
b. The budget process helps coordinate the activities of the organization.
c. The budget process forces management to plan ahead.
d. The budget process is costly and time consuming.
Question 4: The starting point in the budgeting process is the:
a. preparation of the cash budget.
b. preparation of the budgeted statement of cash flows.
c. preparation of the sales budget
d. preparation of the budgeted income statement.
Question 5: Janeway Corporation desires a December 31 ending inventory of 1,500 units. Budgeted sales for December are 2,300 units. The November 30 inventory was 850 units. What are budgeted purchases in units?
a. 2,350
b. 2,950
c. 3,150
d. 3,800
Question 6: A March sales forecast projects that 10,000 units of Product A and 12,000 units of Product B are going to be sold at prices of $11 and $13, respectively. The desired ending inventory of Product A is 20% higher than the beginning inventory of 1,000 units. How much are total March sales for Product A anticipated to be?
a. $110,000
b. $130,000
c. $132,000
d. $156,000
Question 7: Which of the following budgets or financial statements is an operating budget?
a. Capital expenditures budget
b. Budgeted balance sheet
c. Sales budget
d. Cash budget
Question 8: Desired ending inventory is 80% of beginning inventory. If cost of goods sold is $300,000, which of the following statements is true regarding purchases?
a. Purchases will be more than cost of goods sold
b. Purchases will be 80% of cost of goods sold
c. Purchases will equal cost of goods sold
d. Purchases will be less than cost of goods sold
Question 9: Which of the following budgets is a major part of the master budget and focuses on the income statement and its supporting schedules?
a. Operating budget
b. Cash budget
c. Capital expenditures budget
d. Sales budget
Question 10: Spencer Company expects cash sales for July of $12,000, and a 10% monthly increase during August and September. Credit sales of $4,000 in July should be followed by 25% increases during August and September. What are budgeted cash sales and budgeted credit sales for September respectively?
a. $13,200 and $6,000
b. $14,520 and $6,250
c. $14,520 and $6,000
d. $14,400 and $6,250