7. When preparing a production budget, the required production equals: a. budget

Question

7. When preparing a production budget, the required production equals: a. budgeted sales+ desired ending inventory + beginning inventory b. budgeted sales+ desired ending inventory- beginning inventory c. budgeted sales -desired ending inventory- beginning inventory d. budgeted sales-desired ending inveatory+ beginning inventory 8.The direct labor budget is based on: a. the desired ending inventory of finished goods b. the beginning inventory of finished goods c. the required production for the period. d. the required materials purchases for the period 9. The following credit sales are budgeted by Roswell Company January February $102,000 March 150,000 April $210,000 180,000 The company's past experience indicates that 70% ofthe accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale. The anticipated cash inflow for the month of April is: a. $185,160. b. $168,000. c. $180,000. d. $176,400. ng actual results to a budget based on actual activity for the period is most effective with the use of. a. a monthly budget c. a flexible budget. d. a rolling budget 11. Management by exception: a causes managers to be buried under voluminous paperwork. b. means that all differences will be investigated. e means that only unfavorable differences will be investigated d. means that material differences will be investigated 12. Management performance can be measured in many different ways including return on investment (ROID and residual income. A good reason for using residual income in addition to ROl is: a. residual income can be computed without having to measure operating assets. b. managers are more likely to accept projects that are beneficial to the company. c a minimum rate of return does not have to be specified when the residual income approach is used that percentages from residual income calculations are easier to understand and interpret. d.

Explanation / Answer

1) Answer (B) Budgeted Sales + Desired ending inventory - Begining inventory

2) Answer (C) The required production for the period

3) Answer (C) $180,000

Calculation :

= ($180,000*70%) + ($210,000*20%) + ($150,000*8%)

= $180,000

4) Answer (C) A flexible budget

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