33) The following statements are a) It is the first budget prepared b) The produ

Question

33) The following statements are a) It is the first budget prepared b) The production budget determines its production c) Production Budget projects the amount of productien based upon anticipated sales budget. d) Direct Materials budiget has not impact on the projected Ending Inventory. and based upen the sales projections and inventory based upon the sales budget A) A is Fake B)B is False C) C is False DJ D is False 34) The following statements are a) NPV method is the discounting net cash fliows value to the capital outlay required for the capital investment. b) A proposal is acceptable when NPV is equal to Zere or Positive c) The required rate of return is determined by the average of the d) The required rate of return is determined by the management fer to their present value and then determining the present for capital A) A is False 8) B is False C) C is False D) D is False 35) The fellowing statements are False as it rezards Manufacturing Overas distinguishes between the variable and overhead costs. a. The budget b. All labor cost, direct and indirect are charged so Overhead Budget. E. All Fixed cost are part of the Manufacturing Overhesd Budget d. Indirect Materials are a variable overhead cest. A) A is False 8) B is False C) C is False D) D is False

Explanation / Answer

33. D) D is false. Reason: Direct materials budget has not impact on the projected ending inventory of finished goods. In fact projected ending inventory has impact on Direct material budget because based on projected ending inventory of finished good and sales quantity, direct material budget is prepared to determine the quantity of material required for production and quantity of material to be purchased from market and estimated cost of purchase or material.

34. C) C is false. Reason: The required rate of return is not determined by the average of the Bond market. But the required rate of return is determined by the management of capital investment based on the cost of capital used to finance the capital investment.

35. B) B is false. Reason: The direct labour cost is direct cost related to production which directly varies with production and it is part of prime cost. Anything which is not direct material and direct labour is and overhead. Therefore, Direct labour are charged to manufacturing overhead is false statement.

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