Snowbird Company expects to sell 10,000 parkas in January and 5,000 in February for $100 each. What will be the total sales revenue reflected in the sales budget for those months?

1)        Which of the following is an advantage of the budgeting process?

A)      aids in performance evaluation

B)       coordinates the activities of the organization

C)       assures the company of achieving its objectives

D)   both a and b

2)        Which of the following is a benefit of budgeting?

A)      focuses management's attention on the future

B)       improved decision-making processes

C)       improved motivation by employees

D)  all of the above are benefits of budgeting

3)        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

4)        Which of the following alternatives reflects the proper order of preparing components of the master budget?

1.         financial budget

2.         operating budget

3.         capital expenditures budget

A)   2, 3, 1

B)   1, 3, 2

C)   1, 2, 3

D)   3, 1, 2

5)        Snowbird Company expects to sell 10,000 parkas in January and 5,000 in February for $100 each. What will be the total sales revenue reflected in the sales budget for those months?

January     February

A)     $10,000     $5,000

B)      $100,000  $50,000

C)     $1,000,000 $500,000

D)   none of the above

6)        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

7)        Desired ending inventory is 25% more than beginning inventory. If purchases total $160,000, which of the following statements is true regarding cost of goods sold?

A)      COGS will exceed cost of goods available for sale

B)       COGS will exceed purchases

C)   COGS will be less than purchases

D)   COGS will equal $55,000

8)        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

9)        Operating budgets include all of the following except for one. Which is it?

A)      budgeted income statement

B)       sales budget

C)   budgeted balance sheet

D)   inventory budget

10)    A March sales forecast projects 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, which was 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

11)    Wright Company expects cash sales for July of $12,000, and a 20% monthly increase during August and September. Credit sales of $4,000 in July should be followed by 10% decreases during August and September. What are budgeted cash sales and budgeted credit sales for September?

A) $17,280 and $3,240 B) $14,400 and $4,400 C) $9,600 and $4,400 D)   $17,280 and $4,840

12)    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

13)    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

14)    A plan showing the units to be sold and the projected selling price, which is the starting point in the budgeting process, is called the:

A)      cash budget.

B)       budgeted statement of cash flows.

C)   sales budget.

D)   budgeted income statement.

15)    The                           budget is a major part of the master budget and focuses on the income statement and its supporting schedules.

A)  operating

B)       cash

C)       capital expenditures

D)      financial

16)    Martin Company sells a certain product for $15 per unit. The beginning inventory is 40,000 units, and the desired ending inventory is 32,000 units. If budgeted production is 100,000 units, what is the forecasted sales revenue from the product?

A) $1,380,000 B) $1,500,000 C) $1,600,000 D)  $1,620,000

17)    Griffith Company has budgeted purchases of inventory for December of $105,000. Expected beginning inventory on December 1 and ending inventory on December 31 are $120,000 and $129,000, respectively. If cost of goods sold averages 75% of sales, what are budgeted sales for December?

A) $114,000 B) $120,000 C) $128,000 D)  $152,999

18)    The first step in preparing the operating budget is preparing which of the following?

A)   sales budget

B)       cash budget

C)       budgeted income statement

D)      purchases budget

19)    All of the following are part of the operating budget except for which of the following?

A)      cash budget

B)       inventory, purchases and cost of goods sold budget

C)       sales budget

D)  budgeted income statement

20)    The                               budget is the cornerstone of the master budget.

A)      cash

B)   sales

C)       budgeted balance sheet

D)      operating expense

21)    Yokeley Enterprises recorded sales of $160,000 during March. Management expects sales to increase 5% in April, 3% in May, and 5% in June. Cost of goods sold is expected to be 70% of sales. What is the budgeted gross profit for June?

A)  $54,508 B) $112,000 C) $127,184 D)  $181,692

22)    Lan Corporation had beginning inventory of 42,000 units and expects sales of 96,000 units during the year. Desired ending inventory is 31,000 units. How many units should Lan Corporation produce?

A)      65,000 units

B)       73,000 units

C)   85,000 units