accounting 2 exercise8

1. The cash budget is especially important to a firm when: 
A. there is not a lot of confidence in the sales forecast.
B. it has a relatively large amount of operating cash.
C. the P/E ratio has been trending downwards.
D. it may have to negotiate a short-term bank loan.

 

 2. Which of the following costs are included in the cost classification that is based on the relationship between total cost and volume of activity? 
A. Variable cost and fixed cost.
B. Direct cost and indirect cost.
C. Product cost and period cost.
D. Committed cost and discretionary cost.

 

 3. Which of the following costs are included in the cost classification that is based on the time frame perspective? 
A. Variable cost and fixed cost.
B. Direct cost and indirect cost.
C. Product cost and period cost.
D. Committed cost and discretionary cost.

4. Which of the following is a plan for acquiring the resources needed to complete the manufacturing activities that will satisfy the organization’s sales forecast? 
A. Sales budget
B. Raw materials budget
C. Production budget
D. Direct labor budget

 

  5. The operating expense budget is based on the: 
A. sales budget.
B. production budget.
C. manufacturing overhead budget.
D. cash budget.

 

6. Which of the following items would be included in the operating expense budget? 
A. Sales commissions.
B. Raw material purchases.
C. Cash receipts.
D. Cost of goods sold.

 

 7. What is the “key” to the entire operating budget? 
A. The forecast of operating activity.
B. The budgeted income statement.
C. The budgeted balance sheet.
D. The production/purchases budget.

 

8. Which of the following lists the components of the master budget in correct chronological order? 
A. Cash budget, budgeted income statement, budgeted balance sheet.
B. Budgeted balance sheet, cash budget, budgeted income statement.
C. Budgeted income statement, cash budget, budgeted balance sheet.
D. It doesn’t matter in which order they are prepared. 

 

9. If it is to be most useful for control purposes, what variance should be reported to the supervisor responsible for the number of pounds of corn syrup used in the manufacture of a candy bar? 
A. Raw material price variance, expressed in cents per pound.
B. Raw material usage variance, expressed as a total cost for the month.
C. Raw material usage variance, expressed in total pounds for the month.
D. Raw material usage variance, expressed in total pounds for the week.