Budget Quiz

2) Which of the following best describes the function of SWOT analysis?

3) Which of the following are the shortcomings of regression analysis? I. Regression analysis requires the collection of numerous data points to be accurate. II. The user must evaluate whether the relationship between the dependent and independent variables is reasonable. III. Regression analysis is limited to the use of one independent variable. IV. Regression analysis can be strongly influenced by outlying data points.

4)A beverage stand can sell either soft drinks or coffee on any given day. If the stand sells soft drinks and the weather is hot, it will make $2,500; if the weather is cold, the profit will be $1,000. If the stand sells coffee and the weather is hot, it will make $1,900; if the weather is cold, the profit will be $2,900. The probability of cold weather on a given day at this time is 60%. The expected payoff for selling coffee is:

5) Which of the following is not a step in the budgeting process?

6) A management representative of Ana Huff Inc. proposed a budget for the current year considering there will be no work delays, interruptions, waste, or machine breakdown. Which type of standard is being prepared?

7) Which one of the following is generally not cited as being an advantage of a formal budgetary process?

8) Which of the following groups is most likely to introduce budget slack into a budget?

9) If four input units of direct material are allowed for producing one output unit and an input unit costs $20, then the standard direct material cost would be:

10) When developing a budget, an external factor to consider in the planning process would be:

11) Which one of the following is most important to a successful budgeting effort?

12) Which one of the following is not an advantage of activity-based budgeting?

13) A firm wants to place its budgeting emphasis on teamwork, synchronized activity, and customer satisfaction. Which of the following budget types would best fit these needs?

14) The CEO of Marx is analyzing a $100,000 investment opportunity. The investment promises a return of $10,000 per year and a rate of return of 5%. The $100,000 is based on an estimate. The CEO wants to know how acceptable the investment would be if the return was only $60,000 per year. What type of analysis should the CEO perform?

15) The following direct labor information relates to the manufacture of televisions. Number of workers 60 Number of product hours per week, per worker 40 Hours required to make 1 unit 3 Weekly wages per worker $650 Employee benefits treated as direct labor costs 20% of wages What is the standard direct labor cost per unit?

16) What operations strategy is most likely to be adopted when the product sold by an organization is a commodity and the market is very large?

17) Michael E. Porter’s competitive strategies model includes an analysis of the competitive forces that determine the attractiveness of an industry. These forces include I. The stage of the industry life cycle II. Threats of, and barriers to, entry III. Threat of substitutes IV. The threat of suppliers’ bargaining power

18) Which one of the following may be considered an independent item in the preparation of the master budget?

19) In preparing a corporate master budget, which one of the following is most likely to be prepared last? 19) In preparing a corporate master budget, which one of the following is most likely to be prepared last? 

20) In the Boston Consulting Group (BCG) growth-share matrix, which strategic business units are strong competitors in high growth markets but usually have modest net cash flow?

21) A corporation manufactures specialty components for the electronics industry in a highly labor intensive environment. A manufacturer has asked the corporation to bid on a component that the corporation made for the manufacturer last month. The previous order was for 80 units and required 150 hours of direct labor to manufacture. The manufacturer would now like 240 additional components. The corporation experiences an 80% learning curve on all of its jobs. The number of direct labor hours needed for the corporation to complete the 240 additional components is

22) In regression analysis, which of the following correlation coefficients represents the strongest relationship between the independent and dependent variables

23) A particular manufacturing job is subject to an estimated 90% learning curve. The first unit required 55 labor hours to complete. What is the cumulative average time per unit after four units are completed?

24) Berol Company plans to sell 210,000 units of finished product in July and anticipates a growth rate in sales of 5% per month. The desired monthly ending inventory in units of finished product is 80% of the next month’s estimated sales. There are 150,000 finished units in inventory on June 30. Each unit of finished product requires 4 pounds of direct materials at a cost of $1.20 per pound. There are 800,000 pounds of direct materials in inventory on June. Question: Berol Company’s production requirement in units of finished product for the 3-month period ending September 30 is

25) Company is a maker of men’s slacks (pants). The company would like to maintain 20,000 yards of fabric in ending inventory. The beginning fabric inventory is expected to contain 25,000 yards. The expected yards of fabric needed for sales is 95,000. Compute the yards of fabric that the company needs to purchase.

26) A corporation has a policy of maintaining inventory at 15% of the next month’s forecast sales. The cost of the corporation’s merchandise averages 60% of the selling price. The inventory balance as of May 31 is $63,000, and the forecast dollar sales for the last seven months of the year are as follows: June $700,000 July 615,000 August 650,000 September 800,000 October 850,000 November 900,000 December 840,000 What is the budgeted dollar amount of the corporation’s purchases for July?

27) In the budgeting and planning process for a firm, which one of the following should be completed first?

28) For the month of June, a company expects to sell 12,500 cases of small cherries at $25 per case and 33,000 cases of large cherries at $32 per case. Sales personnel receive a 6% commission on each case of small cherries and an 7.5% commission on each case of large cherries. To receive a commission on a product, the sales personnel team must meet the individual product revenue quota. The sales quotas for small cherries and large cherries are $500,000 and $1 million, respectively. What are the sales commissions budgeted for June?

29) All of the following are advantages of top-down budgeting as opposed to participatory budgeting, except that it

30) A company has determined the following standards for production of its dining tables: Square feet of oak per table: 10 Price per square foot of oak: $3.50 Number of screws per table: 12 Price per screw: $0.50 The company expects a 15% increase in the cost of oak and a 5% decrease in the cost of screws. What is the new standard cost per table?

31) A firm has prepared budgets for the next 5 months: May, June, July, August, and September. As soon as May results are reported, the firm will add October to their budget plans. What type of budget system is the firm using?

32) “A company is setting up a new division to sell its products in Africa. An accountant has determined that the new African division will have to sell 250,000 units in order to cover the division’s fixed costs of $375,000. The company is estimating total sales of $475,000 for the new African division. What is the contribution margin per unit for the new African division?”

33) The cash receipts budget includes

34) A cash budget is being prepared for the next year. Sales are expected to be $100,000 in January, $200,000 in February, $350,000 in March, and $100,000 in April. Approximately half of all sales are cash sales, and the other half are on credit. Experience indicates that 70% of the credit sales will be collected in the month following the sale, 20% the month after that, and 10% in the third month after the sale. What are the budgeted collections for April?

35) A firm budgeted sale on account of $150,000 for July, $220,000 for August, and $198,000 for September. Collection experience indicates that 60% of the budgeted sales will be collected the month after the sale, 36% the second month, and 4% will be uncollectible. The cash receipts from accounts receivable that should be budgeted for September equal

36) A company sells products on account and experiences the following collection schedule: In the month of sale 10% In the month after sale 60% In the second month after sale 30% At December 31, the company reports accounts receivable of $211,500. Of that amount, $162,000 is due from December sales and $49,500 from November sales. The company is budgeting $190,000 of sales for January. If so, what amount of cash should be collected in January?

37) In preparing its cash budget for April, the following projections were made: Sales $4,000,000 Gross margin (based on sales) 25% Decrease in inventories 200,000 Decrease in accounts payable for inventories 275,000 For April, the estimated cash disbursements for inventories were

38) On a balanced scorecard, which is more of an internal process measure than an external-based measure?

39) In order to analyze sales as a function of advertising expenses, the sales manager developed a simple regression model. The model included the following equation, which was based on 32 monthly observations of sales and advertising expenses with a related coefficient of determination of .90. Sales = $10,000 + (2.5 × Advertising expenses) If the advertising expenses in one month amounted to $1,000, the related point estimate of sales would be

40) The technique used to predict the change in direct labor hours as a new process stabilizes is 

41) Which of the following steps in the strategic management process should be completed first? 

42) Which condition does not increase the threat of new competitor entry into the industry?

43) In strategic planning, PEST analysis is best described as evaluating which of the following factors?

44) A company has budgeted sales at 6,300 units for the next fiscal year and desires to have 590 good units on hand at the end of that year. Beginning inventory is 470 units. The company has found from past experience that 5% of all units produced do not pass final inspection and therefore must be destroyed. How many units should the company plan to produce in the next fiscal year?

45) Strategic planning, as practiced by most modern organizations, includes all of the following except

46) A company uses a comprehensive planning and budgeting system. The proper order for the company to prepare certain budget schedules would be?

47) Which one of the following budgeting methodologies would be most appropriate for a firm facing a significant level of uncertainty in unit sales volumes for next year?

48) The cash budget must be prepared before completing the

49) The budgeting technique that is most likely to motivate managers is

50) The major disadvantage of a budget produced by means of a top-down process is