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Exam 10: Strategy and the Master Budget

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Question 71

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Budgeted December cash payments by Yekstop Corp. for December inventory purchases are:

A) $67,995.
B) $103,500.
C) $158,655.
D) $241,500.
E) $289,440.

F) A) and B)
G) A) and E)

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Question 72

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Over the years, alternative approaches to traditional budgeting practices have been proposed to facilitate budget preparation and usefulness. First, define what is meant by the term "traditional budgeting." Next, compare and contrast the following alternative budgeting approaches to a traditional budgeting process: Zero Base Budgeting (ZBB); Activity-Based Budgeting (ABB); Time-Driven ABB; and, kaizen budgeting.

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Question 73

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The successful use of a budgeting system generally involves all of the following except which item?

Cripe Corporation maintains ending inventory for each month at 5% of the following month's sales. It predicted the following sales (in units) for the first four months of the coming year: How many units should be produced in March?

Which of the following is NOT a characteristic of Kaizen Budgeting?

As indicated in the text, sensitivity analysis is an important tool for dealing with uncertainty in the budget preparation process. Which estimates, out of all that management has to deal with, do you think are the most critical in terms of developing the master budget for the typical profit-seeking organization?

General Manufacturing's budgeted purchases of materials during September should be:

Which of the following are alternatives to traditional budgeting approaches?

Total budgeted cash collections for Yekstop Corp. in December are:

Which of the following factors is least likely to be considered in preparing a sales budget?

The budget committee for Amacom Company, with the help of the district sales manager, projects sales of 80,000 units of its primary product next year. The budget committee and key executives have decided that finished goods inventory should be decreased from the 10,000 units expected at the end of the current year, to 7,000 units at the end of next year. Each unit of finished product requires three units of material MPS15 and six units of material NAV23. At the end of the current year, the inventory of material MPS15 is expected to be 10,000 units and material NAV23 is expected to be 20,000 units. The budget committee believes that these material inventories can be reduced by 80% during the coming year because of the newly installed supply chain system. Required 1. Calculate the number of units Amacom expects to produce during the next year. 2. Compute the number of units that should be purchased of each of the raw materials in order to produce the budgeted units and comply with inventory policy.

What are Boone Co.'s budgeted cash receipts for January?

The practice of maintaining budgets for the same number of future periods, revising those budgets as each period is completed and adding a new budget each period, is called:

Grey Company is considering replacing its existing cutting machine with a new machine that, according to the manufacturer, is more efficient in terms of energy consumption-a variable cost of production. In this regard, it would like to do some financial planning, including "what-if" analysis. Budgeted information regarding the two machines is as follows: Required: 1. Determine the sales volume at which the costs are the same for both machines. 2. What amount of sales, in dollars, for the new machine would produce a 10% profit margin (i.e. ratio of operating profit to sales = 10%)?

Dockille, Inc., is preparing its budget for the second quarter of the calendar year. The following sales data (in units) have been forecasted: Additional information: Desired ending inventory each month--Finished goods: 30% of next month's sales Desired ending inventory each month--Raw materials: 25% of next month's production needs Number of raw material units required per finished unit: 4 Required: How many units of raw materials should be purchased in the 2^ndquarter?

The act of encouraging non-value-adding actions on the part of management in order to improve indicated performance is referred to as:

Brownsville's budgeted operating income for May is:

Willard Company anticipates that its fixed manufacturing overhead costs will be $50,000 during the next period. Its variable manufacturing overhead is expected to be $8 per unit produced. Required 1. What amount of overhead should be budgeted if the production budget shows that 40,000 units are to be produced? 2. What amount of overhead should be budgeted if the production budget shows that 50,000 units are to be produced? 3. Compute the total overhead cost per unit for requirements 1 and 2.

Critics (e.g., The Beyond Budgeting Roundtable) of traditional budgeting assert that the budgeting process:

As indicated in the text, one of the behavioral issues associated with budgeting deals with the linkage of employee compensation to budgeted performance. In this regard, distinguishbetween so-called fixed performance contracts the use of relative performance (relative improvement) contracts along with "rolling financial forecasts." With respect to the use of fixed performance contracts, define what is meant by the term "gaming the performance indicator." With respect to the use of relative performance contracts, define what is meant by the term "rolling financial forecasts."