1.A company manufactures a single product, M.

Budgeted production output of

product M during August is 200 units. Each unit of product M requires 6 labour
hours for completion and PR Co anticipates 20 per cent idle time. Labour is paid
at a rate of $7 per hour. What is the direct labour cost budget for August?
a.10,080
b.$6,720
c.$8,400
d.$10,500
e. All are incorrect
2.Using linear regression, the relationship between the monthly quantity
produced (x) and total production cost Có was found to be y = 10,000 + 216x. The
only variable costs are raw materials and labour. Last month, 700 units were
made and raw materials cost $150 per unit. Labour is paid at $15 per hour.
Estimate the variable production cost if output is 500 units.
a.$108,000
b.$100,000
c.$137,400
d.$65,400
3. Each unit of product Echo takes five direct labour hours to make. Quality
standards are high, and 8% of units are rejected after completion as sub-
standard. Next month's budgets are as follows: Opening inventories of finished
goods: 3,000 units. Planned closing inventories of finished goods: 7,600 units.
Budgeted sales of Echo: 36,800 units. All inventories of finished goods must have
successfully passed the quality control check. What is the direct labour hours
budget for the month?
a.223,560 hours
b.190,440 hours
c.All are incorrect
d.207,000 hours
e.225,000 hours
4. Budgeted sales of X for December are 18,000 units. At the end of the
production process for X, 10% of production units are scrapped as defective.
Opening inventories of X for December are budgeted to be 15,000 units and
closing inventories will be 11,400 units. All inventories of finished goods must
have successfully passed the quality control check. What is the production
budget for X for December?
a.12,960 units
b.All are incorrect
c.14,400 units
d.15,840 units
e.16,000 units
5. The finance manager for Halfway Ltd is responsible for preparing the following
reports for the firm:
(I) Statement of profit or loss
(II) Statement of financial position
(III) Cash flow forecast for the next 5 years
(IV) Sales budget for the next 5 years
(V) Monthly operating statements for 3 of Halfway’s divisions.
Which of these is/are an example of feedforward control?
a.III & IV only
b.I & II only
c.All of these are examples of feedforward control
d.III & IV & V only
e.IV & V only
6. Furniture, Inc., estimates the following number of mattress sales for the first
four months of 20x6: January: 22,000; February: 30,800; March: 28,600; April:
35,200. Finished goods inventory at the end of December is 6,600 units. Target
ending finished goods inventory is 20% of the next month's sales. How many
mattresses should be produced in the first quarter of 20x6?
a.81,840 mattresses
b.51,920 mattresses
c.All are incorrect
d.88,880 mattresses
e.60,280 mattresses
7. R Plc. is preparing its cash budget for next year. The accounts receivable at the
beginning of next year are expected to be $46,000. The budgeted sales are
$540,000 and will occur evenly throughout the year. 80% of the budgeted sales
will be on credit and the remainder will be cash sales. Credit customers pay in the
month following sale. The budgeted cash receipts from customers next year are:
a.$541,000
b.$504,000
c.$442,000
d.$550,000
8. From the options below, select the purpose of a monthly cash budget.
a.to determine whether there will be sufficient cash in the bank to meet requirements
b.to determine next month’s sales volumes
c.to determine the amount of inventory to purchase in the following month
d.to determine when to pay workers’ wages
9. Projected sales for Sommers, Inc., for next year and beginning and ending
inventory data are as follows: Sales: 50 000 units; Beginning inventory: 4 000
units; Desired ending inventory:8 000 units. The selling price is £40 per unit. Each
unit requires four pounds of material which costs £6 per pound. The beginning
inventory of raw materials is 12 000 pounds. The company wants to have 3000
pounds of material in inventory at the end of the year. Sommers' budgeted total
purchase cost of direct materials would be:
a.All are incorrect
b.£1,242,000
c.£1,350,000
d.£1,206,000
e.£1,296,000
10. B Corporation is working on its direct labor budget for the next two months.
Each unit of output requires 0.05 direct labor-hours. The direct labor rate is $7.50
per direct labor-hour. The production budget calls for producing 9,100 units in
May and 8,800 units in June. If the direct labor work force is fully adjusted to the
total direct labor-hours needed each month, what would be the total combined
direct labor cost for the two months?
a.$3,300.00
b.$3,412.50
c.$6,712.50
d.$3,356.25
11. Which of the following is true of master budgets?
a.They aid in quantifying the expectations of all stakeholders
b.They include only financial aspects of a plan and exclude nonfinancial aspects
c.They aid in coordinating what needs to be done to implement a plan
d.They must be administered rigidly after they are committed to
12. Which of the following are most likely to lead to ethical issues when setting
and using a budget?Select ALL that may apply: (chon nhieu dap an)
a.The use of interdivisional trade to reduce the tax liability budget for the entire
organisation
b.Internal politics leading to some divisions having more challenging targets than others
c.Reducing the quality of the organisation’s products in order to increase profits for the
budget period
d.Incentivising managers with rewards based on the achievement of non-financial
targets
e.Reducing learning and development costs in order to satisfy shareholder’s demands
for profit maximization
13. From the options below, select the ONE item that should not be included in
the cash budget.
a.Gain on the disposal of a piece of machinery
b.Receipt of interest from short term investments
c.Payment of tax due on last year’s profits
d.Repayment of the capital amount of a loan
14. The A Company prepares a cash budget for the year 20x2. The balance in
trades receivable on 1/1/20x2 is $460,000. The budgeted sales for the year 20x2 is
$5,400,000, evenly estimated each month of the year. Sales at A company are
normally collected as follows: 20% in the month of sale; 80% in the month
following the sale. Total cash receipts in the year 20x2 are expected to be:
a.$5,040,000
b.$5,500,000
c.$5,890,000
d.$5,410,000
15. In which of the following situations would the use of the imposed budgets not
be appropriate?
a.During the crisis period when the organization’s survival is challenging
b.In decentralized organizations and acting autonomously
c.In a very small business
d.During the period of economic hardship such as Covid-19
16. Drag and drop the options below to fill in the blanks and complete the
following sentences:An imposed …top -down budget.. is defined as a budget
allowance that is set without permission of the ultimate budget holder to have the
opportunity of participating in the budgeting process. This type of budgeting is
sometimes referred to as … non-participative..budgeting.
A/ An …advantage… associated with this style of budgeting is that it reduces the
likelihood of slack being built into the budget.

advantage/  bottom-up budget/   participative/ top-down budget/ non-participative/

disadvantage

17. R Plc is preparing its cash budget for next year. The estimated accounts
payable balance at the beginning of next year is $54,000. The budgeted
purchases for next year are $680,000, occurring evenly throughout the year. It is
estimated that 75% of purchases will be on credit and the remainder will be for
cash. The company pays for credit purchases in the month following purchase.
The budgeted cash payments to suppliers next year are:
a.$691,500
b.$677,333
c.$521,500
d.$637,500
18. The Waverly Company has budgeted sales for next year as follows: Sales in
units: 1st Quarter – 12,000; 2nd Quarter – 14,000; 3rd Quarter – 18,000; 4th
Quarter – 16,000. The ending inventory of finished goods for each quarter should
equal 25% of the next quarter's budgeted sales in units. The finished goods
inventory at the start of the year is 3,000 units. Scheduled production for the third
quarter should be:
a.18,500
b.13,500
c.22,000
d.17,500
19. From the options below, select the one that shows the right combination of
financial statements that would be included in a master budget.
a.A budgeted profit and loss account
b.A budgeted profit and loss account, balance sheet and cash flow statement
c.A budgeted profit and loss account, balance sheet, cash flow statement and functional
budgets
d.A budgeted profit and loss account and balance sheet
20. The S Company makes and sells a single product, Product R. Budgeted sales
for May are $300,000. Gross Margin is budgeted at 30% of sales dollars. If the net
income for May is budgeted at $40,000, the budgeted selling and administrative
expenses are:
a.$102,000
b.$50,000
c.$78,000
d.$133,333
21. From the options below, select the best definition of a flexible budget.
a.A budget with variable production costs only
b.A budget which shows fixed production costs only
c.A budget which shows costs and revenues at different activity levels
d.A budget prepared using a spreadsheet package
22. The below details have been extracted from the accounts payable records of
Q Plc:
- Invoices paid in the month of purchase*: 15% of total value;

- Invoices paid in the first month after purchase: 65% of total value;

- Invoices paid in the second month after purchase: 20% of total value.
This pattern of payments is expected to continue in the future and has been used
to produce the company's cash budget for October to December.

Purchases for October to December are budgeted as follows: October: $140,000;

November: $125,000; December: $150,000. *) A settlement discount of 5% is taken
on invoices paid in the month of purchase.

The amount budgeted to be paid to suppliers in December is:

a.All are incorrect

b.$131,750
c.$130,625
d.$132,250
e.$125,163
23. A budget should/ can do all of the following, except:

a.Be adjusted if new opportunities become available during the year

b.Be prepared by managers from different functional areas working independently of
each other
c.Become the performance standard against which firms can compare the actual results
d.Help management allocate limited resources
24. Tucker's sales budget is as follows: January: €182,000, February: €320,000,
March: €354,000. 20% of sales are paid for immediately in cash. Of the credit
customers, 40% in the month following the sale and are entitled to a 2% discount.
The remaining customers pay two months after the sale is made. What is the
value of sales receipts shown in the company's cash budget for March?

a.€198,754
b.€258,512
c.€212,514
d.€312,098
25. Which of the below statements are TRUE?
(i) Bottom up budgeting is sometimes referred to as non-participatory budgeting;
(ii) The level of employee involvement in bottom up budgeting is compatible with
attitudes towards staff within a traditional just-in-time philosophy;

(iii) Management are less likely to be motivated by involvement when consulted in

setting their department targets;

(iv) Bottom up budget figures are more likely to be realistic and take into account
any new information at the operational level;

(v) Bottom up budgeting is an ideal approach to use when budgeting must be

planned and implemented quickly.

a.(ii) and (v)

b.(ii), (iv) and (v)
c.(ii) and (iv)
d.(i), (ii) and (iv)
26. From the options below, select the best definition of the term ZBB (Zero
Based Budgeting).
a.It is a method of budgeting whereby all activities are re-evalulated each time a budget
is formulated
b.It is a technique that allows the budget to fluctuate with the changing needs of the
company
c.It is a method of budgeting where the revenues and costs of each cost centre must
equal zero
d.All are incorrect definition of the term ZBB
27. Castil Corporation makes and sells a product called a Miniwarp. One Miniwarp
requires 2.5 kilograms of the raw material Jurislon. Budgeted production of
Miniwarps for the next five months is as follows: August: 20,00 units, September:
20,900 units, October: 20,800 units; November: 20,600 units, December: 21,300
units. The company wants to maintain monthly ending inventories of Jurislon
equal to 20% of the following month's production needs. On July 31, this
requirement was not met since only 9,700 kilograms of Jurislon were on hand.
The cost of Jurislon is $5.00 per kilogram. The company wants to prepare a Direct
Materials Purchase Budget for the next five months. The total cost of Jurislon to
be purchased in August is:
a. $250,000
b. $253,750
c. All are incorrect
d. $302,250
e. $451,500
28. The budget where managers must justify all costs based on need is a/ an:
a. incremental budget
b. zero-based budget
c. ABC budget
d. rolling budget
e. participatory budget
29. R Plc is a specialist manufacturer of a particular type of valve used in pumps.
Analysis for the year shows that, when the budgeted level of sales was 15,000
units with a selling price of £250 a unit, the margin of safety was 25%. The
budgeted contribution to sales ratio of the product was 60%. Budgeted fixed
costs for the year were:
a. £1,937,500
b. £1,140,000
c. £2,062,500
d. £1,687,500
30. J Ltd has budgeted production for the next budget period at 50,000 units.
Each production unit requires 3 direct labour hours and the budgeted labour hour
rate is $10 per hour excluding the overtime. The company expects idle time at
20% of the total hours available. Due to a labour shortage, the company expects
that 30% of the hours paid (including the idle time) will be paid at an overtime rate
of time and a half. The budgeted labour cost for the period is:
a. $2,112,500
b. $2,812,500
c. $3,875,000
d. $2,156,250
31. Castil Corporation makes and sells a product called a Miniwarp. One Miniwarp
requires 2.5 kilograms of the raw material Jurislon. Budgeted production of
Miniwarps for the next five months is as follows: August: 20,00 units, September:
20,900 units, October: 20,800 units; November: 20,600 units, December: 21,300
units. The company wants to maintain monthly ending inventories of Jurislon
equal to 20% of the following month's production needs. On July 31, this
requirement was not met since only 9,700 kilograms of Jurislon were on hand.
The cost of Jurislon is $5.00 per kilogram. The company wants to prepare a Direct
Materials Purchase Budget for the next five months. The desired ending inventory
of Jurislon for the month of September is:
a. $52,000
b. All are incorrect
c. $20,800
d. $52,250
e. $20,900
32. E Plc is preparing its cash forecast for the next three months. From the
options below, select the ONE item that should be left out of its calculations.
a. Receipt of a new bank loan raised for the purpose of purchasing new machinery
b. Tax payment due, that relates to last year’s profits
c. Expected gain on the disposal of a piece of land
d. Rental payment on a leased vehicle
33. Drag and drop the options to fill in the blank spaces and complete the short
paragraph given below.

A problem with ____feed-forward___control is that control reports should be

produced regularly, which means that____forecasts______ must be updated
regularly. TO implement a/ an____efficient___ feed-forward control system, it is
therefore necessary to have an efficient ___forecasting ___ system.

budgets / forecasting / internal / feed-forward/ budgeting/ profitable/ efficient/ forecasts/

effective