previous year's 4th quarter ending inventory of 700 units meets the minimum requirement.

The expected production in the current 2nd Quarter is:

a. 5,300 units
b. 6,800 units
c. 4,500 units
d. 5,000 units
26-12.
Time Period 1st Quarter 2nd Quarter 3rd Quarter
Beginning finished goods (units) 5,000 4,000 12,000
Projected sales units 50,000 40,000 120,000
Desired ending finished goods (units) 4,000 12,000 15,000
Direct labour completes 2 units per hour at $8 per hour.
Which of the following statements
Multiple Choice Quiz

26-1. Which of the following is not a benefit of budgeting?

a. It promotes study, research, and a focus on the future

b. It is a source of motivation
c. It will prevent net losses from occurring
d. It is a means of coordinating business activities
26-2. Which is not a responsibility of the budget committee?

a. Providing central guidance

b. Providing continued communication of the budget to the organization
c. Rejecting department budgets that do not reflect realistic amounts
d. Preparation and development of department budgets
26-3. In which type of budgets is a budget period added as one budget period elapses?

a. Financial budgets
b. Rolling budgets
c. Production budgets
d. Selling and administrative expense budgets
26-4. Which of the following budgets is normally prepared first?

a. Cash budget
b. Sales budget
c. Merchandise purchases budget
d. Selling expense budget
26-5. The following projections have been made:

Cash sales, $380,000.

Beginning cash balance, $30,000.
Operating expenses of $420,000, including depreciation of $20,000
Interest expense of $12,000 is included in operating expenses
Borrowing, $50,000.
End-of-period accrued liabilities of $20,000 for operating expenses.
What is the projected ending cash balance?
a. $80,000
b. $40,000
c. $52,000
d. $48,000
26-6.
Sales Budget
Month October November December January
Credit Sales $40,000 $50,000 $60,000 $35,000
Expected cash collection pattern is 50% in the month of sale, 30% in the following month,
and 15% in the second following month. Five percent of the credit sales are uncollectible.
December collections will be:

a. $35,000
b. $51,000
c. $54,000
d. $50,000
26-7.
Sales Budget
Month October November December January
Credit Sales $40,000 $50,000 $60,000 $35,000
Expected cash collection pattern is 50% in the month of sale, 30% in the following month,
and 15% in the second following month. Five percent of the credit sales are uncollectible.
November collections were $46,000. September sales were:

a. $45,000
b. $60,000
c. $50,000
d. $55,000
26-8. Which of the following statements is true?

a. Budgeted bal. sheets are not dependent upon budgeted inc. statements
b. Budgeted income statements include amortization expenses
c. Cash budgets include amortization expenses
d. Production bud. shows the cost of the raw material to be purchased
26-9. Which of the following budgets is prepared last?

a. Budgeted income statement

b. Capital expenditures budget
c. Manufacturing budget
d. Budgeted balance sheet
26-10. A manufacturing firm would not have need for which of the following budgets?

a. Sales budget
 b. Production budget
c. Cash budget
d. Merchandise purchases budget
26-11.
Production Budget
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Expected sales 7,000 5,000 8,000 6,000
Units produced 6,800 ———To be determined———
The previous year's 4th quarter ending inventory of 700 units meets the minimum
requirement. The expected production in the current 2nd Quarter is:

a. 5,300 units
b. 6,800 units
c. 4,500 units
d. 5,000 units
26-12.
Time Period 1st Quarter 2nd Quarter 3rd Quarter
Beginning finished goods (units) 5,000 4,000 12,000
Projected sales units 50,000 40,000 120,000
Desired ending finished goods (units) 4,000 12,000 15,000
Direct labour completes 2 units per hour at $8 per hour.
Which of the following statements is false?

a. Direct labour hours for the 3rd quarter will be 66,000

b. Direct labour cost for the 4th quarter cannot be determined
c. Direct labour cost for the 2nd quarter will be $192,000
d. 150,000 sales units are projected for the 4th quarter
26-13.
Budgeted production (units) 9,000 10,000 8,500
Labour requirements per unit (hours) 1.5 1.5 1.5
Total labour hours needed 13,500 15,000 12,750
Total labour dollars 60,750 72,000 61,200
The labour rate per hour:

a. remained constant over the budgeted production

b. decreased over the budgeted production
c. increased over the budgeted production
d. cannot be determined from the information provided
26-14.
Time period 1st qtr 2nd qtr
Budgeted units of production 7,000 7,500
Budgeted variable overhead costs 15,000 18,750
Budgeted fixed overhead costs ? ?
Budgeted amortization included in total overhead 3,000 3,000
Budgeted cash disbursements for total overhead 20,000 23,750
All budgeted overhead costs, except for budgeted fixed overhead, are shown. What is the
amount of budgeted fixed overhead?

a. $8,000
b. $6,000
c. $9,000
d. $3,000