1.

In developing an annual master budget, individual budget schedules are

prepared. The budget schedule that would provide the necessary input data for
the direct labor budget would be the *
Production budget.
Schedule of cash receipts and disbursements.
Raw materials purchases budget.
Sales forecast.

2. Ariel Inc. has projected sales to be P260,000 in June , P270,000 in July and
P300,000 in August . Ariel collects 30% of a month's sales in the month of sale,
50% in the month following the sale, and 20% in the second month following the
sale. What is the AR Balance on August 31? *
P210,000
Some other number
P90,000
P264,000

3. It involves the forecasting of realizable results over a definite period or

periods, the planning and coordination of the various operations and functions
of the business to attain realizable results, and control of variations from the
approved plan. *
Internal control
Vouching
Budgeting
Cost control

4. The budgeted cash receipts for March is *

1 point

P158,304
P155,808
P135,840
P118,368

5. Budgeting is *
1 point

A technique for comparing actual costs with standard costs.

A technique for determining the cost of manufactured products.
A means of product costing that emphasizes activities as basic cost objects.
The process of creating a formal plan and translating goals into a quantitative format .

6. Which of the following statements is correct? *

1 point

Budgets foster the planning of operations and facilitate the fixing of blame for missed budget
predictions.
Budgets define responsibility centers and promote communication and coordination among
organization segments.
Budgets foster the planning of operations, provide a framework for performance
evaluation, and promote communication and coordination among organization segments.
Budgets ensure goal congruence between superiors and subordinates.

7. The starting point in preparing a comprehensive budget is *

1 point

The sales forecast

The production budget
The budgeted income statement
The cash budget

8. A life-cycle budget is a budgeting tool or process *

1 point

Which requires each manager to justify his/her unit's entire budget each budget period.
In which estimates of revenues and expenses are prepared for each product beginning
with the product's research and development phase and traced through its customer
support phase.
Which emphasizes the cost of activities.
Which summarizes all of a company's budgets and plans.

9. Ariel Company has budgeted sales of 90,000 units in January; 120,000 units in
February; and 180,000 units in March. The company has 20,000 units on hand on
January 1. If Ariel Company requires an ending inventory of finished goods
equal to 20% of the following month's/sales, the budgeted production during
February should be *
1 point

120,000
96,000
132,000
108,000
10. Ariel Company manufactures a single product. The company keeps ending
inventory of raw materials at 50% of the coming month's budgeted production.
11. Each unit of product requires 3 pounds of materials. The production budget
is (in units): May P1,000; June P1,200; July P1,300; August 1,600. Determine the
raw materials purchases in July. *
1 point

4,350 pounds
3,900 pounds
2,400 pounds
1,450 pounds

12. Budgets are related to the following management functions, except *

1 point

Control
Planning
None of the above
Performance evaluation

13. How much is the budgeted cash receipts in July? *

1 point

P208,000
P104,000
P288,000
P144,000

14. A budget manual describes how a budget is to be prepared. It usually

includes a budget planning calendar and *
1 point

Distribution instructions for budget schedules.

A chart of accounts.
Documentation of the accounting system software.
The company policies regarding the authorization of transactions.

15. How many pounds of DM should be budgeted for purchase during the 6-
month period? *
1 point

88,000
100,000
96,000
92,000

16. Ariel Co. budgeted merchandise purchases of 40,000 units next month. The
expected beginning inventory is 12,000 units and the desired inventory at the
end of next month is 15,000 units. Budgeted sales in units for next month is *
1 point

37,000
55,000
43,000
52,000

17. Which of the following statements regarding budgeting is incorrect? *

1 point

Planning and control are the essential features of the budgeting process.
Budgeting provides a measuring device to which subsequent performance are compared and
evaluated.
Capital expenditures budget shows the availability of idle cash for investments.
Budget preparation is not the sole responsibility of any organizational segment and is
prepared by combining efforts of many individuals.

18. The master budget *

1 point

Reflects only those costs controllable by the individual manager.

Is composed of the operating and financial budgets.
Is the budget of the master of the firm.
Shows a comparison of forecasted and actual results.

19. The budgeted cost of goods sold is *

1 point
P1,400,000
P1,820,000
P1,764,000
P1,860,000

20. In budgeting, a planning calendar is the *

1 point

Schedule of activities for the development and adoption of the budget.

Schedule of dates when new products should be launched in the market.
Schedule of dates at which goals are to be accurately met.
Calendar year covered by the budget.

21. Which of the following is not a primary purpose of preparing a budget? *

1 point

To make sure that the company expands its operations.

To communicate the company's plans throughout the entire business organization.
To provide a basis for comparison of actual performance.
To control revenues and expenses during a given period.

22. The budgeted purchases of raw materials is *

1 point
P574,800
P614,800
P1,916,000
P 534,800

23. What would be the total cash receipts in May? *

1 point

P3,000
P8,150
Some other number
P8,705

24. Which of the following is not considered to be a benefit of participative

budgeting? *
1 point

Participative budgeting involves those most directly affected.

Top management need not be concerned with the overall profitability of the current
operations because lower level managers set the final target for the budget.
Participative budgeting improves accountability because managers are held responsible for
reaching their goals, such that they cannot shift their responsibility by blaming the unrealistic
goals demanded by the budget.
Participative budgeting results in greater support of the organization because individuals at all
levels of the organization are recognized as being part of the team.

25. In the budgeting process, top management should *

1 point

Be involved, including using the budget process to communicate goals.

Separate the budgeting process and the business planning process into two separate processes.
Be involved only in the approval process.
Limit their involvement because they lack the detailed knowledge of the daily operations.

26. How many pieces of materials should the company plan to purchase in
January? *
1 point

567,000
552,500
600,000
468,000

27. Unlike in a private-sector budget, this type of budget is not only a financial
plan and a basis for performance evaluation, but also an expression of public
policy and a form of control having the force of law. *
1 point

Governmental Budget
Personal Budget
Legal budget
Public Budget

28. The following are parts of the operating budget, except *

1 point

Materials Cost Budget

Capital Budget
Sales Budget
Production Budget

29. The budgeted merchandise purchases for the month of May is *
1 point
P960,000
P1,088,000
P990,080
P832,000

30. If the company plans to produce 50,000 units in January, how much is the
factory overhead costs? *
1 point

P5,000,000
P5,050,300
P15,000,000
P20,000,000

31. How may equivalent units should Ariel Corporation plan to produce during
the budget period? *
1 point

7,200
7,300
7,400
7,000