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Course # 171011
Modern Budgeting for Profit Planning & Control
based on the electronic .pdf file(s):

Modern Budgeting for Profit Planning & Control
by: Dr. Jae K. Shim, Ph.D., 2009, 232 pages

15 CPE Credit Hours

A P E X C P E . C O M  . . . . .  1.877.317.9047  . . . . .  support@apexcpe.com

Chapter 1 - The What And Why Of Budgeting

1.    Types of budgets may not include:     4-5
2.    A budget is a financial plan to control future operations and express as dollars, units, hours, or manpower.   1

Chapter 2 - Strategic Planning And Budgeting

3.     Long-term plans should not consider one of the following:   20
New opportunities
Historical goals
Financial strengths
4.    Budget accuracy ratios include:     28
Actual sales/budget sales
Actual cost/budget cost
Actual profit/ budget profit
All the above
5.    Employee performance may be measured by:     29
Computing revenue per employee
Man hours per employee
Production volume to man-hours
All the above
6.    Planning is based on long-term resources allotment and should never be linked to short-term and intermediate goals. T F   19

Chapter 3 - Profit Planning: Targeting And Reaching Achievable Goals

7.    A profit plan may be stated in terms of:   43
Target return on investment (e.g., 20% roi)
Growth in earnings (e.g., 5%)
Percentage of sales
All of the above
8.     Profit plans should always be short-term and for less then a year such as quarterly or semi-annual. T F   32

Chapter 4 - Administering The Budget: Reports, Analyses, And Evaluations

9.    The budget reports are not used for:     44
Product costing
10.    The budget sheet should not include:     49
Cost formulas
Charitable donation formulas
Changes in operating conditions
Foreseeable conditions
11.    The three major types of budget reports are for: planning control, and information. T F   44

Chapter 5 - Cost Behavior: Emphasis On Flexible Budgeting And Contribution Margin

12.    An understanding of cost behavior is helpful to managers for:     53
Flexible budgeting
Contribution margin analysis
Appraisal of divisional performance
All the above
13.    Mixed factory overhead (mixed costs) do not include:     54
Clean up costs
Maintenance and repairs
14.    The high-low method uses two extreme data points to determine the values of ; a (fixed cost portion) and b (variable rate) in the equation:    54
X = b + c
Y = a + bx
B + c = x û y
C = b (y + x)
15.    The Kramer Company developed a cost function for manufacturing overhead costs of Y = $14,000 + $5x. Estimated manufacturing overhead costs at 20,000 units of production would be   57
16.    The letter y in the standard regression equation of y = a + bx is best described as the:   54
Dependent variable
Independent variable
Coefficient of determination.
17.    In the standard regression equation of y = a + bx, the letter b is best described as the:   54
Dependent variable
Coefficient of determination.
18.    The letter a in the standard regression equation of y = a + bx is best described as the:   54
Dependent variable
Coefficient of determination.
19.    Mount Company incurred a total cost of $8,600 to produce 400 units of pulp Each unit of pulp required 5 direct labor hours to complete. What is the total fixed costs if the variable cost was $1.50 per direct labor-hour?   57

Chapter 6 - Responsibility Accounting And Reporting To Management

20.    The cost systems of most companies fail when it comes to:   65
Product cost
Inventory pricing
Cost control
All the above
21.    Costs control themselves when left unchecked. T F   65

Chapter 7 - Master Budget: Genesis Of Forecasting And Profit Planning

22.    Typical master budgets include all except:   76
Sales budget
Pro-rata budget
Direct labor budget
Cash receipts budget
23.    Selling and administrative expenses don not include:   85
Factory utilities
Commission on sales
Bad debts
24.    Which one of the following statements is not true?   86
No collections are made in the month of sales
80% of the sales of any month are collected in the following month
Collections are always made by outside agencies
19% of sales are collected in the second following month
25.    A pro forma financial statement:   76
Is a financial statement for past periods
Is a projected or budgeted financial statement
Is presented for the form but contains no dollar amounts
None of the above
26.    The starting point in preparing a comprehensive budget for a manufacturing company limited by its ability to produce and not by its ability to sell is a(n):   81
Sales forecast
Estimate of productive capacity
Estimate of cash receipts and disbursements
Projection of fixed asset acquisitions.
27.    Jiggy company plans to sell 33,000 units during the month of May. The company plans to have 2,500 units on hand at the end of the month. If 1,200 units are on hand on May 1, how many units must be produced during May?   81
28.    A budget is a projected or planned income statement. T F   76

Chapter 8 - Using Variance Analysis To Evaluate Performance

29.    Variance analysis is a tool used to:   92
Evaluate financial performance
Evaluate customer satisfaction
Determine cost ratios
Identify and control product compatibility
30.     Reasons for unfavorable materials variances do not include:   97
Total quality management (TQM)
Overstated prices
Failure to detect defective goods
Inefficient labor or poor supervision
31.    Price variances focus on the difference between   96
Actual price and standard price for actual quantity allowed for units actually produced
Actual price and standard price for standard quantity allowed for units actually produced
Actual price and standard price for actual quantity allowed for estimated activity
None of the above
32.    Variance analysis can spotlight positive performance and can be used to reward superior performance by employees. T F   92

Chapter 9 - Budgeting Sales And Sales Forecasts

33.    The starting point of the master budget is always the:   113
Cash receipts budget
Production budget
Sales budget
None of the above
34.    The personnel department requires a number of forecasts in planning for human resource which may include trends in:   114
Labor turnover
Retirement age
All the above
35.    Sales forecasts are crude estimates and should never be used for budgets, profit planning, or capital expenditure analysis. T F   113

Chapter 10 - Budgeting Manufacturing Costs

36.    Manufacturing costs are associated with:   117
Direct materials
Direct labor
Factory overhead
All the above
37.    A static budget is geared toward:   133
Only one level of activity
Many independent levels of activity
Only interrelated levels of activity
None of the above
38.    Basic steps in preparing a flexible budget do not include:   134
Determine levels of activities
Determine the relevant range activity is expected to fluctuate
Analyze costs incurred over the relevant range
Separate costs by behavior

Chapter 11 - Budgeting For Sales, Advertisinbg, And Distribution Expenses

39.    Advertising and promotion expense budgets can include:   144
Internet advertising
Television advertising
Magazine advertising
All the above
40.    Measures of advertising do not include:   145
Trends in advertising cost to sales
Advertising by alleged incurred costs
Advertising cost per unit sold
Advertising cost per sales dollars
41.    A budget for automobile expenses may be based on   138
Machine hours
42.    An advertising budget may be developed based on   144
Percentage of sales or profit
Unit sales
Objective task
All of the above
43.    The marketing budget should never depend on the type of product, service, competition or market share but on what the market will bear. T F   138

Chapter 12 - Budgeting General And Administrative Expenses

44.    In budgeting salaries there should be included a provision for salary increases, sick leave time, vacations, holidays and fringe benefits. T F   151
45.    Depreciation on the office equipment would appear in which of the following budgets?   152
Cash budget
Production budget
Selling expenses budget
General and administrative expenses budget

Chapter 13 - Budgeting Research And Development

46.    The direct and indirect costs associated with R & D do not include:   158
Personnel costs
Personal costs
Depreciation on r & d
Rentals and travel
47.    The R & D budget may be based on all except:   159
A percentage of creative activity
Estimated costs of specific projects
A percentage of profit
A percentage of operating income
48.    The manager should not keep track of the following with respect to R & D:   162
R & D to net sales
R & D by product
Non-productive incentives
Estimated project costs
49.    Research and development (R & D) should never be justified on the return obtained or incurred and risks assumed but on the possible potential. T F   158

Chapter 14 - Cash Flow Forecasting And Cash Budgeting

50.    A forecast of cash collections and potential write-offs of accounts receivable is essential in:   165
Sales budgeting
Production budgeting
Cash budgeting
All the above
51.    Nonoperating components of a cash budget do not include:   168
Collections form customers
Loan proceeds
52.    Which of the following appears in the cash budget?   168
Interest payments
Purchase of equipment on credit
All of the above

Chapter 15 - Use Of A Spreadsheet Program And Software For Budgeting

53.    Budgeting packages include:   174-175
Comshare Budget Plus
Encore Plus
Budget Maestro
All the above
54.    The latest generation of budgeting and planning (b&p) software, often known as active financial planning software, are characterized by:   176
Forecasting analytics
Business intelligence
All of the above
55.    Which of the following represents the best reason for “what-if” (sensitivity) analysis when preparing master budgets?   172
Reconcile long-term estimates with short-term realities
Recognize uncertainty surrounding projections
Lend credibility to estimated values
Detect erroneous projections

Chapter 16 - Budgeting Capital Expenditures

56.    Factors to consider in determining capital expenditure do not include:   180-181
Short-term interest rates
Rate of return
Budget ceiling
Tax rates
57.    Capital expenditure policy should not take into account:   181-182
Desired rate of return
Cost impact
Asset life
58.    Capital expenditures do not include replacing machinery to economize on costs. T F   178

Chapter 17 - Zero-Base Budgeting: Priority Budgeting For Best Resource Allocation

59.    Zero-base budgeting (ZBB) system includes all except:   192
Starts with base zero
Examines cost/benefit for all activities
Starts with dollars
Starts with purposes and activities
60.    A decision package will not contain:   194
Description of activities and reason to carry it out
Statement of objectives and benefits to be derived
The priorities established
A flexible (dynamic) input
61.    Program budgeting includes:   197
All the above
62.    Zero Based budgeting requires managers to:   191
Justify expenditures that are increases over the prior period's budgeted amount
Justify all expenditures, not just increases over last year's amount
Maintain a full-year budget intact at all times
Maintain a budget with zero increases over the prior period
63.    Zero base budgeting (ZBB) is a priority form of budgeting ranking activities such as products and services. T F   191
64.    An objective of zero-based budgeting is to base the current year's budget on the expenditures of the previous year    191
65.    The major feature of zero-based budgeting (ZBB) is that it questions each activity and determines whether it should be maintained as it is, reduced, or eliminated. T/F    191

Chapter 18 - Budgeting For Service Organizations

66.    Which one of the following statements is not true?    199
Planning and control are critical functions in service business
The practice of budgeting is probably not as well developed in service companies as it is in manufacturing firms.
In manufacturing businesses, budgeting is forced upon the business by the need to keep sales and pro¡duction coordinated.
In service companies, the business activity rarely requires human effort.
67.    Service industries can include all except:   201
Training centers
68.    Which of the following budgets are identical in a service firm?   204
The cash receipts budget and the cash payments budget
The production budget and the materials purchases budget
The sales budget and the production budget
The materials purchases budget and the cash payments budget
69.    Planning and control are critical functions in all business, whether they produce and sell goods or provide services. T F   199

Chapter 19 - Budgeting For Nonprofit Organizations

70.    Government funds do not include:   208
General fund
Slush fund
Special assessment fund
Capital projects fund
71.    Interfund transactions that are not loans or advances, reimbursements, or quasi-external transactions are classified as:   211
Transfers of tax revenue from a special revenue fund
Transfer of bonds
Transfer of assets
Transfer of services
72.    Which of the following organizations would be most likely to use budgets to authorize expenditure of funds?   210
Service organizations
Retail merchants
Governmental organizations
Organizations seeking to enhance internal control
73.    Nonprofit organizations include voluntary support organizations, governments and state schools, and community-based organizations. T F   206
74.    Gold County received goods that had been approved for purchase but for which payment had not yet been made. Should the accounts listed below be decreased?    211
Encumbrances - No Expenditures - No
Encumbrances - No Expenditures - Yes
Encumbrances - Yes Expenditures - No
Encumbrances - Yes Expenditures - Yes
75.    The estimated revenues control account of a governmental unit is credited when    211
Actual revenues are recorded.
Actual revenues are collected.
The budget (appropriation) is recorded.
The budget is closed at the end of the year.