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SAMPLE MCQ
These MCQ are posted on blackboard to high light and complement certain
aspects of the topic, facilitate those students who may have missed my lecture,
balance traditional with internet based learning and overall enhance student’s
learning. The MCQ are not meant to suggest what questions may be in the
exams, replace textbook studying and/ or preparing your homework of any
kind.
George
MULTIPLE CHOICE
16. The _______________ is responsible for directing and coordinating the overall budgeting process.
a. budget committee
b. president
c. budget director
d. treasurer
ANS: C
19. Amy Company produces and sells bikes. It expects to sell 15,000 bikes in March 2011 and had 1,200
bikes in finished goods inventory at the end of February 2011. Amy Company would like to complete
operations in March with at least 1,500 completed bikes in inventory. The bikes sell for $100 each.
20. Amy Company produces and sells bikes. It expects to sell 15,000 bikes in March 2011 and had 1,200
bikes in finished goods inventory at the end of February 2011. Amy Company would like to complete
operations in March with at least 1,500 completed bikes in inventory. The bikes sell for $100 each.
Figure 8-1
Canceco Company produces and sells pillows. It expects to sell 10,000 pillows in the year 2012 and had
1,000 pillows in finished goods inventory at the end of 2011. Canceco would like to complete operations
in the year 2012 with at least 1,250 completed pillows in inventory. There is no ending work-in-process
inventory. The pillows sell for $5 each.
21. Refer to Figure 8-1. What would be the total sales for the year 2012?
a. $50,000
b. $55,000
c. $56,250
d. $51,250
ANS: A
SUPPORTING CALCULATIONS:
10,000 $5 = $50,000
22. Refer to Figure 8-1. How many pillows would be produced in the year 2012?
a. 10,000 pillows
b. 11,000 pillows
c. 11,250 pillows
d. 10,250 pillows
ANS: D
SUPPORTING CALCULATIONS:
10,000 + 1,250 – 1,000 = 10,250 pillows
Figure 8-2
Oriental Lamp Company manufactures lamps. The estimated number of lamp sales for the last three
months of 2011 are as follows:
Month Sales
October 10,000
November 14,000
December 13,000
Finished goods inventory at the end of September was 3,000 units. Ending finished goods inventory is
budgeted to equal 25 percent of the next month's sales. Oriental Lamp expects to sell the lamps for $25
each. January 2011 sales is projected at 16,000 lamps.
23. Refer to Figure 8-2.What is the expected sales revenue for December?
a. $250,000
b. $350,000
c. $325,000
d. $100,000
ANS: C
SUPPORTING CALCULATIONS:
13,000 $25 = $325,000
24. Refer to Figure 8-2. How many lamps should be produced in November?
a. 11,000 lamps
b. 10,500 lamps
c. 14,000 lamps
d. 13,750 lamps
ANS: D
SUPPORTING CALCULATIONS:
(13,000 .25) + 14,000 – (14,000 .25) = 13,750 lamps
25. Refer to Figure 8-2. In going from the sales budget to the production budget, adjustments to the sales
budget need to be made for
a. finished goods inventories.
b. cash receipts.
c. factory overhead costs.
d. selling expenses.
ANS: A
27. Ben Company has the following sales forecast for the next quarter: April, 20,000 units; May, 24,000
units; June, 28,000 units. Sales totaled 16,000 units in March. The March finished goods inventory was
4,000 units. End-of-month finished goods inventory levels are planned to be equal to 20 percent of the
next month's planned sales.
28. Ben Company has the following sales forecast for the next quarter: April, 20,000 units; May, 24,000
units; June, 28,000 units. Sales totaled 16,000 units in March. The March finished goods inventory was
4,000 units. End-of-month finished goods inventory levels are planned to be equal to 20 percent of the
next month's planned sales.
Month Sales
April $200,000
May 250,000
June 150,000
July 100,000
The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20
percent of the next month's sales.
Month Sales
June $160,000
July 200,000
August 120,000
September 80,000
Reject City has a selling price of $5 per unit and expects to maintain ending inventories equal to 25
percent of next month's sales.
31. General Corporation manufactures boxes. The estimated number of boxes sold for the first three months
of 2011 are:
Month Sales
January 3,000
February 4,200
March 3,900
Finished goods inventory at the end of December was 900 units. Ending finished goods inventory is equal
to 20 percent of the next month's sales. General Corporation expects to sell the boxes for $5 each. April
2011 sales is projected at 4,500 boxes.
Month Sales
January 3,000
February 4,200
March 3,900
Finished goods inventory at the end of December was 900 units. Ending finished goods inventory is equal
to 20 percent of the next month's sales. General Corporation expects to sell the boxes for $5 each. April
2011 sales is projected at 4,500 boxes.
33. General Corporation manufactures boxes. The estimated number of boxes sold for the first three months
of 2011 are as follows:
Month Sales
January 3,000
February 4,200
March 3,900
Finished goods inventory at the end of December was 900 units. Ending finished goods inventory is equal
to 20 percent of the next month's sales. General Corporation expects to sell the boxes for $5 each. April
2011 sales is projected at 4,500 boxes.
34. Gerald Company manufactures books. Manufacturing a book takes 10 units of A1 and 1 unit of A2.
Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively. Beginning
inventory is 4,000 units of A1 and 30 units of A2. The ending inventory of A1 is planned to decrease 500
units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the
next two months.
How many units of A1 does Gerald Company expect to use in production during the second month?
a. 12,000 units
b. 12,500 units
c. 10,000 units
d. 10,750 units
ANS: A
SUPPORTING CALCULATIONS:
1,200 10 = 12,000 units
35. Gerald Company manufactures books. Manufacturing a book takes 10 units of A1 and 1 unit of A2.
Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively. Beginning
inventory is 4,000 units of A1 and 30 units of A2. The ending inventory of A1 is planned to decrease 500
units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the
next two months.
How many units of A2 are expected in the raw material inventory at the end of the second month?
a. 30 units
b. 45 units
c. 40 units
d. 35 units
ANS: C
SUPPORTING CALCULATIONS:
30 + 5 + 5 = 40 units
36. Gerald Company manufactures books. Manufacturing a book takes 10 units of A1 and 1 unit of A2.
Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively. Beginning
inventory is 4,000 units of A1 and 30 units of A2. The ending inventory of A1 is planned to decrease 500
units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the
next two months.
Based on this information, the number of units of A1 that needs to be purchased by Gerald during the first
month is
a. 9,500 units.
b. 10,000 units.
c. 1,000 units.
d. 10,500 units.
ANS: A
SUPPORTING CALCULATIONS:
(1,000 10) + 3,500 – 4,000 = 9,500 units
Figure 8-3
Bug Company manufactures buggies. Manufacturing a buggy takes 20 units of wood and 1 unit of steel.
Scheduled production of buggies for the next two months is 500 and 600 units, respectively. Beginning
inventory is 4,000 units of wood and 30 units of steel. The ending inventory of wood is planned to
decrease 500 units in each of the next two months, and the steel inventory is expected to increase 5 units
in each of the next two months.
37. Refer to Figure 8-3. How many units of wood are expected to be used in production during the second
month?
a. 12,500 units
b. 10,000 units
c. 15,000 units
d. 12,000 units
ANS: D
SUPPORTING CALCULATIONS:
600 20 = 12,000 units
38. Refer to Figure 8-3. How many units of steel are expected in the material inventory at the end of the
second month?
a. 30 units
b. 45 units
c. 40 units
d. 35 units
ANS: C
SUPPORTING CALCULATIONS:
30 + 5 + 5 = 40 units
39. Refer to Figure 8-3. What is the number of units of wood that need to be purchased by Bug Company
during the first month?
a. 1,000 units
b. 9,500 units
c. 500 units
d. 10,000 units
ANS: B
SUPPORTING CALCULATIONS:
(500 20) + 3,500 – 4,000 = 9,500 units
40. Jordan Manufacturing Company expects to incur the following per unit costs for 1,000 units of
production:
What is the total amount of direct labor included in the direct labor budget?
a. $6,000
b. $28,500
c. $6
d. $7,500
ANS: A
SUPPORTING CALCULATIONS:
$6 1,000 = $6,000
41. Jordan Manufacturing Company expects to incur the following per unit costs for 1,000 units of
production:
Direct materials 3 lb. @ $5 = $15
Direct labor 1 hr @ $6 = $6
Variable overhead 75% of direct labor costs
Fixed overhead 50% of direct labor costs
What is the total amount of overhead included in the overhead budget?
a. $4,500
b. $3,000
c. $11,250
d. $7,500
ANS: D
SUPPORTING CALCULATIONS:
$6,000 (0.75 + 0.50) = $7,500
42. Judy's Company has a sales budget for next month of $150,000. Cost of goods sold is expected to be 40
percent of sales. All goods are purchased in the month used and paid for in the month following purchase.
The beginning inventory of merchandise is $5,000, and an ending inventory of $6,000 is desired.
Beginning accounts payable is $38,000.
How much merchandise inventory will Judy's need to purchase next month?
a. $61,000
b. $60,000
c. $65,000
d. $59,000
ANS: A
SUPPORTING CALCULATIONS:
$60,000 + $6,000 – $5,000 = $61,000
43. Judy's Company has a sales budget for next month of $150,000. Cost of goods sold is expected to be 40
percent of sales. All goods are purchased in the month used and paid for in the month following purchase.
The beginning inventory of merchandise is $5,000, and an ending inventory of $6,000 is desired.
Beginning accounts payable is $38,000.
44. Olson Company has a sales budget for next month of $50,000. Cost of goods sold is expected to be 60
percent of sales. All goods are purchased in the month used and paid for in the month following their
purchase. The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is
desired. Beginning accounts payable is $13,000.
How much merchandise inventory will Olson Company need to purchase next month?
a. $29,000
b. $29,500
c. $30,000
d. $30,500
ANS: D
SUPPORTING CALCULATIONS:
($50,000 0.60) + $2,000 – $1,500 = $30,500
45. Olson Company has a sales budget for next month of $50,000. Cost of goods sold is expected to be 60
percent of sales. All goods are purchased in the month used and paid for in the month following their
purchase. The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is
desired. Beginning accounts payable is $13,000.