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1. Why are budgets useful in the planning process? (Points: 2) They provide management with information about the company's past performance. They help communicate goals and provide a basis for evaluation. They guarantee the company will be profitable if it meets its objectives. They enable the budget committee to earn their paycheck. 2. An unrealistic budget is more likely to result when it (Points: 2) has been developed in a top down fashion. has been developed in a bottom up fashion. has been developed by all levels of management. is developed with performance appraisal usages in mind. 3. The direct materials budget shows: Desired ending direct materials 36,000 pounds Total materials required 54,000 pounds Direct materials purchases 47,400 pounds The total direct materials needed for production is (Points: 2) 18,000 pounds. 6,600 pounds. 11,400 pounds. 101,400 pounds. 4. Which of the following would not appear as a fixed expense on a selling and admini-strative expense budget? (Points: 2) Freight-out Office salaries Property taxes Depreciation 5. The following credit sales are budgeted by Roswell Company: January $102,000 February 150,000 March 210,000 April 180,000 The company's past experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following the sale, and 8% in the second month following the sale. The anticipated cash inflow for the month of April is (Points: 2) $185,160. $168,000. $180,000. $176,400. 6. Which one of the following sections would not appear on a cash budget? (Points: 2) Cash receipts Financing Investing Cash disbursements 7. Stanbrough Company has the following budgeted sales: July $100,000, August $150,000, and September $125,000. 40% of the sales are for cash and 60% are on credit. For the credit sales, 50% are collected in the month of sale, and 50% the next month. The total expected cash receipts during September are (Points: 2) $140,000. $132,500. $131,250. $125,000. 8. Which one of the following budgets would be prepared for a manufacturer but not for a merchandiser? (Points: 2) Direct labor budget Cash budget Sales budget Budgeted income statement 9. For a merchandiser, the starting point in the development of the master budget is the (Points: 2) cash budget. sales budget. selling and administrative expenses budget. budgeted income statement. 10. A purchases budget is used instead of a production budget by (Points: 2) merchandising companies. service enterprises. not-for-profit organizations. manufacturing companies.

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