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Question(s) / Instruction(s):

"Budgetary slack" occurs when:

a. Employees refuse to adhere to budgeted plans and operations.

b. The budget is so difficult to meet that employee’s slack-off from work.

c. An authoritative, or imposed, budgeting process is used.

d. Employees ask for resources in excess of what they need, in order to "meet" budget objectives.

e. Employees ask for fewer resources than they need, in order to continuously improve.


Revision of a completed and approved budget:

a. Should be conducted whenever necessary.

b. Should occur only under very special circumstances.

c. Should be discouraged.

d. May discourage diligence in its initial preparation.

e. Is never needed under Kaizen budgeting.


A plan that states the units or costs of merchandise to be purchased by a retailer or wholesaler during the budget period is called a:

a. Production budget.

b. Merchandise purchases budget.

c. Accounts payable budget.

d. Cash payments budget.

e. Cost of goods sold budget.



Which of the following budgets is not a financial budget?

a. Sales budget.

b. Cash receipts budget.

c. Budgeted cash-flow statement.

d. Budgeted balance sheet.

e. Cash payments budget.


Sales forecasting by its nature is:

a)      Precise.

b)      Deterministic in nature.

c)       Objective.

d)      Somewhat subjective.

e)      Mechanical.


The focal point in budgeting for a service organization is likely to be:

a)      Capital assets acquisition.

b)      Raw material utilization.

c)       Human resource planning.

d)      Profit maximization.

e)      Goal definition.


Financial budgets include the:

a)      Pro forma balance sheet.

b)      Projected income statement.

c)       Budgeted selling and administrative expenses.

d)      Sales budget.

e)      Budgeted retained earnings statement.


Which of the following is not an advantage of using a "highly achievable target" when constructing budgets?

a)      Increasing managers' commitment to achieving budget targets.

b)      Increasing the risk that managers will engage in "earnings management" behavior.

c)       Improving predictability of earnings or operating results.

d)      Decreasing the cost of achieving organizational control.

e)      Enhancing the usefulness of a budget as a planning and coordinating tool.



Consistency between goals of the firm and the goals of its employees is:

a. Goal optimization.

b. Goal conformance.

c. Goal congruence.

d. Goal dispersion.

e. Goal compensation.


Wild West Fashion expects the total costs of goods sold to be $30,000 in November and $60,000 in December for one of its young adult suits. Management also wants to have on hand at the end of each month 10 percent of the expected total cost of sales for the following month. What dollar amount of suits should be purchased in November?

a. $26,000.

b. $27,000.

c. $33,000.

d. $36,000.

e. $60,000.


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