Please take your time to answer these questions correctly. Take as much time as you want __________________________________________________________________ 1) Which of the following is not a benefit of budgeting? a) Management can plan ahead. b) An early warning system is provided for potential problems. c) It enables disciplinary action to be taken at every level of responsibility. d) The coordination of activities is facilitated.

2) A budget: a) is the responsibility of management accountants. b) is the primary method of communicating agreed-upon objectives throughout an organization. c) ignores past performance because it represents management's plans for a future time period. d) may promote efficiency but has no role in evaluating performance.

3) The essentials of effective budgeting do not include: a) top-down budgeting. b) management acceptance. c) research and analysis. d) sound organizational structure.

4) Compared to budgeting, long-range planning generally has the: a) same amount of detail. b) longer time period. c) same emphasis. d) same time period.

5) A sales budget is: a) derived from the production budget. b) management's best estimate of sales revenue for the year. c) not the starting point for the master budget. d) prepared only for credit sales.

6) The formula for the production budget is budgeted sales in units plus: a) desired ending merchandise inventory less beginning merchandise inventory. b) beginning finished goods units less desired ending finished goods units. c) desired ending direct materials units less beginning direct materials units. d) desired ending finished goods units less beginning finished goods units.

7) Direct materials inventories are kept in pounds in Byrd Company, and the total pounds of direct materials needed for production is 9,500. If the beginning inventory is 1,000 pounds and the desired ending inventory is 2,200 pounds, the total pounds to be purchased is: a) 9,400. b) 9,500. c) 9,700. d) 10,700.

8) The formula for computing the direct labor budget is to multiply the direct labor cost per hour by the: a) total required direct labor hours. b) physical units to be produced. c) equivalent units to be produced. d) No correct answer is given.

9) Each of the following budgets is used in preparing the budgeted income statement except the: a) sales budget. b) selling and administrative expense budget. c) capital expenditure budget. d) direct labor budget.

10) The budgeted income statement is: a) the end-product of the operating budgets. b) the end-product of the financial budgets. c) the starting point of the master budget. d) dependent on cash receipts and cash disbursements.

11)For Gundy Company, units to be produced are 5,000 in quarter 1 and 7,000 in quarter 2. It takes 1.6 hours to make a finished unit, and the expected hourly wage rate is $15 per hour. Prepare a direct labor budget by quarters for the 6 months ending June 30, 2020.

12)For Roche Inc., variable manufacturing overhead costs are expected to be $20,000 in the first quarter of 2020, with $5,000 increments in each of the remaining three quarters. Fixed overhead costs are estimated to be $40,000 in each quarter. Prepare the manufacturing overhead budget by quarters and in total for the year.

13) Elbert Company classifies its selling and administrative expense budget into variable and fixed components. Variable expenses are expected to be $24,000 in the first quarter, and $4,000 increments are expected in the remaining quarters of 2020. Fixed expenses are expected to be $40,000 in each quarter. Prepare the selling and administrative expense budget by quarters and in total for 2020.

14)Pargo Company is preparing its master budget for 2020. Relevant data pertaining to its sales, production, and direct materials budgets are as follows.

Sales. Sales for the year are expected to total 1,000,000 units. Quarterly sales are 20%, 25%, 25%, and 30%, respectively. The sales price is expected to be $40 per unit for the first three quarters and $45 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 20% higher than the budgeted sales for the first

quarter of 2020.

Production. Management desires to maintain the ending finished goods inventories at 25% of the next quarter's budgeted sales volume.

Direct materials. Each unit requires 2 pounds of raw materials at a cost of $12 per pound. Management desires to maintain raw materials inventories at 10% of the next quarter's production requirements. Assume the production requirements for first quarter of 2021 are 450,000 pounds.

Prepare the sales, production, and direct materials budgets by quarters for 2020. 15) Pargo Company is preparing its budgeted income statement for 2020. Relevant data pertaining to its sales, production, and direct materials budgets can be found in question number 14.

In addition, Pargo budgets 0.3 hours of direct labor per unit, labor costs at $15 per hour, and manufacturing overhead at $20 per direct labor hour. Its budgeted selling and administrative expenses for 2020 are $6,000,000. a. Calculate the budgeted total unit cost. b. Prepare the budgeted multiple-step income statement for 2020. (Ignore incometaxes.)