ACCT 526 UPDATED EXAM SCRIPT QUESTIONS AND
SOLUTIONS RATED A+
✔✔ABC Company budgeted the following transactions for April:
Sales (75% collected in month of sale) $200,000
Cash operating expense $105,000
Cash purchases of capital investments $75,000
Cash payment of debt $20,000
Depreciation on operating assets $15,000
There was a $50,000 beginning cash balance. The company desires to have a $25,000
ended cash balance. What is the amount of cash overage or shortage? - ✔✔$25,000
shortage
✔✔The estimated period costs necessary to support a given level of sales will be shown
on the - ✔✔selling and administrative budget
✔✔The budget for a merchandiser differs from a budget for a manufacturer because:
a. a merchandise purchases budget replaces the production budget
b. the manufacturing budgets are not applicable
c. none of the above
d. both (a) and (b) - ✔✔both (a) and (b)
✔✔Which of the following is generally the first step in preparing the master budget? -
✔✔sales budget
✔✔A well prepared budget can help benefit the company in all of the following ways
except for
a. guarantee profit level
b. allocate resources
c. serving as a guide
d. set performance standards - ✔✔guarantee profit level
✔✔Seagram Corporation makes all sales on account. The June 30th balance sheet
balance in its accounts receivable is $200,000, of which $120,000 pertain to sales that
were made during June. Budgeted sales for July are $1,000,000. Seagram collets 70%
of sales in the month of sale; 20% in the following month; and the final 10% in the
second month after the sale.
What are Seagram's budget collections for July? - ✔✔$732,000
, ✔✔A production budget includes separate schedules for - ✔✔materials, labor and
overhead
✔✔Which one of the following items would never appear on a cash budget? -
✔✔depreciation expense
✔✔The cash budget must be prepared before you can complete the: - ✔✔budgeted
balance sheet
✔✔For the next year, Miller Company has budgeted sales of 20,000 units, target ending
finished goods inventory of 1,000 units, and a beginning finished goods inventory of 600
units. All other inventories are zero. How many of units should be produced? -
✔✔20,400 units
✔✔The segment margin represents the business segment's - ✔✔income
✔✔The advantages of a decentralized management style include all of the following
except for - ✔✔decision made by manager who is less experienced
✔✔V is currently acquiring a key component from its sister company, F, at a transfer
price of $10 per unit. F's variable cost of purchasing the unit is $4, and its fixed cost per
unit is $3 per unit. F does not have any excess capacity and can sell all it makes to
external customers at 410 per unit. V has been offered a price of $9 per unit for the
component from another vendor and is insisting that F reduce its price to $9. Which of
the following statement below is false regarding this scenario? - ✔✔V should not accept
the outside offer because the variable cost of purchasing it inside is only $4 per unit
✔✔The practice of delegating authority and responsibility is referred to as -
✔✔decentralization
✔✔When using residual income (RI) as a project-screening tool, management should
accept a project if
a. RI is negative
b. RI is equal to zero
c. RI is positive
d. B and C, but not A - ✔✔B and C, but not A
✔✔Smith has an average investment of $300,000 in division B. If the income for division
B for the current period is $18,000, what is the return on investment (ROI)? - ✔✔6.00%
✔✔Northern Communications has two divisions (Individual and Business) and has the
following information available for the current year:
SOLUTIONS RATED A+
✔✔ABC Company budgeted the following transactions for April:
Sales (75% collected in month of sale) $200,000
Cash operating expense $105,000
Cash purchases of capital investments $75,000
Cash payment of debt $20,000
Depreciation on operating assets $15,000
There was a $50,000 beginning cash balance. The company desires to have a $25,000
ended cash balance. What is the amount of cash overage or shortage? - ✔✔$25,000
shortage
✔✔The estimated period costs necessary to support a given level of sales will be shown
on the - ✔✔selling and administrative budget
✔✔The budget for a merchandiser differs from a budget for a manufacturer because:
a. a merchandise purchases budget replaces the production budget
b. the manufacturing budgets are not applicable
c. none of the above
d. both (a) and (b) - ✔✔both (a) and (b)
✔✔Which of the following is generally the first step in preparing the master budget? -
✔✔sales budget
✔✔A well prepared budget can help benefit the company in all of the following ways
except for
a. guarantee profit level
b. allocate resources
c. serving as a guide
d. set performance standards - ✔✔guarantee profit level
✔✔Seagram Corporation makes all sales on account. The June 30th balance sheet
balance in its accounts receivable is $200,000, of which $120,000 pertain to sales that
were made during June. Budgeted sales for July are $1,000,000. Seagram collets 70%
of sales in the month of sale; 20% in the following month; and the final 10% in the
second month after the sale.
What are Seagram's budget collections for July? - ✔✔$732,000
, ✔✔A production budget includes separate schedules for - ✔✔materials, labor and
overhead
✔✔Which one of the following items would never appear on a cash budget? -
✔✔depreciation expense
✔✔The cash budget must be prepared before you can complete the: - ✔✔budgeted
balance sheet
✔✔For the next year, Miller Company has budgeted sales of 20,000 units, target ending
finished goods inventory of 1,000 units, and a beginning finished goods inventory of 600
units. All other inventories are zero. How many of units should be produced? -
✔✔20,400 units
✔✔The segment margin represents the business segment's - ✔✔income
✔✔The advantages of a decentralized management style include all of the following
except for - ✔✔decision made by manager who is less experienced
✔✔V is currently acquiring a key component from its sister company, F, at a transfer
price of $10 per unit. F's variable cost of purchasing the unit is $4, and its fixed cost per
unit is $3 per unit. F does not have any excess capacity and can sell all it makes to
external customers at 410 per unit. V has been offered a price of $9 per unit for the
component from another vendor and is insisting that F reduce its price to $9. Which of
the following statement below is false regarding this scenario? - ✔✔V should not accept
the outside offer because the variable cost of purchasing it inside is only $4 per unit
✔✔The practice of delegating authority and responsibility is referred to as -
✔✔decentralization
✔✔When using residual income (RI) as a project-screening tool, management should
accept a project if
a. RI is negative
b. RI is equal to zero
c. RI is positive
d. B and C, but not A - ✔✔B and C, but not A
✔✔Smith has an average investment of $300,000 in division B. If the income for division
B for the current period is $18,000, what is the return on investment (ROI)? - ✔✔6.00%
✔✔Northern Communications has two divisions (Individual and Business) and has the
following information available for the current year:
