Managerial Accounting Chapter 9 Instructor Test Bank – 12th Edition

Chapter 09 Test Bank USE THIS ONE


Accounting (Shanghai Finance University)




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,Chapter 9 Profit Planning


16. Which of the following budgets are prepared before the sales budget?

Budgeted Income Statement Direct Labor Budget
A) Yes Yes
B) Yes No
C) No Yes
D) No No

Ans: D AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 1 Level: Easy

17. The usual starting point for a master budget is:
A) the direct materials purchase budget.
B) the budgeted income statement.
C) the sales forecast or sales budget.
D) the production budget.

Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking
AICPA FN: Reporting LO: 1 Level: Easy

18. Which of the following budgets are prepared before the cash budget?

Selling and Administrative Expense Budget Production Budget
A) Yes Yes
B) Yes No
C) No Yes
D) No No

19. Which of the following benefits could an organization reasonably expect from
an effective budget program?
A) Better control of the organization's costs.
B) Better coordination of an organization's activities.
C) Better communication of the organization's objectives.
D) All of the above.

Ans: D AACSB: Reflective Thinking
AICPA BB: Resource Management, Critical Thinking AICPA FN: Reporting
LO: 1 Level: Easy

20. An organization's budget program should not be used:
A) to motivate employees.
B) to assign blame to managers that do not meet budgetary goals.
C) to help evaluate managers.


Garrison/Noreen /Brewer, Managerial Accounting, Twelfth Edition 9-5

, Chapter 9 Profit Planning

D) to allocate resources to the various parts of an organization.

Ans: B AACSB: Reflective Thinking
AICPA BB: Resource Management, Critical Thinking AICPA FN: Reporting
LO: 1 Level: Easy

21. A basic idea underlying is that a manager should be held
responsible only for those items that the manager can actually control to a
significant extent.
A) participative budgeting
B) planning and control
C) responsibility accounting
D) the master budget

Ans: C AACSB: Reflective Thinking
AICPA BB: Resource Management, Critical Thinking AICPA FN: Reporting
LO: 1 Level: Easy

22. When preparing a merchandise purchases budget, the required purchases
in units equals:
A) budgeted unit sales + beginning merchandise inventory + desired
merchandise ending inventory.
B) budgeted unit sales - beginning merchandise inventory +
desired merchandise ending inventory.
C) budgeted unit sales - beginning merchandise inventory - desired
merchandise ending inventory.
D) budgeted unit sales + beginning merchandise inventory - desired
merchandise ending inventory.

23. When preparing a direct materials budget, the required purchases of
raw materials in units equals:
A) raw materials needed to meet the production schedule + desired
ending inventory of raw materials - beginning inventory of raw
materials.
B) raw materials needed to meet the production schedule - desired ending
inventory of raw materials - beginning inventory of raw materials.
C) raw materials needed to meet the production schedule - desired ending
inventory of raw materials + beginning inventory of raw materials.
D) raw materials needed to meet the production schedule + desired
ending inventory of raw materials + beginning inventory of raw
materials.

24. Which of the following statements is NOT correct concerning the
Manufacturing Overhead Budget?
A) The Manufacturing Overhead Budget provides a schedule of all costs
of production other than direct materials and labor costs.
B) The Manufacturing Overhead Budget shows only the variable portion
of manufacturing overhead.