Chapter 9 Profit Planning Cost Accounting Test Bank Latest 2026–2027 Updated CVP Analysis Questions and Answers. Verified Managerial Accounting Problems for Accurate Exam Preparation. Complete Practice Coverage for High Grades and Concept Mastery.

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,Chapter 9 Profit Planning


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




Budgeted Income Statement L L Direct Labor Budget L L



A) Yes Yes
B) Yes No
C) No Yes
D) No No

Ans: D AACSB: Reflective Thinking AICPA BB: Critical Thinking
L L L L L L L



AICPA FN: Reporting LO: 1 Level: Easy
L L L L




17. The usual starting point for a master budget is:
L L L L L L L L



A) the direct materials purchase budget.
L L L L



B) the budgeted income statement. L L L



C) the sales forecast or sales budget. L L L L L



D) the production budget. L L




Ans: C AACSB: Reflective Thinking AICPA BB: Critical Thinking
L L L L L L L



AICPA FN: Reporting LO: 1 Level: Easy
L L L L




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




Selling and Administrative Expense Budget
L L L L Production Budget L



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
L L L L L L L L L L L L



effective budget program? L L



A) Better control of the organization's costs. L L L L L



B) Better coordination of an organization's activities.
L L L L L



C) Better communication of the organization's objectives.
L L L L L



D) All of the above. L L L




Ans: D AACSB: Reflective Thinking
L L L



AICPA BB: Resource Management, Critical Thinking
L L L L L AICPA FN: Reporting L L L



LO: 1 Level: Easy
L L




20. An organization's budget program should not be used:
L L L L L L L



A) to motivate employees. L L



B) to assign blame to managers that do not meet budgetary goals.
L L L L L L L L L L



C) to help evaluate managers. L L L




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

,Chapter 9 Profit Planning

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




Ans: B AACSB: Reflective Thinking
L L L



AICPA BB: Resource Management, Critical Thinking
L L L L L AICPA FN: Reporting L L L



LO: 1 Level: Easy
L L




21. A basic idea underlying
L L is that a manager should be held
L L L L L L L L L



responsible only for those items that the manager can actually control to a significant
L L L L L L L L L L L L L L



extent.
A) participative budgeting L



B) planning and control L L



C) responsibility accounting L



D) the master budget L L




Ans: C AACSB: Reflective Thinking
L L L



AICPA BB: Resource Management, Critical Thinking
L L L L L AICPA FN: Reporting L L L



LO: 1 Level: Easy
L L




22. When preparing a merchandise purchases budget, the required purchases in
L L L L L L L L L L



units equals: L



A) budgeted unit sales + beginning merchandise inventory + desired merchandise
L L L L L L L L L L



ending inventory. L



B) budgeted unit sales - beginning merchandise inventory + desired L L L L L L L L L



merchandise ending inventory. L L



C) budgeted unit sales - beginning merchandise inventory - desired merchandise
L L L L L L L L L L



ending inventory. L



D) budgeted unit sales + beginning merchandise inventory - desired merchandise
L L L L L L L L L L



ending inventory. L




23. When preparing a direct materials budget, the required purchases of raw
L L L L L L L L L L L



materials in units equals: L L L



A) raw materials needed to meet the production schedule + desired ending
L L L L L L L L L L L



inventory of raw materials - beginning inventory of raw materials. L L L L L L L L L



B) raw materials needed to meet the production schedule - desired ending inventory
L L L L L L L L L L L L



of raw materials - beginning inventory of raw materials.
L L L L L L L L



C) raw materials needed to meet the production schedule - desired ending inventory
L L L L L L L L L L L L



of raw materials + beginning inventory of raw materials.
L L L L L L L L



D) raw materials needed to meet the production schedule + desired ending
L L L L L L L L L L L



inventory of raw materials + beginning inventory of raw materials. L L L L L L L L L




24. Which of the following statements is NOT correct concerning the Manufacturing
L L L L L L L L L L L



Overhead Budget? L



A) The Manufacturing Overhead Budget provides a schedule of all costs of
L L L L L L L L L L L



production other than direct materials and labor costs. L L L L L L L



B) The Manufacturing Overhead Budget shows only the variable portion of
L L L L L L L L L L



manufacturing overhead. L



C) The Manufacturing Overhead Budget shows the expected cash disbursements
L L L L L L L L L



for manufacturing overhead. L L

, Chapter 9 Profit Planning
D) The Manufacturing Overhead Budget is prepared after the Sales Budget.
L L L L L L L L L




25. Which of the following statements is NOT correct concerning the Cash Budget?
L L L L L L L L L L L



A) It is not necessary to prepare any other budgets before preparing the Cash
L L L L L L L L L L L L L



Budget.
B) The Cash Budget should be prepared before the Budgeted Income Statement.
L L L L L L L L L L



C) The Cash Budget should be prepared before the Budgeted Balance Sheet.
L L L L L L L L L L



D) The Cash Budget builds on earlier budgets and schedules as well as additional
L L L L L L L L L L L L L



data.

Ans: A AACSB: Reflective Thinking AICPA BB: Critical Thinking
L L L L L L L



AICPA FN: Reporting LO: 8 Level: Easy
L L L L




26. Pitkins Company collects 20% of a month's sales in the month of sale, 70% in the
L L L L L L L L L L L L L L L L



month following sale, and 6% in the second month following sale. The remainder is
L L L L L L L L L L L L L L



uncollectible. Budgeted sales for the next four months are:
L L L L L L L L




January February March April
$300,00
Budgeted sales....... L $200,000 0 $350,000 $250,000

Cash collections in April are budgeted to be:
L L L L L L L



A) $321,000
B) $313,000
C) $320,000
D) $292,000

Ans: B AACSB: Analytic AICPA BB: Critical Thinking
L L L L L L



AICPA FN: Reporting LO: 2
L Level: Easy
L L L




Solution:

April sales ($250,000 × 20%)..............
L L L L $ 50,000
L



March sales ($350,000 × 70%)...........
L L L L 245,000
February sales ($300,000 × 6%).........
L L L L L L18,000
Total.................................................... $313,000