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Chapter 9 Extra MC Solution

James R. Martin, Ph.D., CMA
Professor Emeritus, University of South Florida

Chapter 9 | MAAW's Textbook Table of Contents

The following Extends problem 9-6 to March. The Microtable Company produces and sells special wood tables that are used with microcomputers.

1. The net sales dollars budgeted for March is

c. 1,289,340

2. The cash collections budgeted for March is

d. 1,246,590

3. Budgeted units (i.e., tables) to be produced for March is

e. None of these.

4. For the remainder of this problem ignore your answer to question 3 and assume that the budgeted units to be produced for March are 5,245. The number of board feet of Direct Material to be purchased for March is

c. 105,710

5. The Budgeted cost of direct material used for March is

a. 314,700

6. The budgeted total factory overhead costs for March is

b. 252,450

7. The budgeted cost of goods sold for March is

d. 562,200

8. The amount and status (i.e., favorable or unfavorable) of the planned production volume variance for March is

b. 9,800 favorable

9. The Budgeted selling and administrative expenses for March is

c. 310,000

10. During March no specific accounts receivable were determined to be uncollectible. The amount of bad debt expense that should appear on the Budgeted Income Statement for March is

d. 35,100

11. Assume 500 additional units of production are budgeted for March with no change in budgeted unit sales. What effect will this have on budgeted net income for March?

c. Budgeted net income will increase by $20,000

12. In overhead variance analysis, when direct labor hours are used as the allocation basis, the capacity or idle capacity variance will be favorable if

d. budgeted fixed overhead is less than applied.

13. Appropriation budgets

b. may be incremental, priority incremental or zero based.

14. The two main parts of a master budget are

d. the operating budget and the financial budget.

15. The main purpose of participative budgeting is to

a. reduce the adverse behavioral effects of budgeting.

The Brace Company produces and sells a single product with budgeted or standard costs as follows:

16. Net sales dollars budgeted for March are

b. 516,100

17. Collections budgeted for March are

c. 482,100

18. Budgeted direct material quantity need for production for march is

a. 6,525

19. Budgeted direct material quantity to be purchased for March is

d. 6,575

20. Budgeted cost of direct labor for March is

c. 46,980

21. Budgeted factory overhead cost for March is

e. 157,420

22. Budgeted cost of goods sold for March is

d. 268,600

23. The planned production volume variance budgeted for March is

b. 4,400 favorable

24. Budgeted selling and administrative expenses for March are

c. 102,000

25. Budgeted bad debts expense for March is

d. 26,000

26. If the budgeted units to be produced were increased from 1,305 to 1,310 with no change in sales, budgeted net income before taxes for March would

b. increase by $400

The Vera Company produces and sells a single product with budgeted or standard unit costs as follows:

27. The net sales dollars budgeted for February are

c. 531,751.50

28. The cash collections budgeted for February are

a. 514,741.50

29. The budgeted units to be produced for February are

d. 854

30. Now ignore your answer to question3 and assume that the budgeted units to be produced are 854. The number of ounces of Direct Material to be purchased for February is

b. 1,724.4

31. The Budgeted cost of direct material used for February is

e. None of these.

32. The budgeted cost of direct labor used for February is

a. 25,620

33. The budgeted total factory overhead costs for February is

c. 225,360

34. The budgeted cost of goods sold for February is

b. 275,340

35. The planned production volume variance for February is

d. 7,590 unfavorable

36. The Budgeted selling and administrative expenses for February are

a. 86,775.00

37. The amount of bad debts that should appear on the Budgeted Income Statement for February is

c. 8,032.50

38. Suppose the budgeted unit sales for March had been 910 rather than 890. Precisely what effect would this have on budgeted net income for February?

d. 330 increase

39. In the budget equation for factory overhead, Y = a + bX, the letter "a" would most likely include which type of cost?

c. discretionary costs.

40. Research and development costs fall into which of the cost categories listed below?

b. discretionary costs.

41. Appropriation budgets are generally used for which type of costs?

b. discretionary costs.

42. A priority incremental budget is a (an)

d. appropriation budget.

43. Conceptually, zero-based budgeting means that the manager must

a. justify 100% of his or her budget.

44. The two overall purposes of the master budget are

d. planning and controlling.

45. A type of budgeting that has been recommended to reduce behavioral conflicts is the

e. participative budget.

46. The two main parts of a master budget include

c. the operating budget and the financial budget.

47. The planned production volume variance is the difference between

b. (SFOR)(DH) and (SFOR)(BH)

48. Which of the following represents a correct calculation for budgeted factory overhead costs?

a. (SFOR + SVOR)(BH) + unfavorable PPVV.

49. In the budget equation for factory overhead (Y = a + bX) the letter "b" would most likely include which type of cost?

b. engineered costs.

50. Employee training costs fall into which of the cost categories listed below?

c. discretionary costs.

51. Appropriation budgets would probably not be used for which type of costs listed below?

d. direct labor.

52. Which of the following types of budgets provides the weakest form of cost control?

e. incremental.

53. Which type of budgeting requires managers to justify current spending as well as proposed future increases in spending?

d. zero based.

54. A type of budgeting mainly recommended to reduce behavioral conflicts is the

a. participative budget.

55. Critics of accounting and budgeting mainly criticize which of the following budgeting purposes?

b. controlling.

The Q Company produces a single product with the following budgeted price and costs.

56. What effect would the budgeted production increase have on budgeted net income for January assuming Q Company uses absorption costing?

b. Increase by $20,000.

57. Assume the same situation as in the question above, but Q Company uses direct costing. Then what effect would the budgeted production increase have on budgeted net income for January?

a. No effect.

58. Assume the same situation as in the two questions above, but Q Company uses throughput costing. Then what effect would the budgeted production increase have on budgeted net income for January?

c. Decrease by $5,000.

59. The planned production volume variance results because

c. planned production for the month is different from denominator production for the month.

60. In comparing budgeted costs to standard costs, which of the following statements is true?

a. Standard unit costs are the same as budgeted unit costs for both variable and fixed inputs.

Chapter 9 Extra MC Questions