Chapter 9 Tietz The Master Budget Full Test Bank

Managerial Accounting, 6e (Braun et al.)

Chapter 9 The Master Budget

9.1 Describe how and why managers use budgets

1) Strategic planning involves setting short-term goals that extend three to four months into the future.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

2) Budgets are helpful because managers can plan the cash inflows and outflows in an organization.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

3) A budget is a quantitative expression of a plan that helps managers coordinate and implement the plan.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

4) Budgets do not provide benchmarks to help managers evaluate performance.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

5) Budgets communicate financial plans to employees at all levels in the company.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

6) One of the key benefits of budgeting is that it forces managers to plan.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

7) The capital expenditures budget is not a component of the operating budget.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

8) The master budget is the set of budgeted financial statements and supporting schedules in the entire organization.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

9) The master budget includes both the operating budgets and the financial budgets.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

10) Management uses budgets to express its plans and to assess how well the organization meets or exceeds its goals.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

11) Strategic planning enables the organization to establish long-term goals that extend 5-10 years into the future.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

12) A rolling budget is useful because the organization can continue to budget its operations 12 months into the future.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

13) The financial budget projects the collection and payment, of cash, and the forecast of the company's budgeted balance sheet.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

14) Budget committees include all of the following people except

A) CEO.

B) research and development manager.

C) shareholder.

D) marketing manager.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

15) Budgets are used to accomplish all of the following tasks, except

A) planning for the future.

B) controlling operations.

C) recording actual results.

D) directing operations.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

16) Strategic planning is beneficial because the organization can

A) establish long-term goals that extend 5-10 years into the future.

B) establish short-term goals that extend one year into the future.

C) establish goals for next month.

D) execute directives from the board of directors.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

17) A rolling budget is a budget that

A) extends 5-10 years into the future.

B) is continuously updated, so that the next 12 months of operations are always budgeted.

C) begins with zero for each expense, and then amounts are added in.

D) is executed by upper management.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

18) Most companies use ________ when the lower level management develops budgets each year.

A) a top-down approach

B) zero-based budgets

C) slack-based budgets

D) participative budgeting

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

19) Which of the following is a potential disadvantage of participative budgeting?

A) Managers are more likely to be motivated by budgets they help create.

B) Managers may build slack into the budget.

C) Managers have more detailed knowledge to create realistic budgets.

D) Lower-level managers feel vested in the company when they have a voice in budgeting.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

20) Managers may intentionally build slack into the budget

A) to gain the resources they need in the event of budget cuts.

B) to make their performance look worse.

C) because they are certain about the future.

D) to accomplish all of the above.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

21) Managers may intentionally build slack into the budget

A) because they are uncertain about the future.

B) to make their performance appear better.

C) to acquire the resources they need in the event the organization implements a budget cut.

D) because all of the above are true.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

22) The budget committee

A) rarely has the final say on the budget.

B) usually is made up of the accounting staff.

C) usually is made up of managers from all areas of the value chain.

D) usually is made up of the Board of Directors.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

23) All of the following are functions of the budget committee except

A) review the budgets it submits for approval in an organization.

B) determine the bonuses the organization awards to employees that achieve the target budget.

C) approve the final budget it expects the organization to implement.

D) remove unwarranted slack in the workplace.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

24) Which of the following should the organization use to initiate a budget?

A) Last year's budget

B) Last year's actual amounts

C) Zero-based budgeting

D) Any of the above

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

25) Which of the following is an advantage of zero-based budgeting?

A) Zero-based budgeting is time consuming.

B) Zero-based budgeting forces managers to justify each dollar in the budget to ensure that some expenses are lower in a current year compared to what they were in previous years.

C) Zero-based budgeting is labor intensive.

D) All of the above are advantages.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

26) The ________ budget is a component in a financial budget.

A) cash

B) sales

C) direct materials

D) operating expense

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

27) The ________ budget is a component in a financial budget.

A) direct labor

B) capital expenditures

C) budgeted income statement

D) manufacturing overhead

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

28) The ________ budget is a component in a financial budget.

A) production

B) budgeted income statement

C) budgeted balance sheet

D) sales

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

29) The ________ budget is a component in an operating budget.

A) capital expenditure

B) budgeted balance sheet

C) production

D) cash

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

30) Which of the following alternatives reflects the proper order of preparing components of the master budget?

1. Production budget

2. Sales budget

3. Direct materials budget

A) 2, 3, 1

B) 1, 3, 2

C) 3, 1, 2

D) 2, 1, 3

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

31) Which of the following is an advantage of the budgeting process?

A) Coordinates the activities of the organization

B) Assures that the lowest cost materials will be obtained

C) Assures the company will achieve its objectives

D) Guarantees that a profit will be achieved

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

32) Which of the following is a benefit to an organization that implements a budget?

A) Budgets help managers focus their attention on the future needs in an organization.

B) Budgets help managers improve their decision-making processes in an organization.

C) Budgets help the manager improve the motivation of employees in the workplace.

D) All of the above

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

33) Which of the following statements about budgeting is not true?

A) Budgeting is an aid to planning and control.

B) The operating budget should be prepared by top management, rather than mid-management personnel, because they have the overall objectives of the company in mind.

C) Budgets help to coordinate the activities of the entire organization.

D) Budgets promote communication and coordination between departments in an organization.

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

34) Which of the following budgets is a major part of the master budget and it focuses on the income statement and its supporting schedules?

A) Cash

B) Operating

C) Capital expenditures

D) Financial

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

35) Which of the following budgets is the cornerstone of the master budget?

A) Sales

B) Cash

C) Budgeted balance sheet

D) Operating expense

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

36) What is the starting point of the master budget process?

A) Sales budget

B) Cash budget

C) Budgeted income statement

D) Production budget

Diff: 1

LO: 9-1

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

37) Which of the following is not a benefit of budgeting?

A) Budgeting forces managers to consider relations across the value chain.

B) Budgeting provides a benchmark that motivates employees.

C) Budgeting forces managers to work in a silo, promoting only the goals of their department.

D) Budgeting provides a benchmark to help managers evaluate performance.

Diff: 1

LO: 9-1

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

38) Which of the following terms is useful because it compares "actual" revenues and expenses against "budgeted" revenues and expenses?

A) Responsibility center

B) Capital budget

C) Performance report

D) Sensitivity analysis

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

39) "The comprehensive budget" is best described by which of the following terms?

A) Operating budget

B) Sensitivity analysis

C) Responsibility center

D) Master budget

Diff: 1

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

40) List and describe three reasons why a company and its managers could benefit from the use of budgeting.

Diff: 2

LO: 9-1

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

9.2 Prepare the operating budgets

1) When creating the sales budget, management simply takes the sales from the year before and divides that total by 12 months. Thus, each month will always predict the same amount of budgeted sales.

Diff: 1

LO: 9-2

EOC: E9-16

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

2) The first component of the operating budget is the production budget.

Diff: 1

LO: 9-2

EOC: E9-16

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

3) The four components of the operating budget are the sales budget; inventory, purchases and cost of goods sold budget; and the cash budget.

Diff: 1

LO: 9-2

EOC: E9-23

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

4) The sales budget must be prepared after every other component of the operating budget.

Diff: 1

LO: 9-2

EOC: E9-16

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

5) Budgeting includes planning for ending inventory.

Diff: 1

LO: 9-2

EOC: E9-18

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

6) The sales budget is the cornerstone of the master budget.

Diff: 1

LO: 9-2

EOC: E9-23

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

7) On the production budget, the number of units to be produced is computed as

A) unit sales + desired end inventory + beginning inventory.

B) unit sales + desired end inventory - beginning inventory.

C) unit sales - desired end inventory - beginning inventory.

D) unit sales - desired end inventory + beginning inventory.

Diff: 1

LO: 9-2

EOC: E9-19A

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

8) On the direct labor budget, the total quantity of direct labor hours needed is computed as

A) units to be produced × direct labor hour per unit.

B) quantity needed for production + indirect labor hours - direct labor hours.

C) units to be produced - indirect labor hours × cost per labor hour.

D) estimated direct labor hours needed × cost per hour.

Diff: 1

LO: 9-2

EOC: E9-19A

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

9) On the direct materials budget, the total quantity of direct materials to purchase is computed as

A) quantity needed for production + desired end inventory of DM - beginning inventory of DM.

B) units to be produced + desired end inventory of DM - beginning inventory of DM.

C) units to be produced - desired end inventory of DM + beginning inventory of DM.

D) quantity needed for production - desired end inventory of DM + beginning inventory DM.

Diff: 1

LO: 9-2

EOC: E9-19A

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

10) The ________ budget is the only budget stated only in units, not dollars.

A) production

B) sales

C) direct materials

D) manufacturing overhead

Diff: 1

LO: 9-2

EOC: E9-19A

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

11) The ________ budget starts with the number of units to be produced.

A) direct materials

B) manufacturing overhead

C) direct labor

D) All of these choices start with the number of units to be produced.

Diff: 1

LO: 9-2

EOC: E9-24A

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

12) The ________ budget begins with the number of units to be sold.

A) manufacturing overhead

B) direct materials

C) sales

D) capital expenditures

Diff: 1

LO: 9-2

EOC: E9-17A

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

13) Which of the following budgets usually shows separate sections for fixed and variable costs?

A) Direct materials budget and manufacturing overhead budget

B) Manufacturing overhead budget and production budget

C) Production budget and manufacturing overhead budget

D) Operating expenses budget and manufacturing overhead budget

Diff: 1

LO: 9-2

EOC: E9-24A

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

14) Which of the following budgets or financial statements is part of the operating budget?

A) Sales budget

B) Budgeted balance sheet

C) Capital expenditures budget

D) Cash budget

Diff: 1

LO: 9-2

EOC: E9-16

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

15) The ________ is a plan that shows the units to be sold and the projected selling price and is also the starting point in the budgeting process.

A) cash budget

B) budgeted statement of cash flows

C) budgeted income statement

D) sales budget

Diff: 1

LO: 9-2

EOC: E9-16

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

16) Which of the following is not part of the operating budget?

A) Direct materials budget

B) Cash budget

C) Sales budget

D) Budgeted income statement

Diff: 1

LO: 9-2

EOC: E9-23

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

17) Which of the following is not included in the operating budget?

A) Budgeted income statement

B) Sales budget

C) Direct labor budget

D) Budgeted balance sheet

Diff: 1

LO: 9-2

EOC: E9-23

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

18) In preparing the operating budget, the first step is preparing the

A) cash budget.

B) sales budget.

C) budgeted income statement.

D) purchases budget.

Diff: 1

LO: 9-2

EOC: E9-23

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

19) Pet Food Plus Company expects to sell 3,000 beefy dog treats in January and 10,000 in February for $4 each. What will be the total sales revenue reflected in the sales budget for those months?

A) January $12,000; February $40,000

B) January $750; February $2,500

C) January $2,500; February $750

D) January $40,000; February $12,000

Diff: 1

LO: 9-2

EOC: E9-16

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

20) Wooden Perch Company expects to sell 5,200 bird perches in January and 10,000 in February for $3 each. What will be the total sales revenue reflected in the sales budget for those months?

A) January $1,733; February $3,333

B) January $15,600; February $30,000

C) January $3,333; February $1,733

D) January $30,000; February $15,600

Diff: 1

LO: 9-2

EOC: E9-16

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

21) Long Company expects cash sales for July of $14,000, and a 23% monthly increase during August and September. Credit sales of $8,000 in July should be followed by 33% increases during August and September. What are budgeted cash sales and budgeted credit sales for September respectively? (Round final answers to the nearest dollar.)

A) $18,620 and $9,840

B) $11,382 and $6,015

C) $21,181 and $14,151

D) $17,220 and $10,640

Diff: 2

LO: 9-2

EOC: E9-16

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

22) Fit Company expects cash sales for July of $18,000, and a 25% monthly increase during August and September. Credit sales of $500 in July should be followed by 32% increases during August and September. What are budgeted cash sales and budgeted credit sales for September respectively? (Round final answers to the nearest dollar.)

A) $23,760 and $625

B) $14,400 and $379

C) $22,500 and $660

D) $28,125 and $871

Diff: 2

LO: 9-2

EOC: E9-16

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

23) This and That Company has two products: This and That. A March sales forecast projects 16,000 units of This and 13,000 units of That are going to be sold at prices of $10 and $20, respectively. The desired ending inventory of This is 18% higher than the beginning inventory, which was 1,500 units. How much are total March sales for This anticipated to be?

A) $88,889

B) $260,000

C) $160,000

D) $320,000

Diff: 1

LO: 9-2

EOC: E9-16

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

24) Flying Things Company has two products: Kites and Gliders. A March sales forecast projects 22,000 units of Kites and 19,000 units of Gliders are going to be sold at prices of $20.00 and $11.00, respectively. The desired ending inventory of Kites is 10% higher than the beginning inventory, which was 1,000 units. How much are total March sales for Kites anticipated to be?

A) $209,000

B) $440,000

C) $242,000

D) $220,000

Diff: 1

LO: 9-2

EOC: E9-16

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

25) Delucia Company expects cash sales for July of $14,000, and a 30% monthly increase during August and September. Credit sales of $12,000 in July should be followed by 18% decreases during August and September. What are budgeted cash sales and budgeted credit sales for September? (Round final answers to the nearest dollar.)

A) $18,200 and $9,840

B) $23,660 and $8,069

C) $11,480 and $15,600

D) $9,414 and $20,280

Diff: 2

LO: 9-2

EOC: E9-16

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

26) Tickbite Company has beginning inventory of 11,000 units and expected sales of 20,000 units. If the desired ending inventory is 18,000 units, how many units should be produced?

A) 13,000

B) 40,000

C) 9,000

D) 27,000

Diff: 2

LO: 9-2

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

27) Lamp Company wants to have an ending inventory of 9,000 units. Lamp Company has beginning inventory of 8,000 units and expects to sell 25,000 units. How many units should Lamp Company produce?

A) 26,000

B) 24,000

C) 42,000

D) 34,000

Diff: 2

LO: 9-2

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

28) Twist Corporation desires a December 31 ending inventory of 800 units. Budgeted sales for December are 3,300 units. The November 30 inventory was 550 units. What are budgeted purchases in units?

A) 4,100

B) 3,050

C) 3,550

D) 4,650

Diff: 2

LO: 9-2

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

29) Peak Stores wants to have 300 shovels in ending inventory on December 31. Budgeted sales for December are 2,250 shovels. The November 30 inventory was 470 shovels. How many shovels should Peak Stores purchase for December?

A) 3,020

B) 2,420

C) 2,550

D) 2,080

Diff: 2

LO: 9-2

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

30) Sitting Pretty Company produces and sells a shelf for $10 each. The beginning inventory is 1,400 shelves, and the desired ending inventory is 1,000 shelves. If budgeted production is 12,000 shelves, what is the forecasted sales revenue from the shelves?

A) $144,000

B) $124,000

C) $120,000

D) $96,000

Diff: 3

LO: 9-2

EOC: E9-16

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

31) Card Corporation had beginning inventory of 22,000 units and expects sales of 75,000 units during the year. Desired ending inventory is 19,700 units. How many units should Card Corporation produce?

A) 77,300 units

B) 33,300 units

C) 72,700 units

D) 116,700 units

Diff: 2

LO: 9-2

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

32) Merle Corporation had beginning inventory of 18,000 units and expects sales of 82,000 units during the year. Desired ending inventory is 18,100 units. How many units should Merle Corporation produce?

A) 82,100 units

B) 45,900 units

C) 81,900 units

D) 118,100 units

Diff: 2

LO: 9-2

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

33) At the beginning of the year, Patio Living Corporation has 590 planters in inventory. The company plans to sell 5,700 planters during the year and wants to have 1,500 planters in inventory at the end of the year. How many planters must Patio Living Corporation produce during the year?

A) 6,610

B) 7,200

C) 3,610

D) 7,790

Diff: 2

LO: 9-2

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

34) At the beginning of the year, Boatwise Corporation has 610 life vests in inventory. The company wants to have 3,000 vests in inventory at the end of the year and plans to sell 6,800 life vests during the year. How many life vests must Boatwise Corporation produce during the year?

A) 9,800

B) 3,190

C) 9,190

D) 10,410

Diff: 2

LO: 9-2

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

35) Slick Company produces jump ropes. Slick Company has the following sales projections for the upcoming year:

Inventory at the beginning of the year was 3,500 jump ropes. Slick Company wants to have 20% of the next quarter's sales in units on hand at the end of each quarter. How many jump ropes should Slick Company produce during the first quarter?

A) 19,500

B) 23,000

C) 23,500

D) 30,500

Diff: 2

LO: 9-2

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

36) Round Company produces hula hoops. Round Company has the following sales projections for the upcoming year:

Round Company wants to have 20% of the next quarter's sales in units on hand at the end of each quarter. Inventory at the beginning of the year was 3,900 hula hoops. How many hula hoops should the company produce during the first quarter?

A) 31,300

B) 23,500

C) 18,500

D) 22,400

Diff: 2

LO: 9-2

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

37) Mountaineer Company manufactures dog collars. The following selected data relates to the company's budgeted sales and inventory levels of the dog collars for the upcoming quarter:

How many dog collars should Mountaineer Company produce in November?

A) 1420

B) 3730

C) 4580

D) 2880

Diff: 2

LO: 9-2

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

38) Quality Corporation manufactures quality vases. Budgeted sales and production data for the vases are as follows:

Each vase requires one pound of clay in its manufacture. Quality Corporation has a policy that the inventory of clay at the end of each month needs to be equal to 30% of the production needs for the following month. At the beginning of Month 1, 750 pounds of clay were in inventory. How many pounds of clay would Quality Corporation need to purchase in Month 2?

A) 2680

B) 2590

C) 3580

D) 2980

Diff: 2

LO: 9-2

EOC: E9-19

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

39) Wheels Company manufactures and sells children's skateboards. Each skateboard requires four bearings. For September, Wheels Company has budgeted skateboard sales of 560 skateboards, while 620 skateboards are scheduled to be produced. Wheels Company will begin September with 260 bearings in its beginning inventory, and estimates ending inventory for September to be 500 bearings. How many bearings should Wheels Company purchase in September?

A) 300

B) 2480

C) 2740

D) 2720

Diff: 2

LO: 9-2

EOC: E9-19

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

40) Baby Buggy Company manufactures and sells children's strollers. Each stroller requires eight screws. For September, Baby Buggy Company will begin September with 320 screws in its beginning inventory. Baby Buggy Company has budgeted stroller sales of 500 strollers, while 570 strollers are scheduled to be produced. How many screws should the company purchase in September?

A) 180

B) 4240

C) 4880

D) 4560

Diff: 2

LO: 9-2

EOC: E9-19

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

41) The Posh Cushion Company manufactures foam cushions. The number of cushions to be produced in the upcoming three months follows:

Each cushion requires 3 pounds of the foam used as stuffing. The company has a policy that the ending inventory of foam each month must be equal to 20% of the following month's expected production needs. How many pounds of foam does The Posh Cushion Company need to purchase in August?

A) 37,800

B) 50,400

C) 33,600

D) 46,200

Diff: 2

LO: 9-2

EOC: E9-19

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

42) Rest Easy Corporation manufactures end tables. Each end table requires .50 direct labor hours in its production. Rest Easy Corporation has a direct labor rate of $20 per direct labor hour. The production budget shows that the company plans to produce 1300 end tables in March and 700 end tables in April. What is the total combined direct labor cost that Rest Easy Corporation should budget in March and April?

A) 14,000

B) 13,000

C) 20,000

D) 40,000

Diff: 2

LO: 9-2

EOC: E9-21

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

43) Bedside Corporation manufactures nightstands. The production budget shows that Bedside Corporation plans to produce 1400 nightstands in March and 2000 nightstands in April. Each nightstand requires 0.25 direct labor hours in its production. The corporation has a direct labor rate of $14 per direct labor hour. What is the total combined direct labor cost that Bedside Corporation should budget in March and April?

A) 7000

B) 4900

C) 47,600

D) 11,900

Diff: 2

LO: 9-2

EOC: E9-21

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

44) Safety Works manufacturers safety whistle keychains. They have the following information available to prepare their master budget:

Safety Works sells each whistle for $10. They have a desired ending inventory for production of 10% of the next month's budgeted sales in units. How many units does Safety Works need to produce in November? (Round all intermediary calculations up to the next whole unit.)

A) 4710 units

B) 32,400 units

C) 3240 units

D) 4920 units

Diff: 3

LO: 9-2

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

45) Safety Works manufacturers safety whistle keychains. They have the following information available to prepare their master budget:

Safety Works sells each whistle for $6. How many units does Safety Works thinks it will sell in December?

A) 216,000 units

B) 21,000 units

C) 6000 units

D) 7500 units

Diff: 1

LO: 9-2

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

46) Safety Works manufacturers safety whistle keychains. They have the following information available to prepare their master budget:

Safety Works sells each whistle for $11. It takes 3 ounces of metal to produce each whistle at a cost of $0.30 per ounce. They prefer to have 10% of materials required for the following month's production in ending inventory as well. How many ounces of direct materials does Safety Works need to purchase in October to meet production needs?

A) 4,600 ounces

B) 13,965 ounces

C) 13,635 ounces

D) 5,385 ounces

Diff: 2

LO: 9-2

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

47) Safety Works manufacturers safety whistle keychains. They have the following information available to prepare their master budget:

Safety Works sells each whistle for $8. It takes 3 ounces of metal to produce each whistle at a cost of $0.70 per ounce. They prefer to have 10% of materials required for the following month's production in ending inventory as well. What is the total cost of direct materials for October to meet production needs? (Round the final answer to the nearest dollar.)

A) $3,570

B) $10,700

C) $10,721

D) $3,854

Diff: 3

LO: 9-2

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

48) Safety Works manufacturers safety whistle keychains. They have the following information available to prepare their master budget:

Safety Works sells each whistle for $6. It takes 0.50 direct labor hours to produce each whistle at a cost of $11 per hour. How much will direct labor costs be in December?

A) $5,520

B) $23,850

C) $2,760

D) $30,360

Diff: 2

LO: 9-2

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

49) Safety Works manufacturers safety whistle keychains. They have the following information available to prepare their master budget:

Safety Works sells each whistle for $12. It's been determined that each unit costs $8.50 to manufacture. How much will be budgeted for gross profit in November? (Do not round intermediary calculations. Round your final answer to the nearest dollar.)

A) $18,970.00

B) $67,800.00

C) $48,025.00

D) $19,775.00

Diff: 2

LO: 9-2

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

50) Safety Works manufacturers safety whistle keychains. They have the following information available to prepare their master budget:

Safety Works sells each whistle for $7. It's been determined that each unit costs $8.25 to manufacture. How much is total budgeted MOH costs for the year ended 2020?

A) $88,500

B) $228,000

C) $271,500

D) $273,000

Diff: 2

LO: 9-2

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

51) Safety Works manufacturers safety whistle keychains. They have the following information available to prepare their master budget:

Safety Works sells each whistle for $13. It's been determined that each unit costs $6.25 to manufacture. How much is total budgeted operating expenses for the year ended 2020?

A) $114,375

B) $234,000

C) $292,750

D) $289,625

Diff: 2

LO: 9-2

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

52) Safety Works manufacturers safety whistle keychains. They have the following information available to prepare their master budget:

Safety Works sells each whistle for $10. They have a desired ending inventory for production of 20% of the next month's budgeted sales in units. How many units does Safety Works need to produce in November? (Round all intermediary calculations up to the next whole unit.)

A) 4144 units

B) 38,310 units

C) 3956 units

D) 4238 units

Diff: 2

LO: 9-2

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

53) List the operating budgets in order of use and describe the purpose of each budget on the list below Describe the relationship between each budget.

Diff: 2

LO: 9-2

EOC: E9-23

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

54) Carlton Cookie Company produces a hand-processed gourmet cookie that is made with organic sugar. Five (5) pounds of organic sugar are required per batch of gourmet cookies. The organic sugar costs $2.40 per pound. The company needs to have 20% of the following month's production needs of organic sugar in ending inventory so it is on hand to start each month. A total of 120 pounds of organic sugar are expected to be on hand on April 1.

1. Budgeted production of the gourmet cookies for the first four months of the upcoming year is as follows:

Required:

Prepare a direct materials budget for organic sugar for each of the months in the second quarter and for the second quarter in total. Include both the quantity of sugar to be purchased and the cost of the purchases in each month.

Diff: 3

LO: 9-2

EOC: E9-21

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

55) Flying Disc Enterprises produces frisbees. Flying Disc Enterprises has the following sales projections for the upcoming year:

Inventory at the beginning of the year was 6,000 frisbees. Flying Disc Enterprises wants to have 30% of the next quarter's sales in units on hand at the end of each quarter. How many frisbees should Flying Disc Enterprises produce during the first quarter? Show your calculations.

Diff: 2

LO: 9-2

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

56) Wide Awake Company manufactures coffee makers. The following selected data relates to Wide Awake Company's budgeted sales and inventory levels of the coffee makers for the upcoming quarter. How many coffee makers should the company produce in November? Show your calculations.

Diff: 2

LO: 9-2

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

57) Scooters Inc. manufactures and sells scooters. Each scooter requires two rear view mirrors. For September, Scooters Inc. has budgeted sales of 415 scooters, while 450 scooters are scheduled to be produced. The company will begin September with 220 rear view mirrors in its beginning inventory. How many rear view mirrors should Sally Scooters purchase for September?

Diff: 2

LO: 9-2

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

58) Pristine Yards Manufacturing produces weed whackers. On March 31, Pristine Yards Manufacturing had 144 weed whackers in inventory. The company has a policy that the ending inventory in any month must be 12% of the following month's expected sales. Pristine Yards Manufacturing expects to sell the following number of weed whackers in each of the next four months:

Required:

Prepare a production budget for the second quarter, with a column for each month and for the quarter.

Diff: 3

LO: 9-2

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

59) Flawless Lawns Manufacturing produces lawn edgers. The company has a policy that the ending inventory in any month must be 10% of the following month's expected sales. On March 31, Flawless Lawns Manufacturing had 140 lawn edgers in inventory. Flawless Lawns Manufacturing expects to sell the following number of lawn edgers in each of the next four months:

Required:

Prepare a production budget for the second quarter, with a column for each month and for the quarter.

Diff: 3

LO: 9-2

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

9.3 Prepare the financial budgets

1) A cash collections budget focuses on the timing of cash receipts.

Diff: 1

LO: 9-3

EOC: E9-31

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

2) A company's plan to purchase property, plant, equipment, and other long-term assets is part of the budgeted balance sheet.

Diff: 1

LO: 9-3

EOC: E9-31

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

3) The budgeted cash collections from credit customers generally only reflect sales made in the current month.

Diff: 1

LO: 9-3

EOC: E9-26

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

4) The cash budget is prepared before the operating budget.

Diff: 1

LO: 9-3

EOC: E9-26

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

5) The cash budget is prepared before the budgeted balance sheet is prepared.

Diff: 1

LO: 9-3

EOC: E9-26

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

6) The cash budget helps managers determine whether or not the company requires financing in a given month.

Diff: 1

LO: 9-3

EOC: E9-28

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

7) Budget committee is a what-if technique that asks what a result will be if a predicted amount is not achieved or if an underlying assumption changes.

Diff: 1

LO: 9-3

EOC: E9-26

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

8) A company sells goods and offers credit terms of "net 30 days." What does this reveal to the company that sold the goods?

A) It does not have to ship the goods for 30 days.

B) It cannot recognize the sales credit for 30 days.

C) It offers a 30% discount for customers that use credit cards.

D) The customer has up to 30 days to pay back the seller for the goods purchased without penalty.

Diff: 1

LO: 9-3

EOC: E9-26

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

9) Which of the following items is a component of a cash payments budget?

A) Bad debt expense

B) Depreciation expense

C) Cash dividends

D) Gains on sales of equipment

Diff: 1

LO: 9-3

EOC: E9-26

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

10) Which of the following types of cash outlays contains its own budget?

A) Capital expenditures

B) Dividends

C) Income taxes

D) All of the above

Diff: 1

LO: 9-3

EOC: E9-31

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

11) A combined cash budget includes all of the following except

A) projected cash balance at the end of the month.

B) projected cash collections and cash payments.

C) projected borrowings and repayments.

D) projected depreciation on retail store.

Diff: 1

LO: 9-3

EOC: E9-28

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

12) A company should ________ when projecting cash receipts for a given month.

A) include only cash collections from sales made in that month

B) only list COD sales made in that month

C) only list credit sales made in that month

D) include cash to be collected in that month regardless of when the sale was made

Diff: 1

LO: 9-3

EOC: E9-28

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

13) "Financial budget" is best described by which of the following?

A) A company's plan to purchase property, plant and equipment, and other long-term assets

B) A budget that projects cash inflows, cash outflows, and the end of period budgeted balance sheet

C) A budget that shows projected sales, purchases, and operating expenses

D) A system for evaluating the performance of each responsibility center and its manager

Diff: 1

LO: 9-3

EOC: E9-30

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

14) "Capital expenditures budget" is best described by which of the following concepts?

A) Details that reveal how the company expects to move out of the beginning cash balance and into the desired ending cash balance

B) A system to evaluate the performance of each responsibility center and its manager

C) A company's plan to purchase property, plant and equipment, and other long-term assets

D) A budget that projects cash inflows, cash outflows, and the end of period budgeted balance sheet

Diff: 1

LO: 9-3

EOC: E9-33

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

15) ________ is a what-if technique that asks what a result will be if a predicted amount is not achieved or if an underlying assumption changes.

A) Sensitivity analysis

B) Ratio analysis

C) Risk analysis

D) Strategic analysis

Diff: 1

LO: 9-3

EOC: S9-2

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

16) "Combined cash budget" is best defined by which of the following?

A) A company's plan to purchase of property, plant and equipment, and other long-term assets

B) Details about how the company expects to move out of the beginning cash balance and into the desired ending cash balance

C) A system to evaluate the performance and manager of each responsibility center

D) A budget that projects assets, liabilities, and stockholders' equity at the end of a period

Diff: 1

LO: 9-3

EOC: E9-28

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

17) Which of the following budgets project cash inflows, cash outflows, and the budgeted balance sheet?

A) Purchases budget

B) Capital expenditures budget

C) Financial budget

D) Cash budget

Diff: 1

LO: 9-3

EOC: E9-28

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

18) Which of the following is an example of a financial budget?

A) Budgeted balance sheet

B) Sales budget

C) Budgeted income statement

D) Operating expenses budget

Diff: 1

LO: 9-3

EOC: E9-31

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

19) A manager considers all of the following when he or she prepares the cash budget except

A) payments for inventory.

B) cash receipts from customers.

C) depreciation expense.

D) cash payments to suppliers.

Diff: 1

LO: 9-3

EOC: E9-28

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

20) The final step in the preparation of the financial budget is the preparation of which of the following?

A) Master budget

B) Cash budget

C) Operating budgets

D) Budgeted balance sheet

Diff: 1

LO: 9-3

EOC: E9-28

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

21) Riverside Corporation collects 35% of a month's sales in the month of sale, 45% in the month following sale, and 20% in the second month following sale. Budgeted sales for the upcoming four months are:

The amount of cash that will be collected in July is budgeted to be

A) $80,500.

B) $140,500.

C) $221,000.

D) $207,500.

Diff: 2

LO: 9-3

EOC: E9-26

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

22) Northwest Corporation collects 35% in the second month following sale, 45% in the month following sale and 20% of a month's sales in the month of sale. Budgeted sales for the upcoming four months are:

The amount of cash that will be collected in July is budgeted to be

A) $36,000.

B) $205,500.

C) $169,500.

D) $210,000.

Diff: 2

LO: 9-3

EOC: E9-26

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

2

3) Maritime Corporation collects 45% of a month's sales in the month of sale, 40% in the month following sale, and 15% in the second month following sale. The company has found that 5% of their sales are uncollectible. Budgeted sales for the upcoming four months are:

The amount of cash that will be collected in November is budgeted to be

A) $312,000.

B) $290,000.

C) $130,500.

D) $300,000.

Diff: 2

LO: 9-3

EOC: E9-26

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

24) Lee Corporation collects 20% in the second month following sale, 40% in the month following sale and 32% of a month's sales in the month of sale. The company has found that 8% of their sales are uncollectible. Budgeted sales for the upcoming four months are:

The amount of cash that will be collected in November is budgeted to be

A) $248,400.

B) $286,800.

C) $86,400.

D) $278,400.

Diff: 2

LO: 9-3

EOC: E9-26

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

25) Bagel Company is preparing its cash budget for the upcoming month. The beginning cash balance for the month is expected to be $17,000. Budgeted cash receipts are $87,000, while budgeted cash disbursements are $70,000. Bagel Company wants to have an ending cash balance of $50,000. The excess (deficiency) of cash available over disbursements for the month would be

A) $174,000.

B) $(34,000).

C) $120,000.

D) $34,000.

Diff: 2

LO: 9-3

EOC: E9-31A

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

26) Hedlon Company is preparing its cash budget for the upcoming month. The beginning cash balance for the month is expected to be $16,000. Budgeted cash disbursements are $80,000, while budgeted cash receipts are $89,000. Hedlon Company wants to have an ending cash balance of $30,000. The excess (deficiency) of cash available over disbursements for the month would be

A) $25,000.

B) $185,000.

C) $(25,000).

D) $110,000.

Diff: 2

LO: 9-3

EOC: E9-31A

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

27) Wilson Company is preparing its cash budget for the upcoming month. The budgeted beginning cash balance is expected to be $41,000. Budgeted cash receipts are $92,000, while budgeted cash disbursements are $125,000. Wilson Company wants to have an ending cash balance of $42,000. How much would Wilson Company need to borrow to achieve its desired ending cash balance?

A) $8,000

B) $34,000

C) $9,000

D) $50,000

Diff: 2

LO: 9-3

EOC: E9-31A

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

28) Wise Company is preparing its cash budget for the upcoming month. The budgeted beginning cash balance is expected to be $35,000. Budgeted cash disbursements are $125,000, while budgeted cash receipts are $130,000. Wise Company wants to have an ending cash balance of $44,000. How much would Wise Company need to borrow to achieve its desired ending cash balance?

A) $4,000

B) $84,000

C) $40,000

D) $49,000

Diff: 2

LO: 9-3

EOC: E9-31A

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

29) Littletown Corporation expects its November sales to be 10% higher than its October sales of $160,000. Purchases were $120,000 in October and are expected to be $170,000 in November. All sales are on credit and are collected as follows: 30% in the month of the sale and 65% in the following month. Purchases are paid 40% in the month of purchase and 60% in the following month. The cash balance on November 1 is $13,800. The cash balance on November 30 will be

A) $170,600.

B) $16,800.

C) $30,600.

D) $3,000.

Diff: 3

LO: 9-3

EOC: E9-28

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

30) Miller Company expects its November sales to be 10% higher than its October sales of $200,000. All sales are on credit and are collected as follows: 35% in the month of the sale and 60% in the following month. Purchases were $90,000 in October and are expected to be $100,000 in November. Purchases are paid 20% in the month of purchase and 80% in the following month. The cash balance on November 1 is $13,300. The cash balance on November 30 will be

A) $105,000.

B) $118,300.

C) $210,300.

D) $91,700.

Diff: 3

LO: 9-3

EOC: E9-28

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

31) June sales were $9,000 while projected sales for July and August were $6,300 and $5,000, respectively. Sales are 45% cash and 55% credit. All credit sales are collected in the month following the sale. What are the total expected collections for July?

A) $10,035

B) $7,785

C) $5,585

D) $7,515

Diff: 2

LO: 9-3

EOC: E9-28

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

32) June sales were $3,000 while projected sales for July and August were $8,300 and $4,000, respectively. All credit sales are collected in the month following the sale. Sales are 65% credit and 35% cash. What are the total expected collections for July?

A) $6,255

B) $6,445

C) $5,505

D) $4,855

Diff: 2

LO: 9-3

EOC: E9-28

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

33) Purchases in May were $65,000, while expected purchases for June and July are $78,000 and $87,000, respectively. All purchases are paid 40% in the month of purchase and 60% in the following month. At what amount are June payments for purchases budgeted?

A) $72,800

B) $70,200

C) $92,000

D) $105,000

Diff: 2

LO: 9-3

EOC: E9-28

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

34) Expected purchases for June and July are $72,000 and $92,000, respectively. Purchases for May were $56,000. All purchases are paid 35% in the month of purchase and 65% the following month. At what amount are June payments for purchases budgeted?

A) $61,600

B) $66,400

C) $77,000

D) $93,800

Diff: 2

LO: 9-3

EOC: E9-28

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

35) Gregory Company has budgeted the following credit sales during the last four months of the year: September, $14,000; October, $15,000; November $18,000; December, $34,000. Experience has shown that payment for the credit sales is received as follows: 50% in the month of sale, 43% in the first month after sale, 5% in the second month after sale, and 2% uncollectible. How much cash can Gregory Company expect to collect in November as a result of credit sales?

A) $7,150

B) $16,150

C) $15,450

D) $16,830

Diff: 2

LO: 9-3

EOC: E9-28

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

36) For Rowan Company, experience has shown that payment for the credit sales is received as follows: 40% in the month of sale, 50% in the first month after sale, 5% in the second month after sale, and 5% uncollectible. Rowan Company has budgeted the following credit sales during the last four months of the year: September, $23,000; October, $17,000; November $24,000; December, $29,000. How much cash can Rowan Company expect to collect in November as a result of credit sales?

A) $18,100

B) $9,650

C) $19,250

D) $24,000

Diff: 2

LO: 9-3

EOC: E9-28

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

37) Lincoln Enterprises has budgeted sales for the months of September and October at $170,000 and $100,000, respectively. Monthly sales are 80% credit and 20% cash. Of the credit sales, 30% are collected in the month of sale and 70% are collected in the following month. What are the October cash collections from customers?

A) $139,200

B) $44,000

C) $116,800

D) $119,200

Diff: 2

LO: 9-3

EOC: E9-28

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

38) Five Friends Relocation Company prepared the following sales budget:

Credit collections are 32% in the month of sale, 40% in the month following the sale, and 20% two months following the sale. The remaining 8% is expected to be uncollectible.

What are the total cash collections in May at Five Friends Relocation Company?

A) $60,720

B) $18,720

C) $57,120

D) $99,000

Diff: 2

LO: 9-3

EOC: E9-26

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

39) Five Friends Relocation Company prepared the following sales budget:

Credit collections are 10% in the month of sale, 65% in the month following the sale, and 20% two months following the sale. The remaining 5% is expected to be uncollectible.

What are the total cash collections in June at Five Friends Relocation Company?

A) $35,700

B) $16,300

C) $93,700

D) $110,000

Diff: 2

LO: 9-3

EOC: E9-26

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

40) Five Friends Relocation Company prepared the following sales budget:

Credit collections are 50% in the month of sale, 43% in the month following the sale, and 5% two months following the sale. The remaining 2% is expected to be uncollectible.

What is the total cash received in April to account for the April sales at Five Friends Relocation Company?

A) $39,500

B) $6,500

C) $36,500

D) $3,500

Diff: 2

LO: 9-3

EOC: E9-26

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

41) Boise Boots prepared the following sales budget:

Credit collections are 20% two months following the sale, 40% in the month following the sale and 32% in the month of sale. The remaining 8% is expected to be uncollectible.

What are the total cash collections in May at Boise Boots?

A) $19,840

B) $60,840

C) $15,760

D) $83,000

Diff: 2

LO: 9-3

EOC: E9-26

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

42) Boise Boots prepared the following sales budget:

Credit collections are 10% two months following the sale, 40% in the month following the sale, and 40% in the month of sale. The remaining 10% is expected to be uncollectible.

What are the total cash collections in June at Boise Boots?

A) $38,000

B) $94,000

C) $28,100

D) $109,000

Diff: 2

LO: 9-3

EOC: E9-26

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

43) Boise Boots prepared the following sales budget:

Credit collections are 10% two months following the sale, 60% in the month following the sale, and 25% in the month of sale. The remaining 5% is expected to be uncollectible.

What is the total cash received in April from the April sales at Boise Boots?

A) $4,750

B) $32,250

C) $56,000

D) $41,750

Diff: 2

LO: 9-3

EOC: E9-26

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

44) BWB Board Games has budgeted sales for June and July at $470,000 and $520,000 , respectively. Sales are 75% credit, of which 20% is collected in the month of the sale and 80% is collected in the following month. What is the accounts receivable balance on July 31?

A) $282,000

B) $416,000

C) $312,000

D) $390,000

Diff: 1

LO: 9-3

EOC: E9-30

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

45) Light as a Feather Inc makes running shoes and they are anticipating the incurrence of the following manufacturing overhead costs during the upcoming year:

What will Light as a Feather Inc budget for cash disbursements related to manufacturing overhead?

A) $182,900

B) $84,000

C) $121,100

D) $158,900

Diff: 2

LO: 9-3

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

46) Light as a Feather Inc makes running shoes and they are anticipating the incurrence of the following operating expenses during the upcoming year:

The company plans to sell 126,000 pairs of shoes at $100 per pair. What will Light as a Feather Inc budget for cash disbursements related to operating expenses?

A) $590,000

B) $1,459,500

C) $1,333,500

D) $1,305,500

Diff: 2

LO: 9-3

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

47) Light as a Feather Inc makes running shoes and they have gathered the following data for the month of October:

Light as a Feather Inc requires an ending cash balance of at least $12,000 and can borrow from a line of credit in $1,000 increments. What is the company's cash excess or cash deficiency at the end of October?

A) $4,000 cash excess

B) $4,000 cash deficiency

C) $16,000 cash excess

D) $12,000 cash deficiency

Diff: 2

LO: 9-3

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

48) Light as a Feather Inc makes running shoes and they have gathered the following data for the month of October:

Light as a Feather Inc requires an ending cash balance of at least $12,000 and can borrow from a line of credit in $1,000 increments. How much will the company need to borrow at the end of October?

A) $0

B) $12,000

C) $11,000

D) $1000

Diff: 3

LO: 9-3

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

49) Light as a Feather Inc makes running shoes and they have gathered the following data for the month of October:

Light as a Feather Inc requires an ending cash balance of at least $12,000 and can borrow from a line of credit in $1,000 increments. What is the ending cash balance for October?

A) $10,000

B) $2000

C) $12,000

D) $0

Diff: 3

LO: 9-3

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

50) Frontlist Publishing Company publishes books and they have gathered the following data for the month of October:

Frontlist Publishing Company requires an ending cash balance of at least $5,000 and can borrow from a line of credit in $1,000 increments. What is the ending cash balance for October?

A) $16,000

B) $21,000

C) $5000

D) $37,000

Diff: 3

LO: 9-3

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

51) Frontlist Publishing Company publishes books and they have gathered the following data for the month of October:

Frontlist Publishing Company requires an ending cash balance of at least $5,000 and can borrow from a line of credit in $1,000 increments. What is the excess or deficiency of cash for October?

A) $13,000 cash deficiency

B) $18,000 cash excess

C) $5,000 cash excess

D) $31,000 cash deficiency

Diff: 3

LO: 9-3

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

52) Frontlist Publishing Company publishes books and they have gathered the following data for the month of October:

Frontlist Publishing Company requires an ending cash balance of at least $5,000 and can borrow from a line of credit in $1,000 increments. How much cash does the company need to borrow for October?

A) $8,000

B) $0

C) $3,000

D) $5,000

Diff: 3

LO: 9-3

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

53) Frontlist Publishing Company publishes books and they have gathered the following data for the month of October:

Frontlist Publishing Company requires an ending cash balance of at least $5,000 and can borrow from a line of credit in $1,000 increments. How much cash is available for October?

A) $359,000

B) $366,500

C) $277,000

D) $5,000

Diff: 1

LO: 9-3

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

54) Define operating budgets and financial budgets. List the specific budgets which are operating budgets. List the specific budgets which are financial budgets.

Diff: 3

LO: 9-3

EOC: S9-2

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

55) Byerly Corporation anticipates the following sales revenue over a five-month period:

Byerly Corporation's sales are 40% cash and 60% credit. The Byerly Corporation's collection history indicates that credit sales are collected as follows:

Required:

Prepare a cash collections budget for each month in the quarter (January, February, and March) and for the quarter in total.

Diff: 3

LO: 9-3

EOC: E9-27

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

56) Potato State Manufacturing is preparing its cash payments budget in the upcoming month. The following information pertains to the cash payments:

a. Potato State Manufacturing pays for 70% of its direct materials purchases in the month of purchase and the remainder the following month. Last month's direct material purchases were $40,000, while First State Manufacturing anticipates $45,000 of direct material purchases this coming month.

b. Direct labor for the upcoming month is budgeted to be $25,000 and will be paid at the end of the upcoming month.

c. Overhead is estimated to be 150% of direct labor cost each month and is paid in the month in which it is incurred. This monthly estimate includes $8,000 of depreciation on the plant and equipment.

d. Monthly operating expenses for next month are expected to be $27,500, which includes $1,500 of depreciation on office equipment and $2,000 of bad debt expense. These monthly operating expenses are paid during the month in which they are incurred.

e. Potato State Manufacturing will be making an estimated tax payment of $6,000 next month.

Required:

Prepare a cash payments budget for the month.

Diff: 2

LO: 9-3

EOC: E9-28

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

9.4 Prepare budgets for a merchandiser

1) A merchandising company has a production budget.

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

2) The master budget of a service company has fewer individual budget components compared to the master budget of a manufacturing company.

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

3) The operating budgets of retailers and manufacturers are virtually identical.

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

4) Merchandisers use a "cost of goods sold, inventory, and purchases budget" to calculate the amount of merchandise to purchase.

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

5) The financial budget that a manager prepares at a manufacturing company is different compared to the financial budget that a manager prepares at a merchandising and a service company.

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

6) The managers at manufacturing, merchandising, and service companies prepare operating expenses budgets.

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

7) The manager at a merchandising company does not prepare a direct materials budget.

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

8) The manager at a service company does not prepare a cash budget.

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

9) Merchandising companies prepare sales, cash, and operating expenses budgets.

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

10) Service companies do not prepare a cost of goods sold, inventory, and purchases budget.

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

11) Merchandising companies prepare a direct materials budget.

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

12) Merchandising companies prepare a manufacturing overhead budget.

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

13) In which of the following company types would the manager use a direct materials budget?

A) Manufacturing

B) Merchandising

C) Service

D) All of the above

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

14) In which of the following company types would the manager combine cost of goods sold, inventory, and purchases into one budget?

A) Manufacturing

B) Merchandising

C) Service

D) All of the above

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

15) In which of the following company types does a manager use a sales budget?

A) Manufacturing

B) Merchandising

C) Service

D) All of the above

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

16) In which of the following company types does a manager use an operating expenses budget?

A) Manufacturing

B) Merchandising

C) Service

D) All of the above

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

17) In which of the following company types does the manager use a "cost of goods sold, inventory, and purchases" budget?

A) Merchandising

B) Manufacturing

C) Service

D) All of the above

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

18) In which of the following company types does the manager use a capital expenditures budget?

A) Manufacturing

B) Merchandising

C) Service

D) All of the above

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

19) The format of the "cost of goods sold, inventory, and purchases" budget is as follows:

A) desired ending inventory + beginning inventory - cost of goods sold.

B) cost of goods sold + desired ending inventory - beginning inventory.

C) cost of goods sold - desired ending inventory + beginning inventory.

D) desired ending inventory - beginning inventory - cost of goods sold.

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

20) Merchandising companies prepare which of the following budgets?

A) Sales

B) Cash

C) Operating expense

D) All of the above

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

21) All of the following budgets are prepared by service companies except

A) cost of goods sold, inventory and purchases.

B) cash.

C) operating expense.

D) sales.

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

22) All of the following budgets are prepared by merchandising companies except

A) sales.

B) operating expense.

C) direct materials.

D) cost of goods sold, inventory and purchases.

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

23) All of the following budgets are prepared by merchandising companies except

A) manufacturing overhead.

B) capital expenditures.

C) budgeted income statement.

D) cash.

Diff: 1

LO: 9-4

EOC: A9-66

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

24) Desired ending inventory is 20% of next month's sales. If cost of goods sold is $300,000 and next month's sales are $900,000, which of the following statements is true regarding purchases?

A) Purchases will be more than cost of goods sold.

B) Purchases cannot be predicted from the information given.

C) Purchases will be less than cost of goods sold.

D) Purchases will equal cost of goods sold.

Diff: 2

LO: 9-4

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

25) Desired ending inventory is 25% more than beginning inventory. If purchases total $160,000, which of the following statements is true regarding cost of goods sold (COGS)?

A) COGS will exceed cost of goods available for sale.

B) COGS will be less than purchases.

C) COGS will exceed purchases.

D) COGS will equal $55,000.

Diff: 3

LO: 9-4

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

26) Boyd's Bookstore budgeted sales of $800,000 for the month of November and cost of goods sold equal to 70% of sales. Beginning inventory for November was $54,000 and ending inventory for November is estimated at $59,000. How much are the budgeted purchases for November?

A) $565,000

B) $687,000

C) $555,000

D) $447,000

Diff: 3

LO: 9-4

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

27) Smoothie Vibes prepared the following sales budget:

The expected gross profit rate is 30% and the inventory at the end of February was $7,000. Desired inventory levels at the end of the month are 30% of the next month's cost of goods sold.

What is the desired beginning inventory on June 1?

A) $1,350

B) $2,520

C) $3,150

D) $10,500

Diff: 2

LO: 9-4

EOC: E9-21A

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

28) Smoothie Vibes prepared the following sales budget:

The expected gross profit rate is 30% and the inventory at the end of February was $6,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.

What is the desired ending inventory on May 31?

A) $840

B) $9,800

C) $1,820

D) $1,960

Diff: 2

LO: 9-4

EOC: E9-21A

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

29) Smoothie Vibes prepared the following sales budget:

The expected gross profit rate is 30% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 10% of the next month's cost of goods sold.

What is the budgeted cost of goods sold for May?

A) $4,200

B) $9,800

C) $3,000

D) $1,400

Diff: 2

LO: 9-4

EOC: E9-18

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

30) Smoothie Vibes prepared the following sales budget:

The expected gross profit rate is 10% and the inventory at the end of February was $15,000. Desired inventory levels at the end of the month are 10% of the next month's cost of goods sold.

What are the total purchases budgeted for April?

A) $900

B) $9,900

C) $9,270

D) $8,730

Diff: 3

LO: 9-4

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

31) Smoothie Vibes prepared the following sales budget:

The expected gross profit rate is 30% and the inventory at the end of February was $7,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.

What are the total purchases budgeted for May?

A) $7,700

B) $8,400

C) $9,100

D) $10,080

Diff: 3

LO: 9-4

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

32) Hiking General Store prepared the following sales budget:

The expected gross profit rate is 30% and the inventory at the end of February was $11,000. Desired inventory levels at the end of the month are 30% of the next month's cost of goods sold.

What is the desired beginning inventory on June 1?

A) $2,100

B) $3,570

C) $1,530

D) $11,900

Diff: 2

LO: 9-4

EOC: E9-21A

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

33) Hiking General Store prepared the following sales budget:

The expected gross profit rate is 20% and the inventory at the end of February was $8,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.

What is the desired ending inventory on May 31?

A) $560

B) $1,600

C) $2,240

D) $11,200

Diff: 2

LO: 9-4

EOC: E9-21A

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

34) Hiking General Store prepared the following sales budget:

The expected gross profit rate is 30% and the inventory at the end of February was $12,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.

What is the budgeted cost of goods sold for May?

A) $7,700

B) $3,300

C) $2,200

D) $11,900

Diff: 2

LO: 9-4

EOC: E9-18

AACSB: Reflective thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

35) Hiking General Store prepared the following sales budget:

The expected gross profit rate is 30% and the inventory at the end of February was $14,000. Desired inventory levels at the end of the month are 10% of the next month's cost of goods sold.

What are the total purchases budgeted for April?

A) $10,780

B) $9,800

C) $9,660

D) $9,940

Diff: 3

LO: 9-4

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

36) Hiking General Store prepared the following sales budget:

The expected gross profit rate is 10% and the inventory at the end of February was $13,000. Desired inventory levels at the end of the month are 30% of the next month's cost of goods sold.

What are the total purchases budgeted for May?

A) $16,380

B) $12,600

C) $13,140

D) $12,060

Diff: 3

LO: 9-4

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

37) A lamp store purchased $3,800 of lamps in September. The store had $1,100 of lamps on hand at the beginning of September and expected to have $1,800 of lamps at the end of September to cover part of anticipated October sales. What is the budgeted cost of goods sold for September?

A) $4,900

B) $3,100

C) $6,700

D) $4,500

Diff: 2

LO: 9-4

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

38) Pet Supplies Inc has budgeted purchases of inventory for December of $202,050. Expected beginning inventory on December 1 and ending inventory on December 31 are $50,000 and $140,000, respectively. If cost of goods sold averages 83% of sales, what are budgeted sales for December?

A) $135,000

B) $93,001.5

C) $351,867

D) $472,349

Diff: 2

LO: 9-4

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

39) Ruby's Department Store has budgeted cost of goods sold of $35,000 for its men's shorts in March. Management also wants to have $7,100 of men's shorts in inventory at the end of March to prepare for the summer season. Beginning inventory of men's shorts for March is expected to be $4,800. What dollar amount of men's shorts should be purchased in March?

A) $32,700

B) $37,300

C) $46,900

D) $23,100

Diff: 2

LO: 9-4

EOC: E9-20

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

40) Dave's Fine Clothing has budgeted cost of goods sold of $39,000 for its men's shorts in March. Management also wants to have $6,000 of men's shorts in inventory at the end of March to prepare for the summer season. Beginning inventory of men's shorts for March is expected to be $4,900. What dollar amount of men's shorts should be purchased in March?

A) $40,100

B) $37,900

C) $49,900

D) $28,100

Diff: 2

LO: 9-4

EOC: E9-20

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

41) Oil & Vinegar Store recorded sales of $180,000 during March. Management expects sales to increase 25% in April, another 2% in May, and another 12% in June. Cost of goods sold is expected to be 70% of sales. What is the budgeted gross profit for June?

A) $77,112

B) $257,143

C) $257,040

D) $126,000

Diff: 2

LO: 9-4

EOC: E9-16

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

42) Pet Food Company budgets payroll at $3,600 per month plus a percentage of monthly sales. The June operating expenses budget includes total payroll of $13,600 with budgeted sales of $200,000. Sales for July are budgeted at $150,000 while purchases of inventory for July are budgeted at $980,000. Depreciation and insurance for July are estimated at $900 and $800, respectively. Office and administrative expenses related to purchasing inventory are budgeted at 10% of purchases for the month. The purchase of $2,900 in equipment and $1,500 in furniture is expected in July.

The July payroll should be budgeted at

A) $11,100

B) $13,600

C) $16,500

D) $7,500

Diff: 3

LO: 9-4

EOC: E9-21

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

43) Pet Food Company budgets payroll at $3,300 per month plus a percentage of monthly sales. The June operating expenses budget includes total payroll of $9,900 with budgeted sales of $110,000. Sales for July are budgeted at $170,000 while purchases of inventory for July are budgeted at $190,000.00. Depreciation and insurance for July are estimated at $1,100 and $400, respectively. Office and administrative expenses related to purchasing inventory are budgeted at 5% of purchases for the month. The purchase of $2,800 in equipment and $1,400 in furniture is expected in July.

The total operating expenses budgeted for July are

A) $23,000.

B) $11,400.

C) $24,500.

D) $13,500.

Diff: 3

LO: 9-4

EOC: E9-23

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

44) Pet Food Company budgets payroll at $3,900 per month plus a percentage of monthly sales. The June operating expenses budget includes total payroll of $12,900 with budgeted sales of $150,000. Sales for July are budgeted at $110,000 while purchases of inventory for July are budgeted at $990,000. Depreciation and insurance for July are estimated at $1,500 and $200, respectively. Office and administrative expenses related to purchasing inventory are budgeted at 5% of purchases for the month. The purchase of $2,700 in equipment and $1,600 in furniture is expected in July.

If the percentage of monthly sales used in budgeting payroll increases 25%, what would the total payroll budgeted for July be?

A) $6,600

B) $12,150

C) $8,250

D) $10,500

Diff: 3

LO: 9-4

EOC: E9-21

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

45) Betsy's Fine Beach Souvenirs charges tourists to use their credit cards to purchase merchandise at the vacation store. On Monday, the store sold $4,000 in merchandise to tourists that used their credit cards to purchase beachwear at the store. The bank charges the store 1.70% of the total credit card purchases per day to settle the credit transactions. What is the total deposit the store expects the bank to deposit into her account after the total bank fees and charges are taken out of the credit purchases on Monday? (Round the final answer to the nearest dollar.)

A) $68.00

B) $4068.00

C) $3932.00

D) $4000.00

Diff: 3

LO: 9-4

EOC: S9-13

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

46) Oliver's Ice Cream Stand makes payments on its inventory purchases as follows: 20% in the month of purchase, 70% in the following month, and 10% in the second month following purchase. Budgeted inventory purchases for June, July, and August are $10,000, $15,000 and $23,000, respectively. What is the budgeted amount of cash payments to account for inventory in August at Oliver's Ice Cream Stand?

A) $14,800

B) $6,900

C) $4,800

D) $16,100

Diff: 2

LO: 9-4

EOC: E9-28

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

47) Cave Hardware's forecasted sales for April, May, June, and July are $210,000, $230,000, $110,000, and $290,000, respectively. Sales are 60% cash and 40% credit with all accounts receivables collected in the month following the sale. Cost of goods sold is 75% of sales and ending inventory is maintained at $50,000 plus 10% of the following month's cost of goods sold. All inventory purchases are paid 28% in the month of purchase and 72% in the following month.

What are the cash collections budgeted for June at Cave Hardware?

A) $108,000

B) $218,000

C) $66,000

D) $158,000

Diff: 3

LO: 9-4

EOC: E9-28

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

48) Cave Hardware's forecasted sales for April, May, June, and July are $230,000, $200,000, $180,000, and $290,000, respectively. Sales are 70% cash and 30% credit with all accounts receivables collected in the month following the sale. Cost of goods sold is 80% of sales and ending inventory is maintained at $65,000 plus 10% of the following month's cost of goods sold. All inventory purchases are paid 26% in the month of purchase and 74% in the following month.

What are the budgeted cash payments in June to account for the inventory purchases at Cave Hardware?

A) $341,600

B) $311,200

C) $156,944

D) $154,256

Diff: 3

LO: 9-4

EOC: E9-28

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

49) Cave Hardware's forecasted sales for April; May; June; and July are $250,000; $300,000; $170,000; and $230,000; respectively. Sales are 65% cash and 35% credit with all accounts receivables collected in the month following the sale. Cost of goods sold is 80% of sales and ending inventory is maintained at $80,000 plus 20% of the following month's cost of goods sold. All inventory purchases are paid 24% in the month of purchase and 76% in the following month.

What is the balance of accounts payable on the June 30 budgeted balance sheet at Cave Hardware?

A) $82,688

B) $129,200

C) $145,600

D) $110,656

Diff: 3

LO: 9-4

EOC: E9-27

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

50) Peabody Company prepared the following purchases budget:

All purchases are paid for as follows: 60% in the month of purchase, 35% in the following month, and 5% two months after purchase.

What are the cash disbursements in August to account for the June purchases at Peabody Company?

A) $20,400

B) $15,855

C) $11,900

D) $1,700

Diff: 1

LO: 9-4

EOC: E9-27

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

51) Peabody Company prepared the following purchases budget:

All purchases are paid for as follows: 30% in the month of purchase, 60% in the following month, and 10% two months after purchase.

What are the cash disbursements in October to account for the September purchases at Peabody Company?

A) $27,360

B) $4,560

C) $3,580

D) $93,700

Diff: 1

LO: 9-4

EOC: E9-27

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

52) Peabody Company prepared the following purchases budget:

All purchases are paid for as follows: 60% in the month of purchase, 35% in the following month, and 5% two months after purchase.

What are the total cash disbursements in August to account for the purchase of merchandise at Peabody Company?

A) $46,590

B) $70,020

C) $40,525

D) $24,000

Diff: 2

LO: 9-4

EOC: E9-27

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

53) Peabody Company prepared the following purchases budget:

All purchases are paid for as follows: 30% in the month of purchase, 45% in the following month, and 25% two months after purchase.

What are the total cash disbursements in October to account for the purchase of merchandise at Peabody Company?

A) $44,350

B) $38,920

C) $48,700

D) $14,610

Diff: 2

LO: 9-4

EOC: E9-27

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

54) Perry Company prepared the following purchases budget:

All purchases are paid for as follows: 25% two months after purchase, 45% in the following month, and 30% in the month of purchase.

What are the cash disbursements in August to account for the June purchases at Perry Company?

A) $10,250

B) $21,150

C) $18,450

D) $12,300

Diff: 1

LO: 9-4

EOC: E9-27

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

55) Perry Company prepared the following purchases budget:

All purchases are paid for as follows: 5% two months after purchase, 55% in the following month, and 40% in the month of purchase.

What are the cash disbursements in October to account for the September purchases at Perry Company?

A) $2,750

B) $30,250

C) $1,900

D) $55,000

Diff: 1

LO: 9-4

EOC: E9-27

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

56) Perry Company prepared the following purchases budget:

All purchases are paid for as follows: 25% two months after purchase, 45% in the following month, and 30% in the month of purchase.

What are the total cash disbursements in August to account for the purchase of merchandise at Perry Company?

A) $39,950

B) $46,620

C) $40,050

D) $11,700

Diff: 2

LO: 9-4

EOC: E9-27

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

57) Perry Company prepared the following purchases budget:

All purchases are paid for as follows: 15% two months after purchase, 40% in the following month, and 45% in the month of purchase.

What are the total cash disbursements in October to account for the purchase of merchandise at Perry Company?

A) $22,320

B) $41,520

C) $41,925

D) $47,295

Diff: 2

LO: 9-4

EOC: E9-27

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

58) The managerial accountant at the Holly and Ivy Tree Store reported that the company anticipates sales of $600,000 in September and October, $625,000 in November, $635,000 in December, and note that the sales figure is $640,000 in January. The August sales revenue was equal to the September sales revenue. The managerial accountant establishes the prices at the Holly and Ivy Tree Store on its merchandise to ensure the company earns 45% gross profit on its sales. The managerial accountant expects the ending inventory at the store to equal 12% of the next month's cost of goods sold.

Compute the COGS, inventory, and purchases budget for October, November, and December.

Diff: 3

LO: 9-4

EOC: E9-33

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

59) Jasmine and Rosemary sell healthy spices to consumers at the county fair. Sally and Rosemary only accept credit card purchases and cash from consumers. On Saturday, they sold $350 in merchandise and all consumers used credit cards to purchase merchandise at the fair. The bank charges 1.75% on total credit charges each day to settle the credit charges on their business banking account. Compute the total charges the bank will charge Jasmine and Rosemary on their account. How much will the bank deposit into their account after all charges? How should Jasmine and Rosemary show the sale and fees in the sales budget, the operating expense budget, and the cash collections budget?

Diff: 3

LO: 9-4

EOC: S9-13

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

60) Ted's Graduation Store sells graduation supplies to students through the college bookstore. The bank charges Ted's Graduation Store 3.25% on the total credit card sales each day to settle the credit card transactions. The college bookstore reported that consumers purchased $420 in credit card purchases. The managerial accountant needs to update the sales budget, the operating expenses budget, and the cash collections budget to account for the credit sales. What amount should the managerial accountant use to complete the sales budget, the operating expenses budget, and the cash collections budget? In which month should the managerial accountant show this data? What should the managerial accountant consider when updating the master budget?

Diff: 3

LO: 9-4

EOC: S9-13

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

61) Trailrunners Company has prepared the following forecasts of monthly sales:

Trailrunners Company has decided that the number of units in its inventory at the end of each month should equal 80% of next month's sales. The budgeted cost per unit is $10.

How many units should be in January's beginning inventory?

Diff: 2

LO: 9-4

EOC: E9-18

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

62) The Blow Up Pools Company sells inflatable pools. On June 30, there were 105 pools in ending inventory, and accounts receivable had a balance of $12,000. Sales of inflatable pools (in units) have been budgeted at the following levels for the upcoming months:

The company has a policy that the ending inventory of inflatable pools should be equal to 30% of the number of pools to be sold in the following month. The Blow Up Pools Company sells the inflatable pools for $100 each. The company's collection history shows that 30% of the sales in a month are paid for by customers in the month of sale, while the remainder is collected in the following month.

Required:

a. Prepare a merchandise purchases budget showing how many pools should be purchased

in each of the months including July, August, and September.

b. Prepare a cash collections budget for each of the months including July, August, and September.

Diff: 3

LO: 9-4

EOC: E9-28

AACSB: Analytical thinking

Learning Outcome: Discuss basic budgeting concepts and identify and prepare the budgets that comprise the master budget.

9.5 Analyze data for budgeting using data analytics tools

1) The slope of the trendline indicates the fixed portion of the trendline.

Diff: 1

LO: 9-5

AACSB: Reflective thinking

2) The intercept of the trendline indicates the fixed portion of the trendline.

Diff: 1

LO: 9-5

AACSB: Reflective thinking

3) The variable portion of the trendline is indicated by the slope of the trendline.

Diff: 1

LO: 9-5

AACSB: Reflective thinking

4) In order to visualize a linear trendline in Excel, one must enter a data set then choose which tab on the ribbon to see a scatterplot?

A) Data

B) Insert

C) Formulas

D) Home

Diff: 1

LO: 9-5

AACSB: Reflective thinking

5) When adding a trendline to the scatterplot graph, one must right click on which data point on the trendline?

A) Highest data point on the trendline.

B) Lowest data point on the trendline.

C) Absolute enter data point on the trendline.

D) Any data point on the trendline.

Diff: 1

LO: 9-5

AACSB: Reflective thinking

6) Which of the following is not a step in creating a trendline on a scatterplot graph?

A) Enter data set with predictor variable (x) in the left column and outcome variable (y) in the right column.

B) Right click on any data point to add a trendline.

C) Go to Formulas and add subtotals for each change in outcome variable (y).

D) Go to the Insert Tab and click on scatter icon to add scatterplot graph.

Diff: 2

LO: 9-5

AACSB: Analytical thinking

7) SLOPE, INTERCEPT, and RSQ are accessed in Excel through which of the following sequences?

A) Click on Formulas tab, then select More Functions, and then Statistical.

B) Click on Insert tab, then select Scatter icon, and add trendline.

C) Click on Formulas tab then select trendline.

D) Click on Data Tab, then select More Functions, then add trendline.

Diff: 2

LO: 9-5

AACSB: Analytical thinking

8) If one wants to gather forecasted values based on a linear data set, one can use what function in Excel?

A) Linear Trendline.

B) RSQ.

C) Statistical Intercept.

D) FORECAST.LINEAR.

Diff: 1

LO: 9-5

AACSB: Reflective thinking

9) When preparing a linear trendline in Excel with the forecast forward feature, list the following steps in order of their occurrence.

________ Right click on any data point in the scatterplot.

________ Enter data set with predictor variable (x) on left and outcome variable (y) on right.

________ Extend trendline forward by enter number of units you would like to extend

the trendline forward past the highest value in the data set.

________ Add Trendline.

________ Choose scatter icon from group of available charts.

________ Choose Insert Tab.

Diff: 2

LO: 9-5

AACSB: Reflective thinking

10) List the following steps in order of their occurrence when using FORECAST.LINEAR, SLOPE, INTERCEPT, and RSQ Functions.

________ Choose Formulas tab, then More Functions and then Statistical.

________ Enter data set with predictor variable (x) on left and outcome variable (y) on right.

________ Type in values of predictions you would like to forecast then click on cell

for what you would like to forecast.

________ Choose FORECAST.LINEAR and fill in dialog box to calculate forecasted

information.

________ Choose Formulas tab, then More Functions and then Statistical.

________ Click on SLOPE, INTERCEPT, or RSQ (depending on which you are calculating

at that point) and fill in dialog box.

Diff: 2

LO: 9-5

AACSB: Reflective thinking