ACT 4B Flashcards
The _________ budget is a component in a financial budget.
Budget Balance Sheet
Which of the following is a benefit to an organization that implements a budget?
Budgets help the manager improve the motivation of employees in the workplace. Budgets help managers focus their attention on the future needs in an organization.
Budgets help managers improve their decision-making processes in an organization.
All of the above.
Meers Corporation had beginning inventory of 19,000 units and expects sales of 75,000 units during the
year. Desired ending inventory is 20,000 units. How many units should Meers Corporation produce?
75000+20,000-19,000= 76,000
Combined cash budget” is best defined by which of the following?
Details about how the company expects to move out of the beginning cash balance and into the
desired ending cash balance.
Brockman 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 $129,000, while budgeted cash
receipts are $125,000. Brockman Company wants to have an ending cash balance of $45,000. How
much would Brockman Company need to borrow to achieve its desired ending cash balance?
35,000 + 125,000 – 129,000 = 31,000. $45,000 – 31,000 = $14,000.
June sales were $6,000 while projected sales for July and August were $8,500 and $2,000, respectively.
All credit sales are collected in the month following the sale. Sales are 70% credit and 30% cash. What
are the total expected collections for July?
($6,000 June sales x 70% credit = $4,200) + ($8,500 July sales x 30% cash = $2,550) = $6,750.
Sandy’s Sauces, which produces stir-fry sauces, is developing direct material standards. Each bottle of
sauce requires 0.73 kilograms of base. The allowance for waste is 0.60 kilograms per bottle, while the
allowance for rejects is 0.90 kilograms per bottle. What is the standard quantity of base per bottle?
0.73 base + 0.60 allowance for waste + 0.90 allowance for rejects = 2.23
The ___________ tells managers how much of the overall variance is due to paying a higher or lower
price than expected for the quantity of materials it purchased.
Price variance
Fitness Bands Corporation gathered the following information for Job #928: Standard Total Cost Actual Total Cost Direct materials
Standard: 2300 pints at $3.00/pint
$6,900
Actual: 2400 pints at $4.75/pint
$11,400
(4.75-3.00) x 2,400 = 4,200
The direct labor variance can be divided into two variances
rate variance and efficiency variance.
The Ticktock Corporation produces clocks. According to company standards, it should take 2 hours of
direct labor to produce a clock. Ticktock’s standard labor cost is $14 per hour. During June, Ticktock
produced 6,300 stopwatches and used 13,300 hours of direct labor at a total cost of $239,400. What is
Ticktock’s direct labor rate variance for June?
$239,400/13,300 = $18 per rate actual. ($18 - $14) x 13,300 actual hours = $53,200
Which of the following is a characteristic of a capital asset?
The item involves a significant sum of money.
The item will be used for a long period of time.
Osprey Company is evaluating two possible investments in depreciable plant assets. The company uses
the straight-line method of depreciation. The following information is available:
Investment A Investment B
Initial capital investment $30,000 $105,000
Estimated useful life 5 years 5 years
Estimated residual value $10,000 $15,000
Estimated annual net cash inflow $12,000 $30,000
Required rate of return 15% 13%
How long is the payback period for Investment B?
$105,000 initial capital investment / $30,000 annual cash inflow = 3.5 years
The present value of an investment is affected by all of the following except?
The value of a past investment
