1) The number of units included in the production budget:
A may differ from the number of units in the sales budget, depending on ending inventory goals.
B are always the same as the number of units in the sales budget.
C is based on the number of units in the sales budget, and increased for increases in the selling and administrative expense budget to account for increased demand.
D depends on the raw materials purchases budget.
2 Which of the following is not a source that can be used in preparing the sales budget?
A Industry trends.
B Marketing activities.
C Prior sales.
D The production budget.
3 When calculating the direct labor budget, the starting point should be:
A budgeted sales.
B budgeted cost of direct labor.
C actual direct labor hours from the previous year.
D budgeted production.
4 The formula for budgeted raw materials purchases is:
A Budgeted production units + Beginning raw materials inventory – Ending raw materials inventory.
B Budgeted production units + Ending raw materials inventory – Beginning raw materials inventory.
C Materials needed for production + Ending raw materials inventory – Beginning raw materials inventory.
D Materials needed for production + Beginning raw materials inventory – Ending raw materials inventory.
5 From a managerial perspective, which budget is most likely to motivate people to succeed in executing it?
A) A budget that is tight, but attainable because it creates the appropriate level of challenge.
B ) A budget that is easy to achieve, because it inspires confidence.
C ) A budget that is tight, and nearly impossible to achieve, because it creates camaraderie and an “us versus them” mentality.
D ) A budget that is difficult to achieve, because it encourages people to aim high.
