1) Which of the following statements are characteristic of budgets?

1)

Which of the following statements are characteristic of budgets?

• Budgets are financial plans for the future.
• Budgets improve decision making.
• Budgets represent an important aspect of planning.
• All of the answers are correct.

2)

A continuous budget:

• is a plan that is continuously updated with one month expiring and another month being added.
• is prepared for only the relevant range.
• is a plan that is continuously changing.
• is a plan that is updated quarterly.

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3)

A company is planning to sell 2,000 chairs for the first quarter. Desired ending inventory is 200 chairs and beginning inventory is 300 chairs. How many chairs need to be produced during this quarter?

• 2,500
• 2,000
• 1,900
• 2,100

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4)

In an overhead budget:

• both budgeted variable and fixed overhead costs are included.
• only the variable overhead rate is included.
• several activity drivers are selected.
• a separate budget is prepared for fixed overhead.

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5)

Which of the following budgets is not considered when preparing a cost of goods sold budget?

• direct materials budget
• direct labor budget
• selling expenses budget
• finished goods inventory budget

6)

The following information is provided for preparing a cash budget:

Beginning cash balance: