9th Edition

Managerial
Accounting
Warren/Reeve
Score %
A
Chapter Test 6A
Name
Course Section
TEST 6A (Concluded)

FILL-IN-THE-BLANK—PRINCIPLES AND TERMINOLOGY—60%

INSTRUCTIONS: Complete each of the following statements by writing the appropriate words or amounts in the
Answers column.

For
Answers Scoring
0. The document that charts a course of future action for a business by
outlining the plans of the business in financial terms is the ................... budget 0. ____
1-3. The objectives of budgeting include:
1. ................................................................................................................ 1. ____
2. ................................................................................................................ 2. ____
3. ................................................................................................................ 3. ____
4. Giving information to employees about their performance relative to the
goals they helped establish is called........................................................ 4. ____
5. An organization’s budgetary unit led by a manager who has both
authority over and responsibility for the unit’s performance is a ............ 5. ____
6. The budget becomes less effective as a tool for planning or controlling
operations if employees view budget goals as unachievable. This occurs
when the budget is set too ...................................................................... 6. ____
TEST 7.
6A (Concluded)
Goquik Taxi Co. establishes its budget at only one level of activity. This
type of budget is called............................................................................ 7. ____
8. The manager of the shipping department was directed to stay within the
departmental budget. To accomplish this goal, the manager stopped
shipping to customers for an entire month. This manager’s behavior is
said to exhibit .......................................................................................... 8. ____
9. A variation of fiscal-year budgeting that seeks to maintain a continuous
twelve-month projection into the future is called a ................................. 9. ____
10. When budgets establish lower goals than may be possible, they are
said to be “padded” or contain................................................................. 10. ____
 11. Parts Supply Co. prepares its budgets based on 23,000, 24,000, and
25,000 units of production. This type of budgeting is known as ............ 11. ____
12. Manufacturing operations require a series of budgets that are linked
together in a ............................................................................................ 12. ____
13–15. The production budgets are used to prepare the following budgets:
13. ................................................................................................................ 13. ____
14. ................................................................................................................ 14. ____
15. ................................................................................................................ 15. ____
16. The starting point in estimating the quantity of sales for each product in
the sales budget is .................................................................................. 16. ____
TEST17.
6A (Concluded)
The budgets that are used by managers to plan the financing, investing,
and cash objectives for the firm are......................................................... 17. ____
18. The budget that allows management to assess the effects of the
individual budgets on profits for the year is the....................................... 18. ____
continued
 For
Answers Scoring
19. The budget that summarizes plans for acquiring fixed assets is the...... 19. ____
20. The budget that shows expected receipts (inflows) and payments
(outflows) of cash for a week, a month, or a longer period is the.......... 20. ____

NOTE: Each of the 20 correct answers is assigned a weight of 3%.

PROBLEM 1—PROBLEMS—40%
TEST
INSTRUCTIONS:
6A (Concluded) Solve the following problems and record the answers in the Answers column.

For
Answers Scoring
0. Sales are expected to total 125,000 units, and no inventories are
maintained. Production should total ........................................................ 125,000 units 0. ____
1. Calculate the units to be produced, based on the following data:
Estimated units in beginning inventory ......... 87,000
Estimated units in ending inventory .............. 89,000
1. ____
Expected units sold ....................................... 750,000
2–3. Kian Inc. plans to manufacture 39,200 units of Product D. Product D is
produced in Department 1, where 0.25 hour per unit is required for
direct labor. Direct labor rates in Department 1 are $14 per hour
2. The hours required in Department 1 to manufacture Product D are ..... 2. ____
3. The total direct labor cost to manufacture Product D is ......................... $ 3. ____
TEST 6A (Concluded)
4–5. Sammie Co.’s accounts receivable on January 1, 2008, total $375,000.
Budgeted sales for the first three months of the year are:
January February March
$550,000 $850,000 $980,000
Lisa expects to sell 20% of its merchandise for cash. Of the
remaining 80% of the sales on account, 60% is expected to be
collected in the month of sale and the remainder in the following month.
4. Calculate Sammie’s estimated cash receipts for January ...................... $ 4. ____
5. Calculate Sammie’s estimated cash receipts for February .................... $ 5. ____
6–7. Stewart Inc. uses a flexible budgeting system to plan for its
 manufacturing operations. The static budget for 10,000 units of
production provides for direct labor at $10 per unit and variable
electricity expense at $0.83 per unit. Fixed costs for the period are
electric power $1,750 and supervisor salaries of $23,400.
6. Variable costs for 14,000 units of production are ................................... $ 6. ____
7. Fixed costs for 14,000 units of production are ....................................... $ 7. ____
8. The total department costs for 15,000 units of production are .............. $ 8. ____

NOTE: Each of the 8 correct answers is assigned a weight of 5%.