Unit 8: Budgetary Control - Practice Quiz

1 A budget is best defined as a plan that is expressed primarily in:

2 Budgetary control primarily involves comparing actual results with:

3 A cash budget shows the estimated:

4 A flexible budget is one that:

5 A budget that remains unchanged irrespective of the level of activity achieved is called a:

6 The master budget is best described as:

7 A budget centre refers to a:

8 Which of the following is a cash inflow in a cash budget?

9 Which item is generally excluded from a cash budget?

10 A budget prepared for the department expected to face a key constraint or limiting factor is prepared:

11 Zero-based budgeting (ZBB) requires that each expense be:

12 A flexible budget is most useful when:

13 In a flexible budget, fixed costs are assumed to:

14 In a flexible budget, variable costs behave in what manner as activity rises?

15 Which of the following is a key objective of budgetary control?

16 The difference between the budgeted figure and the actual figure is known as a:

17 The closing cash balance in a cash budget is calculated as:

18 A sales budget is classified as which type of budget?

19 Which document sets out the responsibilities and procedures for operating the budgetary control system?

20 If the opening cash balance is , total receipts are and total payments are , the closing cash balance is:

21 A manufacturing firm sets targets, measures actual performance, compares the two, and initiates corrective action for deviations. Which essential feature of budgetary control does this sequence primarily illustrate?

22 In a budgetary control system, the budget that limits the extent to which all other budgets can be prepared is known as the:

23 Which of the following is the correct logical order of the main steps in budgetary control?

24 A company introduces budgetary control mainly to fix responsibility on individual managers for costs within their control. This objective best supports which need for budgetary control?

25 A budget prepared for a single level of activity that is not adjusted when the actual activity level differs is called a:

26 Which budget is prepared by starting each period from a 'zero base', requiring every expense to be justified afresh rather than based on previous budgets?

27 The summary budget that incorporates all functional budgets and shows the projected profit and financial position of the whole organisation is the:

28 Budgets classified as long-term, short-term, and current are grouped on the basis of:

29 A budget that is continuously updated by adding a new period as the earliest period expires is best described as a:

30 Which of the following is classified as a financial budget rather than an operating budget?

31 A firm expects credit sales of in April. If is collected in the month of sale and the balance in the next month, how much is collected in May from April's sales?

32 Opening cash balance is . Total receipts during the month are and total payments are . What is the closing cash balance?

33 Which of the following items is correctly excluded while preparing a cash budget?

34 Purchases for June are . Suppliers are paid in the purchase month and in the following month. What amount is paid to suppliers in June for June purchases?

35 A company wants to maintain a minimum cash balance of . If the budgeted closing balance before financing is , what action does the cash budget indicate?

36 In a cash budget, cash sales of a month and collections from prior credit sales are both shown as:

37 At units, variable cost per unit is and total fixed cost is . What is the total cost in a flexible budget at units?

38 The main advantage of a flexible budget over a fixed budget is that it:

39 In a flexible budget, as output increases within the relevant range, fixed cost per unit and total fixed cost respectively:

40 A semi-variable cost is at units and at units. Using the high-low method, what is the variable cost per unit?

41 A firm sells goods with the following collection pattern: 60% in the month of sale, 30% in the next month, and 10% in the second month after sale. Sales were (Jan), (Feb), and (Mar). What are the total cash collections in March?

42 At 70% capacity a factory's total cost is and at 90% capacity it is . Using the high-low method, what is the fixed cost component?

43 A company purchases raw materials on credit, paying 40% in the month of purchase (availing a 2% cash discount on that portion) and the balance next month with no discount. Purchases are (Apr) and (May). What is the cash paid to suppliers in May?

44 A flexible budget shows at 10,000 units: variable cost , semi-variable cost (of which 25% is fixed), fixed cost . What is the total budgeted cost at 15,000 units?

45 Which statement best distinguishes a fixed budget from a flexible budget in the context of variance analysis?

46 A firm wants a minimum closing cash balance of . Opening cash is ; receipts ; payments . Borrowing is arranged in multiples of . How much must be borrowed this month?

47 A budget at 80% capacity (16,000 units) shows profit of with selling price /unit, variable cost /unit and total fixed cost . If capacity rises to 100% (20,000 units) with selling price unchanged, what is the revised profit?

48 In a budgetary control system, which factor must be identified first because it limits the volume of all other budgets and dictates the sequence of budget preparation?

49 A company pays a fixed monthly rent of and a quarterly insurance premium of payable in March, June, September and December. It also buys machinery for in June, paid in three equal monthly instalments starting July. What is the total of these payments in July?

50 At 60% activity, cost per unit data are: direct material , direct labour , variable overhead and fixed overhead (based on 60% output of 6,000 units). What is the fixed overhead cost per unit at 80% activity?

51 Sales are in June. 25% are cash sales; credit customers pay in the following month but 4% of credit sales become bad debts (never collected). How much cash is collected from June sales in July?

52 A company prepares a budget where every expense line must be justified from a zero base each period rather than by adjusting the previous year's figures. This describes:

53 The total cost function of a firm is estimated as (where is units). Actual output was 12,000 units at an actual total cost of . What is the flexible budget variance (cost)?

54 A firm has an opening overdraft of carrying interest at 1% per month, charged on the opening overdraft and paid in cash the same month. During the month, operating receipts are and operating payments are . What is the closing cash/overdraft position?

55 Which sequence correctly represents the core steps in a budgetary control cycle?

56 A flexible budget is prepared for 50%, 75% and 100% capacity. Fixed costs are stepped: up to 75% capacity and above 75%. Variable cost is /unit. At 100% capacity output is 10,000 units. What is total cost at 100% capacity?

57 A company's wages are per month, paid 75% in the current month and 25% (lag) in the following month. In the transition month where wages rise from to , what wage cash outflow appears in that month?

58 A master budget is best described as:

59 A firm expects the following: opening balance ; collections ; a tax payment of ; other payments ; dividend received . It maintains a minimum balance of and invests any excess in multiples of . How much can be invested (surplus above minimum)?

60 At 8,000 units, budgeted profit is ; at 12,000 units budgeted profit is . Assuming linear cost behaviour and constant selling price, what is the break-even quantity?