Going through the Budgetary Control – Corporate and Management Accounting CS Executive MCQ Questions with Answers you can quickly revise the concepts.
Budgetary Control – Corporate and Management Accounting MCQs
Question 1.
A budget is all of the following, except:
(A) A plan which will ensure the generation of future profits
(B) A system which helps to co-ordinate internal activities
(C) A system to integrate the operations for future activity
(D) A financial plan for the future
Answer:
(D) A financial plan for the future
Question 2.
For a budget to be useful and relevant for performance measurement it should satisfy all of the following, except:
(A) It will be flexible for a range of possible activity volumes
(B) It should have involved subordinate staff in the preparation
(C) Will have been agreed by those being evaluated
(D) It will have been imposed from the highest level of management
Answer:
(D) It will have been imposed from the highest level of management
Question 3.
Which of the following is not a function of budgeting?
(A) Decision making
(B) Controlling
(C) Planning
(D) Motivating
Answer:
(A) Decision making
Question 4.
The term “budgetary period” relates to:
(A) The period in which the budget is finalized
(B) The period for which the budget is prepared
(C) The subdivisions of the main budget
(D) A specific year for which the budget has been prepared
Answer:
(B) The period for which the budget is prepared
Question 5.
A budget is accepted by a manager when they:
(A) Relate it to their own personal objectives
(B) Are consulted by top management
(C) Agree to it verbally
(D) Receive the budget in writing
Answer:
(A) Relate it to their own personal objectives
Question 6.
What functional role do management accountants play in the budgeting process?
(A) They facilitate and co-ordinate the budgeting process
(B) They audit the financial statements
(C) They decide what bonuses should be paid to the staff
(D) They set targets for other managers
Answer:
(A) They facilitate and co-ordinate the budgeting process
Question 7.
A fixed budget is:
(A) A budget that ignores inflation
(B) A budget that is set for a specified level of activity
(C) A budget that never changes
(D) A budget that itemizes the fixed costs of a department
Answer:
(B) A budget that is set for a specified level of activity
Question 8.
A flexible budget is:
(A) A budget that is adjusted to reflect different costs at different activity levels
(B) A budget that will be changed at the end of the month in order to reflect the actual costs of a department
(C) A budget that comprises variable costs only
(D) A budget that is constantly being changed
Answer:
(A) A budget that is adjusted to reflect different costs at different activity levels
Question 9.
If actual output is lower than budgeted output which of the following costs would you expect to be lower than the original budget?
(A) Total variable costs
(B) Total fixed costs
(C) Fixed costs per unit
(D) Variable costs per unit
Answer:
(A) Total variable costs
Question 10.
When a production budget is being prepared the quantity that needs to be produced is calculated by the following equation:
(A) Opening stock less quantity sold plus closing stock
(B) Opening stock less quantity sold
(C) Quantity sold plus closing stock less opening stock
(D) Opening stock plus quantity sold plus closing stock
Answer:
(C) Quantity sold plus closing stock less opening stock
Question 11.
The master budget will comprise:
(A) All the production, selling and cost budgets for the organization.
(B) The budgeted profit and loss account and the budgeted balance sheet.
(C) The cash budget.
(D) The cash budget, the budgeted profit and loss account and the budgeted balance sheet.
Answer:
(D) The cash budget, the budgeted profit and loss account and the budgeted balance sheet.
Question 12.
Which of the following will NOT appear in a cash budget?
(A) Machinery bought on hire purchase
(B) Depreciation of machinery
(C) Sales revenue
(D) Wages
Answer:
(B) Depreciation of machinery
Question 13.
A budget that gives a summary’ of all the functional budgets and projected Profit and Loss Account is known as ….
(A) Capital budget
(B) Flexible budget
(C) Master budget
(D) Discretionary budget
Answer:
(C) Master budget
Question 14.
The fixed-variable cost classification has a special significance in the preparation of
(A) Flexible budget
(B) Master budget
(C) Cash budget
(D) Capital budget
Answer:
(A) Flexible budget
Question 15.
The basic difference between a fixed budget and a flexible budget is that a fixed budget
(A) Includes only fixed costs, and a flexible budget only variable costs
(B) Is a budget for a single level of some measures of activity, while a flexible budget consists of several budgets based on different activity levels
(C) Is concerned with future acquisition of fixed assets, while a flexible budget is concerned with expenses that vary with sales
(D) Cannot be changed after a fiscal period begins, while a flexible budget can be changed after a fiscal period begins
Answer:
(B) Is a budget for a single level of some measures of activity, while a flexible budget consists of several budgets based on different activity levels
Question 16.
When preparing a production budget, the quantity to be produced equals:
(A) Sales Quantity + Opening Stock + Closing Stock
(B) Sales Quantity – Opening Stock + Closing Stock
(C) Sales Quantity – Opening Stock – Closing Stock
(D) Sales Quantity + Opening Stock – Closing Stock
Answer:
(B) Sales Quantity – Opening Stock + Closing Stock
Question 17.
Of the four costs shown below, which would not be included in the cash budget of an insurance firm?
(A) Depreciation of fixed asset
(B) Commission paid to agents
(C) Office salaries
(D) Capital cost of a new computer
Answer:
(A) Depreciation of fixed asset
Question 18.
A master budget comprises
(A) The budgeted profit & loss account
(B) Budgeted cash flow, budgeted profit and loss, budgeted balance sheet
(C) Budgeted cash flow
(D) Entire sets of budgets prepared
Answer:
(B) Budgeted cash flow, budgeted profit and loss, budgeted balance sheet
Question 19.
Which of the information below should be contained in a budget manual?
(A) An organisation chart
(B) Timetable for budget preparation
(C) A list of account codes
(D) All (A), (B) and (C)
Answer:
(D) All (A), (B) and (C)
Question 20.
NSZ Ltd. cash budget forewarns of a short term surplus. Which of the following would be appropriate action to be taken in such a situation?
(A) Increase debtors and stock to boost sales
(B) Purchase new fixed assets
(C) Repay long term loans
(D) All of the above
Answer:
(A) Increase debtors and stock to boost sales
Question 21.
A Ltd. is a manufacturing company that has no production resource limitations for the foreseeable future. The Managing Director has asked the company mangers to coordinate the preparation of their budgets for the next financial year. In what order should the following budgets be prepared?
(1) Sales budget
(2) Cash budget
(3) Production budget
(4) Purchase budget
(5) Finished goods inventory budget
Select the correct answer from the options given below.
(A) (2), (3), (4), (5), (1)
(B) (1), (5), (3), (4), (2)
(C) (1), (4), (5), (3), (2)
(D) (4), (5), (3), (1), (2)
Answer:
(B) (1), (5), (3), (4), (2)
Question 22.
A plan expressed in financial terms may also be known as a:
(A) Budget
(B) Forecast
(C) Balanced scorecard
(D) Final account
Answer:
(A) Budget
Question 23.
Which of the following would not lead to an increase in net cash flow?
(A) Larger sales volume
(B) Reduced materials costs
(C) Lower depreciation charge
(D) Higher selling price
Answer:
(C) Lower depreciation charge
Question 24.
Advantages of maintaining cash budgets would not include one of the following:
(A) Surplus cash can be put to more profitable uses if expected to occur
(B) Debtors can be paid more quickly
(C) Time is available to investigate the possible future sources of finance
(D) Overdrafts can be negotiated in advance of when they are needed
Answer:
(B) Debtors can be paid more quickly
Question 25.
Which of the following would be found in a cash budget?
(A) Capital expenditure
(B) Provision for doubtful debts
(C) Depreciation
(D) Accrued expenditure
Answer:
(A) Capital expenditure
Question 26.
A forecast set of final accounts is also known as:
(A) Capital budget
(B) Cash budget
(C) Master budget
(D) Sales budget
Answer:
(B) Cash budget
Question 27.
Which of the following will not affect preparation of cash budget?
(A) Loan taken by firm
(B) Proceeds from asset disposal
(C) Reduction in provision for doubtful debts
(D) Cash sales
Answer:
(C) Reduction in provision for doubtful debts
Question 28.
Which of the following budgets should be produced first?
(A) Production budget
(B) Purchases budget
(C) Master budget
(D) Sales budget
Answer:
(D) Sales budget
Question 29.
Budgetary control involves all but one of the following:
(A) Modifying future plans
(B) Analyzing differences
(C) Using static budgets
(D) Determining differences between actual and planned results
Answer:
(C) Using static budgets
Question 30.
A static budget is useful in controlling costs when cost behaviour is:
(A) Mixed
(B) Fixed
(C) Variable
(D) Linear
Answer:
(B) Fixed
Question 31.
Responsibility centers include:
(A) Cost centers
(B) Profit centers
(C) Investment centers
(D) All of the above
Answer:
(D) All of the above
Question 32.
Which of the following objective is not primary purpose of preparing budget?
(A) To provide a basis for comparison of actual performance
(B) To communicate the company’s plan throughout the organization and insure co-ordination of activity throughout the organization
(C) To control income and expenditure for a given period
(D) To insure that company expands its operations
Answer:
(D) To insure that company expands its operations
Question 33.
Which of the following statements most clearly describes the master budget?
(A) The master budget is similar to a legal action and must be followed to fulfill company policy.
(B) The master budget is a strategic plan proposed by management and communicated through pro forma financial statements.
(C) The master budget is a set of budgeted financial statements that are sometimes called pro forma statements.
(D) The master budget is not in itself a strategic plan but aids managers in implementing their strategic plans.
Answer:
(D) The master budget is not in itself a strategic plan but aids managers in implementing their strategic plans.
Question 34.
Managers can use feedback from budgets to help them evaluate performance if they initially
(A) Pinpoint fault for operating problems
(B) Focus on whom they should ask and not on whom they should blame
(C) Fix the blame on those who are responsible for actions that do not meet budget expectations
(D) Designate the appropriate responsibility centre to be held accountable for any problems
Answer:
(B) Focus on whom they should ask and not on whom they should blame
Question 35.
A manager who is responsible for receivables and stock would most likely be considered in charge of ……………….
(A) Profit centre
(B) Revenue centre
(C) Cost centre
(D) Investment centre
Answer:
(D) Investment centre
Question 36.
Which of the following represents the normal sequence in which the below budgets are prepared.
(A) Sales, Balance Sheet, Income Statement
(B) Balance Sheet, Sales, Income Statement
(C) Sales, Income Statement, Balance Sheet
(D) Income Statement, Sales, Balance Sheet
Answer:
(C) Sales, Income Statement, Balance Sheet
Question 37.
Operating budgets are:
(A) A forecast of expected operating expenses
(B) A forecast of operating expenses
(C) Concerned with the income generating activities of a firm
(D) Concerned with the inflows and outflows of cash
Answer:
(C) Concerned with the income generating activities of a firm
Question 38.
Which of the following is NOT an advantage of budgeting?
(A) It provides resource information that can be used to improve decision making.
(B) It aids in the use of resources and employees by setting a benchmark that can be used for the subsequent evaluation of performance.
(C) It provides organizational independence.
(D) It improves communication and coordination
Answer:
(C) It provides organizational independence.
Question 39.
Which of the following factors is not a responsibility of the budget committee?
(A) Reviews the budget
(B) Provides policy guidelines
(C) Provides budgeting goals
(D) Prepares actual financial statements
Answer:
(D) Prepares actual financial statements
Question 40.
The difference between fixed cost and variable cost has significance in preparation of
(A) Flexible budget
(B) Master budget
(C) Cash budget
(D) Capital expenditure budget
Answer:
(A) Flexible budget
Question 41.
Which of the following items would have to be included for a company preparing a schedule of cash receipts and disbursements for the calendar year 2015?
(A) The annual depreciation for the year 2015.
(B) Purchase order issued in December 2014 for items to be delivered in February 2015.
(C) Dividends declared in November 2015, to be paid in January 2016 to shareholders of record as of December 2015
(D) Funds borrowed from a bank on a note payable taken out in June 2014 with an agreement to pay the principal and all of the interest owed in December 2015.
Answer:
(D) Funds borrowed from a bank on a note payable taken out in June 2014 with an agreement to pay the principal and all of the interest owed in December 2015.
Question 42.
Individual budget schedules are prepared to develop an annual comprehensive or master budget. The budget schedule that would provide the necessary input data for the direct labour budget would be the:
(A) Sales forecast
(B) Raw materials purchases budget
(C) Schedule of cash receipts and disbursements
(D) Production budget
Answer:
(D) Production budget
Question 43.
In a not-for-profit service firm, the sales budget is replaced by:
(A) The production budget
(B) A budget that identifies the various expenses
(C) A budget that identifies the various services and the associated funds assigned to them
(D) None of the above
Answer:
(C) A budget that identifies the various services and the associated funds assigned to them
Question 44.
Which of the following budgets would not be present for both for-profit and not- for-profit service organizations?
(A) Sales budget
(B) Budgeted income statement
(C) Budgeted balance sheet
(D) Finished goods budget
Answer:
(D) Finished goods budget
Question 45.
In a for-profit service firm, the sales budget is also the:
(A) Merchandise purchase budget
(B) Production budget
(C) Direct materials budget
(D) Overhead budget
Answer:
(B) Production budget
Question 46.
Budgetary control helps the management in…………..
(A) Planning only
(B) Control only
(C) Planning and control
(D) Directing
Answer:
(C) Planning and control
Question 47.
The priorities in functional budget are determined by ………..
(A) Cash resources only
(B) Human resources only
(C) Principle budget factor
(D) None of the above
Answer:
(C) Principle budget factor
Question 48.
The budget designed to furnish budgeted cost any level of activity actual attained is called ……………
(A) Zero base budget
(B) Fixed budget
(C) Flexible budget
(D) Budget manual
Answer:
(C) Flexible budget
Question 49.
Which of the following statement(s) is/are false?
(A) Budget reports comparing actual results with planned objectives should be prepared only once a year.
(B) Certain budget reports are prepared monthly whereas others are prepared more frequently depending on the activities being monitored.
(C) A static budget is one that is geared to one level of activity.
(D) All of the above
Answer:
(A) Budget reports comparing actual results with planned objectives should be prepared only once a year.
Question 50.
Which of the following statement(s) is/are true?
(A) The master budget is not used in the budgetary control process.
(B) A master budget is most useful in evaluating a manager1’s performance in controlling costs.
(C) A flexible budget can be prepared for each of the types of budgets included in the master budget.
(D) All of the above
Answer:
(C) A flexible budget can be prepared for each of the types of budgets included in the master budget.
Question 51.
Which of the following statement(s) is/are false?
(A) A flexible budget is a series of static budgets at different levels of activities.
(B) Flexible budgeting relies on the assumption that unit variable costs will remain constant within the relevant range of activity.
(C) The activity index used in preparing a flexible budget should not influence the variable costs that are being budgeted.
(D) All of the above
Answer:
(C) The activity index used in preparing a flexible budget should not influence the variable costs that are being budgeted.
Question 52.
Which of the following statement(s) is/are true?
(A) A formula used in developing a flexible budget is: Total budgeted cost = fixed cost + (total variable cost per unit X activity level)
(B) Flexible budgets are widely used in production and service departments.
(C) Flexible budgets are widely used in production and service departments.
(D) All of the above
Answer:
(D) All of the above
Question 53.
Which of the following statement(s) is/are false?
(A) Cost centers, profit centers, and investment centers can all be classified as responsibility centers.
(B) The terms “direct fixed costs” and “indirect fixed costs” are synonymous with “traceable costs” and “common costs,” respectively.
(C) Management by exception means that management will investigate areas where actual results differ from planned results if the items are material and controllable.
(D) None of the above
Answer:
(D) All of the above
Question 54.
A major element in budgetary controlis:
(A) The preparation of long-term plans
(B) The comparison of actual results with planned objectives
(C) The valuation of inventories
(D) Approval of the budget by the stock-holders
Answer:
(B) The comparison of actual results with planned objectives
Question 55.
Budget reports should be prepared
(A) Daily
(B) Monthly
(C) Weekly
(D) As frequently as needed
Answer:
(D) As frequently as needed
Question 56.
On the basis of the budget reports
(A) Management analyzes differences between actual and planned results
(B) Management may take corrective action
(C) Management may modify the future plans
(D) All of these
Answer:
(D) All of these
Question 57.
The purpose of the sales budget report is to
(A) Control selling expenses
(B) Determine whether income objectives are being met
(C) Determine whether sales goals are being met
(D) Control sales commissions
Answer:
(C) Determine whether sales goals are being met
Question 58.
A static budget
(A) Should not be prepared in a company
(B) Is useful in evaluating a manager’s performance by comparing actual variable costs and planned variable costs
(C) Shows planned results at the original budgeted activity level
(D) Is changed only if the actual level of activity is different than originally budgeted
Answer:
(C) Shows planned results at the original budgeted activity level
Question 59.
Top management’s reaction to a difference between budgeted and actual sales often depends on
(A) Whether the difference is favorable or unfavorable
(B) Whether management anticipated the difference
(C) The materiality of the difference
(D) The personality of the top managers
Answer:
(C) The materiality of the difference
Question 60.
Assume that actual sales results exceed the planned results for the second quarter. This favourable difference is greater than the unfavourable difference reported for the first quarter sales. Which of the following statements about the sales budget report on June 30 is true?
(A) The year-to-date results will show a favourable difference
(B) The year-to-date results will show an unfavourable difference
(C) The difference for the first quarter can be ignored
(D) The sales report is not useful if it shows a favorable and unfavourable difference for the two quarters
Answer:
(A) The year-to-date results will show a favourable difference
Question 61.
Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets?
(A) Direct materials cost
(B) Direct labour cost
(C) Variable manufacturing overhead
(D) Fixed manufacturing overhead
Answer:
(D) Fixed manufacturing overhead
Question 62.
In developing a flexible budget within a relevant range of activity,
(A) Only fixed costs are included
(B) It is necessary to relate variable cost data to the activity index chosen
(C) It is necessary to prepare a budget at 1,000 unit increments
(D) Variable and fixed costs are combined and are reported as a total cost
Answer:
(B) It is necessary to relate variable cost data to the activity index chosen
Question 63.
Another name for the static budget is:
(A) Master budget
(B) Overhead budget
(C) Permanent budget
(D) Flexible budget
Answer:
(A) Master budget
Question 64.
If a company plans to sell 16,000 units of product but sells 20,000, the most appropriate comparison of the cost data associated with the sales will be by a budget based on
(A) The original planned level of activity
(B) 18,000 units of activity
(C) 20,000 units of activity
(D) 16,000 units of activity
Answer:
(C) 20,000 units of activity
Question 65.
Within the relevant range of activity, the behaviour of total costs is assumed to be:
(A) Linear and upward sloping
(B) Linear and downward sloping
(C) Curvilinear and upward sloping
(D) Linear to a point and then level off
Answer:
(A) Linear and upward sloping
Question 66.
Sales results that are evaluated by a static budget might show
(1) Favourable differences that are not justified.
(2) Unfavourable differences that are not justified.
Select the correct answer from the options given below.
(A) (1)
(B) (2)
(C) Both (1) & (2)
(D) Neither (1) or (2)
Answer:
(C) Both (1) & (2)
Question 67.
Under management by exception, which differences between planned and actual results should be investigated?
(A) Material and non-controllable
(B) Controllable and non-controllable
(C) Material and controllable
(D) All differences should be investigated
Answer:
(C) Material and controllable
Question 68.
A flexible budget depicted graphically…
(A) Is identical to a CVP graph
(B) Differs from a CVP graph in the way that fixed costs are shown
(C) Differs from a CVP graph in the way that variable costs are shown
(D) Differs from a CVP graph in that sales revenue is not shown
Answer:
(D) Differs from a CVP graph in that sales revenue is not shown
Question 69.
The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area is called …….
(A) Static reporting
(B) Flexible accounting
(C) Responsibility accounting
(D) Master budgeting
Answer:
(C) Responsibility accounting
Question 70.
Which of the following would NOT be considered an aspect of budgetary control?
(A) It assists in the determination of differences between actual and planned results.
(B) It provides feedback value needed by management to see whether actual operations are on course.
(C) It assists management in controlling operations.
(D) It provides a guarantee for favourable results
Answer:
(D) It provides a guarantee for favourable results
Question 71.
A flexible budget is appropriate for
Answer:
(B)
Question 72.
A flexible budget requires a careful study of …………
(A) Fixed, semi-fixed and variable expenses
(B) Past and current expenses
(C) Overheads, selling and administrative expenses
(D) None of the above
Answer:
(A) Fixed, semi-fixed and variable expenses
Question 73.
Sales budget is a ……
(A) Expenditure budget
(B) Functional budget
(C) Master budget
(D) None of the above
Answer:
(B) Functional budget
Question 74.
The budget that is prepared first of all is ………….
(A) Master budget
(B) Budget, with key factor
(C) Cash Budget
(D) Capital expenditure budget
Answer:
(D) Capital expenditure budget
Question 75.
Which of the following is a long-term budget?
(A) Master Budget
(B) Flexible Budget
(C) Cash Budget
(D) Capital Budget
Answer:
(D) Capital Budget
Question 76.
Budgets are shown in terms.
(A) Qualitative
(B) Quantitative
(C) Materialistic
(D) Both (B) and (C)
Answer:
(D) Both (B) and (C)
Question 77.
………. may be defined as, “planning and budgeting processes which requires each managers to justify his entire budget request in details from scratch and shifts the burden of proof to each manager to justify why he should spend any money at all.
(A) Zero base budgeting
(B) Past base budgeting
(C) Master budgeting
(D) Performance budgeting
Answer:
(A) Zero base budgeting
Question 78.
……… is a period for which various reports are submitted to take corrective actions by the management.
(A) Control period
(B) Budget period
(C) Accounting period
(D) All of the above
Answer:
(A) Control period
Question 79.
The …. is concerned with estimating the probable output of each product in the forthcoming budget period.
(A) Production budget
(B) Sales budget
(C) Purchase budget
(D) None of the Above.
Answer:
(A) Production budget
Question 80.
………… may be defined as analysis and interpretation of the future conditions in relation to operations of the enterprise.
(A) Budgeting
(B) Value analysis
(C) Control management
(D) Forecasting
Answer:
(D) Forecasting
Question 81.
Budgets are estimate-based on
(A) Probable events
(B) Planned events
(C) Future events
(D) All of the above
Answer:
(B) Planned events
Question 82.
CIMA, London defines as, “the establishment of budgets relating the responsibilities of executives to the requirements of policy, and the continuous comparison of actual with budgeted results, either to secure, by individual action, the objective of that policy or to provide a basis for its revision.”
(A) Management by exception
(B) Budget
(C) Budget reporting
(D) Budgetary control
Answer:
(D) Budgetary control
Question 83.
Section of an organization for which separate budgets can be prepared, and control exercised is known as
(A) Department
(B) Budget Centre
(C) Budget Committee
(D) Master Budget
Answer:
(B) Budget Centre
Question 84.
Which of the following statement is correct about budget manual?
(A) It is a document which sets out interalia the responsibilities of the persons engaged in the routine of and the forms and records required for budgetary control
(B) It is the document which lays down the details of the budgeting organization and procedures.
(C) It is a formal record defining the functions and responsibilities of each executive.
(D) All of the above
Answer:
(D) All of the above
Question 85
……. provide a meaningful relationship between estimated inputs and expected outputs as an integral part of the budgeting system.
(A) Zero base budgeting
(B) Master budgeting
(C) Performance budgeting
(D) Input and output budgeting
Answer:
(C) Performance budgeting
Question 86.
Which of the following formula is correct?
Answer:
(A) Activity Ratio \(=\frac{\text { Budgeted Hours }}{\text { Standard Hours }} \times 100\)
(B) Efficiency Ratio \( =\frac{\text { Standard Hours }}{\text { Budgeted Hours }} \times 100\)
(C) Capacity Ratio \(=\frac{\text { Actual Hours }}{\text { Standard Hours }} \times 100\)
(D) None of the above
Answer:
(D) None of the above
Question 87.
A company has sales in units of 2,600. There are 1,400 units of opening stock while the closing stock is planned to be 1,800units. What production is needed to satisfy sales?
(A) 3,000 units
(B) 2,437 units
(C) 2,600 units
(D) 2,200 units
Answer:
(A) 3,000 units
Sales Units + Closing Stock – Opening Stock = Unit Produced
2,600 + 1,800 – 1,400 = 3,000
Question 88.
Consider the following data for the month of May:
Based on the data, production in May will have to be…….
(A) 110 units
(B) 190 units
(C) 50 units
(D) 150 units
Answer:
(A) 110 units
Try to solve at your own end.
Question 89.
Consider the following data for the month of May:
Based on the data, the opening inventory for April will have to be:
(A) 70 units
(B) 130 units
(C) 50 units
(D) 410 units
Answer:
(B) 130 units
Try to solve at your own end.
Question 90.
Consider the following data for the month of May:
If the closing inventory is 50% higher than the previous month then production will have to be:
(A) 540 units
(B) 700 units
(C) 600 units
(D) 720 units
Answer:
(B) 700 units
Closing Stock = 80 + 50% = 120; Unit Produced = 660 + 120 – 80 = 700
Question 91.
M Ltd. produces & sells laptop computers. It had 2,000 computers in finished goods inventory at the end of the last year. M Ltd. expects to sell 20,000 computers and would like to complete in this year with at least 2,500 completed computers in inventory. There is no ending work-in-process in either year. The laptop computers are sold for ₹ 20,000 each. How many laptop computers would be produced for the next year?
(A) 20,000
(B) 20,500
(C) 22,000
(D) 22,500
Answer:
(B) 20,500
Try to solve at your own end.
Question 92.
A company has made the following budget forecasts for next year:
Opening cash balance 1 Jan. — 24,000
Net profit for the year — 100,000
Payment of tax — 25,000
No other relevant information is available. What is the company’s budgeted cash holding at 31 December next year
(A) ₹ 34,000
(B) ₹ 26,000
(C) ₹ 6,000
(D) ₹ 56,000
Answer:
(D) ₹ 56,000
Question 93.
The budgeted sales for the next four quarters are ₹ 1,92,000, ₹ 2,88,000, ₹ 2,88,000 & ₹ 3,36,000, respectively. It is estimated that sales will be paid for as follows: 75% of the total will be paid in the quarter that the sales were made. Of the balance 50% will be paid in the quarter after the sale was made. The remaining 50% will be paid in the quarter after this. The amount of cash received in quarter 3 will be
(A) ₹ 2,76,000
(B) ₹ 1,44,000
(C) ₹ 3,24,000
(D) ₹ 2,40,000
Answer:
(A) ₹ 2,76,000
Question 94.
A company is preparing the production budget for quarter 2. Projected sales (in units) are as follows:
The company policy is to have finished goods stocks of 20% of the next month’s projected sales. Assuming that there was no opening stock for April, what should be the production quota for May?
(A) 694 units
(B) 680 units
(C) 830 units
(D) 666 units
Answer:
(A) 694 units
Question 95.
A job requires 2,400 actual labour hours for completion and it is anticipated that there will be 20% idle time. If the wage rate is ₹ 10 per hour, what is the budgeted labour cost for the job?
(A) ₹ 19,200
(B) ₹ 24,000
(C) ₹ 28,800
(D) ₹ 30,000
Answer:
(D) ₹ 30,000
\(\begin{gathered}
2,400 \\
\hline 80 \%
\end{gathered}\) × 10 = 30,000
Question 96.
PG Ltd. makes a single product and is preparing its material usage budget for next year. Each unit of product requires 2 kg. of material, and 5,000 units of product are to be produced next year. Opening stock of material is budgeted to be 800 kg. and PG Ltd. budgeted to increase material stock at the end of next year by 20%. The material usage budget for next year is
(A) 8,000 kg.
(B) 9,840 kg.
(C) 10,000 kg.
(D) 10,160 kg.
Answer:
(C) 10,000 kg.
Material Purchases = Material consumed + Closing stock of raw material – Opening stock of raw material
(5,000 × 2 kg) + 960 kg – 800 kg = 10,160; this is not the answer.
Read the question carefully. Question asks to calculate material usage i.e. material consumed.
Material usage = (5,000 ×2 kg) = 10,000 kg.
Question 97.
BDLLtd . is currently preparing its cash budget for the year to 31 March 2014. An extract from its sales budget for the same year shows the following sales values.
March — 60,000
April — 70,000
May — 55,000
June — 65,000
40% of its sales are expected to be for cash. Of its credit sales, 70% are expected to pay in month after sale and take a 2% discount. 27% are expected to pay in the second month after the sale, and the remaining 3% are expected to be bad debts. The value of sales budget to be shown in the cash budget for May 2013 is
(A) ₹ 60,532
(B) ₹ 61,120
(C) ₹ 66,532
(D) ₹ 86,620
Answer:
(A) ₹ 60,532
Question 98.
The actual output of 1,62,500 units and actual fixed costs of ₹ 87000 were exactly as budgeted. However, the actual expenditure of ₹ 300,000 was ₹ 18,000 over budget. What was the budget variable cost per unit?
(A) ₹ 1.20
(B) ₹ 1.31
(C) ₹ 1.42
(D) ₹ 1.50
Answer:
(A) ₹ 1.20
\(\frac{3,00,000-18,000-87,000}{1,62,500}=1.20\)
Question 99.
CA Co. manufactures a single product and has drawn up the following flexed budget for the year.
What would be the total cost in a budget that is prepared at the 77% level of activity?
(A) ₹ 3,30,300
(B) ₹ 3,70,300
(C) ₹ 3,73,300
(D) ₹ 3,77,300
Answer:
(B) ₹ 3,70,300
Question 100.
S produces and sells one product, P, for which the data are as follows:
Selling price — ₹ 28
Variable cost — ₹ 16
Fixed cost — ₹ 4
The fixed costs are based on a budgeted production and sales level of 25,000 units for the next period. Due to market changes both the selling price and the variable cost are expected to increase above the budgeted level in the next period. If the selling price and variable cost per unit increase by 10% and 8% respectively, by how much must sales volume change, compared with the original budgeted level, in order to achieve the original budgeted profit for the period?
(A) 10.1 % decrease
(B) 11.2% decrease
(C) 13.3% decrease
(D) 16.0% decrease
Answer:
(B) 11.2% decrease
Question 101.
At zero direct labour hours in a flexible budget graph, the total budgeted cost line intersects the vertical axis at ₹ 30,000. At 10,000 direct labour hours, a horizontal line drawn from the total budgeted cost line intersects the vertical axis at ₹ 90,000. Fixed and variable costs may be expressed as
(A) ₹ 30,000 fixed plus ₹ 6 per direct labour hour variable
(B) ₹ 30,000 fixed plus ₹ 9 per direct labour hour variable
(C) ₹ 60,000fixed plus ₹ 3 per direct labour hour variable
(D) ₹ 60,000 fixed plus ₹ 6per direct labour hour variable
Use the following information to answer next five questions:
X Ltd. makes Product W. Each Product W is cast from 4 kg. of raw material that costs ₹ 2.50 per kg. The opening stock of raw materials is 4,000 kg and the company wants 6,000 kg with which to begin the following period. Product W takes one- half hour of direct labour at a rate of ₹ 9 per hour. Projected sales of Product W is 1,00,000 units, each unit selling for ₹ 15. Opening stock of finished Product W is 8,000 and the desired closing stock is 12.000 units.
Answer:
(A) ₹ 30,000 fixed plus ₹ 6 per direct labour hour variable
Fixed cost = ₹ 30,000
Variable cost per unit =\(\frac{90,000-30,000}{10,000}=6\)
Question 102.
What is the sales budget for the X Ltd.?
(A) ₹ 15,000
(B) ₹ 15,00,000
(C) ₹ 1,00,000
(D) ₹ 1,50,000
Answer:
(B) ₹ 15,00,000
1,00,000 × 15 = 15,00,000
Question 103.
What would be the production budget in units for X Ltd.?
(A) 1,06,000 units
(B) 1,04,000 units
(C) 98,000 units
(D) 1,10,000 units
Answer:
(B) 1,04,000 units
Sales Units + Closing Stock – Opening Stock = Unit Produced
1,0, 000 + 12,000 – 8,000 = 1,04,000 units
Question 104.
What would be the direct materials purchases budget in kg?
(A) 4,18,000 kg
(B) 4,00,000 kg
(C) 4,14,000 kg
(D) 4,16,000 kg
Answer:
(A) 4,18,000 kg
Material consumed = 1,04,000 × 4 = 4,16,000
Material Purchases=Material consumed + Closing stock of raw material – Opening stock of raw material = 4,16,000 + 6,000 – 4,000 = 4,18,000
Question 105.
What would be the direct labour budget?
(A) ₹ 4,68,000
(B) ₹ 4,50,000
(C) ₹ 9,36,000
(D) ₹ 1,04,000
Answer:
(A) ₹ 4,68,000
1,04,000 × 0.5 × 9 = 4,68,000
Question 106.
If the beginning balance of cash is ₹ 5,000 and the desired closing cash balance is ₹ 10,000, with the only other cash-related items being revenue, direct materials purchases, and cost of direct labour, what would be the surplus or deficit of cash at the end of the period?
(A) Deficit of ₹ 8,000
(B) Surplus of ₹ 18,000
(C) Deficit of ₹ 18,000
(D) No surplus or deficit
Answer:
(C) Deficit of ₹ 18,000
5,000 + 15,00,000 (sales) -10,45,000 (material purchase) – 4,68,000 (labour) -10,000 (desired cash balance) = – 18,000
Question 107.
R Ltd. is budgeting production of 1,00,000 units of Product R for the month of May this year. Production of one unit of Product R requires three units of Material B. For Material B, the actual inventory units at May 1 were 22,000 units and budgeted inventory units at May 31 are 24,000. How many units of Material B is R Ltd. planning to purchase during May?
(A) 3,28,000
(B) 3,02,000
(C) 2,98,000
(D) 2,72,000
Answer:
(B) 3,02,000
Material consumed = 1,00,000 × 3 = 3,00,000
Material Purchases=Material consumed + Closing stock of raw material – Opening stock of raw material = 3,00,000 + 24,000 – 22,000 = 3,02,000
Question 108.
XYZ has forecast sales for the next three months as follows: January, 10,000 units; February, 15,000 units; and March, 20,000 units. Inventory as of January 1 is expected to be 2,000 units. Ending inventories should equal 25% of the coming month’s sales needs. How many units should be produced in February?
(A) 13,750 units
(B) 15,000 units
(C) 16,250 units
(D) 18,000 units
Answer:
(C) 16,250 units
Question 109.
A Ltd. has observed its receivable collection pattern to be as follows: 40% in the month of the sale, 45% in the month following the sale, and 13% in the second month following the sale. Sales for the last 3 months of the year were as follows: October ₹ 3,00,000; November, ₹ 4,50,000 and December, ₹ 6,25,000. Sales for January are budgeted to be ₹ 3,75,000. What are the budgeted cash collections for January?
(A) ₹ 3,75,000
(B) ₹ 4,89,750
(C) ₹ 4,95,750
(D) ₹ 6,25,000
Answer:
(B) ₹ 4,89,750
Question 110.
S Ltd. has forecast sales as follows: July 30,000 units; August 35,000 units; and September 40,000 units. Finished goods inventory as of July 1 is forecast to be 10,000 units. Finished goods inventory of 20% of the following month’s sales needs is desired. Each finished unit requires 5 kg of raw material. The raw materials inventory level on July 1 was 2,02,500 kg and the expected raw materials inventory level on July 31 will be 2,70,000 kg. How many kg of raw material should be purchased in July?
(A) 27,000 kg
(B) 40,500 kg
(C) 1,35,000 kg
(D) 2,02,500 kg
Answer:
(D) 2,02,500 kg
Question 111.
The master budget of Benedict Company shows that the planned activity level for next year is expected to be 50,000 machine hours. At this level of activity, the following manufacturing overhead costs are expected:
A flexible budget for a level of activity of 60,000 machine hours would show total manufacturing overhead costs of ……………..
(A) ₹ 7,41,000
(B) ₹ 6,30,000
(C) ₹ 7,56,000
(D) ₹ 6,81,000
Answer:
(A) ₹ 7,41,000
Question 112.
A department has budgeted monthly manufacturing overhead cost of ₹ 90,000 plus ₹ 3 per direct labour hour. If a flexible budget report reflects ₹ 1,74,000 for budgeted manufacturing cost for the month, the actual level of activity achieved during the month was:
(A) 88,000 direct labour hours
(B) 28,000 direct labour hours
(C) 58,000 direct labour hours
(D) Cannot be determined
Answer:
(B) 28,000 direct labour hours
Question 113.
Z & Co. has budgeted manufacturing costs for 25,000 units are:
Fixed manufacturing costs ₹ 25,000 per month, Variable manufacturing costs ₹ 12.00 per unit. Z & Co. produced 20,000 units during March. How much is the flexible budget for total manufacturing costs for March?
(A) 2,60,000
(B) 3,25,000
(C) 2,40,000
(D) 2,65,000
Answer:
(D) 2,65,000
Question 114.
If indirect repair cost at 6,000 labour hours is 42,000 and ₹ 63,000 at 9,000 labour hours, then it indirect repair cost is in nature.
(A) Variable
(B) Fixed
(C) Semi-fixed
(D) None of the above
Answer:
(A) Variable
Question 115.
The following information is obtained from the books of account of Excellent manufactures.
Which cost is semi-variable in nature?
(A) Repair, shop labour & inspection
(B) Repair, Power, Consumables & inspection
(C) Shop labour & Consumables
(D) Repair, Power & inspection
Answer:
(D) Repair, Power & inspection
Question 116.
Recent budget prepared by G Ltd. show that inspection cost is ₹ 5,000 at a capacity level of 2,500 units out of which 25% is semi-variable. What will be inspection cost at 1,750 level of activity?
(A) ₹ 6,125
(B) ₹ 4,625
(C) ₹ 3,875
(D) ₹ 3,625
Answer:
(B) ₹ 4,625
Question 117.
The budget manager of J Ltd. is preparing a flexible budget. Material costs ₹ 7 per unit. Direct labour averages ₹ 2.5 per hour and requires 1.60 hours to produce one unit. Salesmen are paid commission of ₹ 1 per unit sold.
What will be total cost at 1,40,000 units?
(A) ₹ 26,30,000
(B) ₹ 25,10,000
(C) ₹ 27,70,000
(D) ₹ 28,55,000
Use the following information to answer next 2 questions.
A factory is working at 50% of its capacity and produces 10,000 units. At 60% capacity, the raw materials cost increased by 2%. At 80% capacity, raw material cost increased by 5% and selling price falls by 5%. At 50% capacity, the product costs ₹ 180 per unit and sold at ₹ 200 per unit. The cost of ₹ 180 is made up as follows:
Answer:
(C) ₹ 27,70,000
Question 118.
Estimate the profit of the factory when it works at 60% of its working capacity.
(A) ₹ 3,72,000
(B) ₹ 2,60,000
(C) ₹ 2,72,000
(D) ₹ 3,60,000
Answer:
(B) ₹ 2,60,000
Question 119.
Estimate the profit of the factory when it works at 80% of its working capacity.
(A) ₹ 3,72,000
(B) ₹ 2,60,000
(C) ₹ 2,72,000
(D) ₹ 3,60,000
Answer:
(A) ₹ 3,72,000
Question 120.
Factory overheads of Good-Luck Ltd. at 55% capacity are ₹ 3,10,000 and at 75% capacity ₹ 3,50,000 for the current year. The following increases in cost are expected in next year:
What will be the factory overheads if factory works at 85% capacity next year?
(A) 3,98,500
(B) 2,98,500
(C) 5,98,200
(D) 3,48,250
Answer:
(A) 3,98,500
Question 121.
A single product company estimated its unit to be produced for the next year quarter wise as under:
Each unit of finished output requires 2 kg of raw material. The opening stock of raw materials in the beginning of the year is 10,000 kg and the closing stock at the end of the year is required to be maintained at 5,000 kg. Raw material to be purchased in kg = ?
(A) 3,20,000
(B) 3,25,000
(C) 3,15,000
(D) 3,30,000
Answer:
(C) 3,15,000
Question 122.
P Ltd. has prepared its expense budget for 20,000 units in its factory for the year 2015 as detailed below:
What will be total cost at 18,000 units.
(A) 20,14,000
(B) 23,53,600
(C) 23,14,000
(D) 25,14,600
Answer:
(B) 23,53,600
Question 123.
A company estimated its sales for the next year quarter wise as under:
The opening stock of finished goods is 10,000 units and the company expects to maintain the closing stock of finished goods at 16,250 units at the end of the year. The production pattern in each quarter is based on 80% of the sales of the current quarter and 20% of the sales of the next quarter. How much units will be produced in last quarter?
(A) 48,250
(B) 38,250
(C) 42,000
(D) 48,750
Answer:
(A) 48,250
Question 124.
As per budget of Z Ltd. estimated sales emits for the month of April & May 2015 are 12,000 units & 13,000 units. As a matter of policy, the company maintains the closing balance of finished goods 50% of the estimated sales for the next month. Unit to be produced for the month of April = ?
(A) 12,500
(B) 6,000
(C) 18,500
(D) 11,500
Use the following information to answer next 3 questions:
Answer:
(A) 12,500
Question 125.
Activity Ratio = ?
(A) 85.23%
(B) 125%
(C) 76.25%
(D) 68.18%
Answer:
(A) 85.23%
Question 126.
Efficiency Ratio = ?
(A) 68.18%
(B) 85.23%
(C) 125%
(D) 65.83%
Answer:
(C) 125%
Question 127.
Capacity Ratio = ?
(A) 125%
(B) 68.18%
(C) 85.23%
(D) 110%
Answer:
(B) 68.18%
Question 128.
C Ltd. produced two products, viz. Product A & B. Each unit takes 5 hours and 10 hours respectively as production time. 1,000 units of Product A and 600 units of Product B were produced during March, 2015. Actual man hours spent in the production were 10,000. Monthly budgeted hours are 8,000. Efficiency Ratio = ?
(A) 137.5%
(B) 110%
(C) 125%
(D) 113.5%
Answer:
(B) 110%
Question 129.
If the ‘activity ratio’ and ‘capacity ratio’ of a company is 104% and 96% respectively, fine out its ‘efficiency ratio.’
(a) 108.33%
(b) 92.31%
(c) 91.0596
(d) 78.12596
Answer:
(a) 108.33%
Question 130.
The activity ratio of a concern is 95.696 whereas the capacity ratio is 10596. What is the efficiency ratio?
(A) 108.3396
(B) 92.3196
(C) 91.0596
(D) 78.12596
Answer:
(C) 91.0596
Question 131.
Dec. 2014: The budgeting system designed to change in relation to level of activity actually attained is known as —
(A) Fixed budgeting
(B) Flexible budgeting
(C) Performance budgeting
(D) Functional budgeting
Answer:
(B) Flexible budgeting
Question 132.
Dec. 2014: From the following, which one is a functional budget —
(A) Master budget
(B) Fixed budget
(C) Sales budget
(D) Current budget
Answer:
(C) Sales budget
Question 133.
Dec. 2014: The following information is available:
Wages for January: ₹ 20,000
Wages for February: ₹ 22,000
Delay in payment of wages: 1/2 month
The amount of wages paid during the month of February is —
(A) ₹ 11,000
(B) ₹ 22,000
(C) ₹ 20,000
(D) ₹ 21,000
Answer:
(D) ₹ 21,000
Question 134.
Dec. 2014: In an organization, cash sales is 2596 and credit sales is 7596. Sales for October, 2013 is ₹ 12,00,000, November, 2013 ? 14,00,000, December, 2013 ₹ 16,00,000, January, 2014 ₹ 6,00,000 and February, 2014 ₹ 8,00,000. 6096 of credit sales are collected in the next month after sales, 3096 in the second month and 1096 in the third month. No bad debts are anticipated. The cash collected in the month of February, 2014 from debtors is —
(A) ₹ 15,00,000
(B) ₹ 9,80,000
(C) ₹ 7,35,000
(D) ₹ 80,000
Answer:
(C) ₹ 7,35,000
Question 135.
Dec. 2014: ABC Ltd. produces and sells a single product. Sales budget to the calendar year 2015 for each quarter is as under:
No. of units to be sold:
Quarter – I : 12,000
Quarter – II : 15,000
Quarter – Ill : 16,500
Quarter-IV : 18,000
The year 2015 is expected to open with an inventory of 4,000 units of finished product and close with an inventory of 6,500 units. Production is customarily scheduled to provide for two-thirds of the current quarter’s demand plus one-third of the following quarter’s demand. Production for Quarter – IV would be —
(A) 13,500 units
(B) 15,500 units
(C) 17,000 units
(D) 18,500 units
Answer:
(D) 18,500 units
Question 136.
Dec. 2014: Under which of the following method of budgeting, all activities are re-evaluated each time a budget is set—
(A) Materials budget
(B) Zero base budgeting
(C) Sales budget
(D) Overheads budget
Answer:
(B) Zero base budgeting
Question 137.
June 2015: In Rise Ltd., cash sales is 2596 and credit sales 7596. Sales for November, 2014 is ₹ 15,00,000, December, 2014? 14,00,000, January,2015 ₹ 16,00,000, February, 2015 ₹ 10,00,000 and March, 2015 ₹ 9,00,000.60% of the credit sales are collected in the next month after sales, 30% in the second month and 10% in the third month. No bad debts are anticipated. The cash collected – in the month of March, 2015 from debtors is —
(A) ₹ 14,60,000
(B) ₹ 14,20,000
(C) ₹ 12,20,000
(D) ₹ 9,15,000
Answer:
(D) ₹ 9,15,000
Question 138.
June 2015: A factor which limits the activities of an undertaking and which is taken into account while preparing budget is known as —
(A) Budget manual
(B) Budget controller
(C) Budget key factor
(D) Budget centre
Answer:
(C) Budget key factor
Question 139.
June 2015: A document which sets out the responsibility of the persons engaged in the routine of and the procedures, forms and records required for budgetary control is called—
(A) Budget centre
(B) Budget report
(C) Budget controller
(D) Budget manual
Answer:
(D) Budget manual
Question 140.
June 2015: A budget that gives a summary of all the functional budgets and budgeted statement of profit and loss is called —
(A) Flexible budget
(B) Master budget
(C) Performance budget
(D) Zero base budget
Answer:
(B) Master budget
Question 141.
June 2015: A company estimates its quarter wise sales (in units) for the next year as under:
The opening stock of finished goods is 10,000 units and the company expects to maintain the closing stock of finished goods at 16,250 units at the end of the year. The production pattern in each quarter is based on 80% of the sales of the current quarter and 20% of the sales of the next quarter. The production for quarter IV will be —
(A) 36,000 units
(B) 42,000 units
(C) 48,250 units
(D) 38,250 units
Answer:
(C) 48,250 units
Question 142.
June 2015: Budget which remains unchanged regardless of the actual level of activity is known as –
(A) Fixed budget
(B) Functional budget
(C) Flexible budget
(D) Cash budget
Answer:
(A) Fixed budget
Question 143.
June 2015: Estimated wages for January is ₹ 4,000 and for February ₹ 4,400. If the delay in payment of wages is 1 /2 month, the amount of wages to be considered in cash budget for the month of February will be –
(A) ₹ 4,000
(B) ₹ 4,400
(C) ₹ 4,600
(D) ₹ 4,200
Answer:
(D) ₹ 4,200
Question 144.
June 2015: Which of the following formula is used to calculate efficiency ratio –
Answer:
(B)
Question 145.
June 2015: Crown Ltd. has forecast its sales for the next three months as follows:
April: 12,000 units, May: 15,000 units, June: 17,000 units.
Opening stock as on 1st April is expected to be 3,500 units.
Closing stock should be equal to 20% of the coming month’s sales needs. The number of units required to be produced in May is-
(A) 14,600 units
(B) 11,500 units
(C) 15,400 units
(D) 13,600 units
Answer:
(C) 15,400 units
Question 146.
Dec. 2015: The basic difference between a static budget and a flexible budget is —
(A) A static budget is based on one specific level of production and a flexible budget can be prepared for any production level within a relevant range
(B) A static budget is for an entire production, but a flexible budget is applicable only to a single department
(C) Flexible budget allows management latitude in meeting goals, whereas a static budget is based on a fixed standard
(D) A flexible budget considers only variable costs, but a static budget considers all costs
Answer:
(A) A static budget is based on one specific level of production and a flexible budget can be prepared for any production level within a relevant range
Question 147.
Dec. 2015: Match the following
Select the correct answer from the options given below —
Answer:
(D)
Question 148.
Dec. 2015: X Ltd. has forecast its sales for the next three months as follows:
May : 12,000 units
June : 20,000 emits
July : 25,000 units
Opening stock as on 1 st April is expected to be 5,000 units. Closing stock should equal 20% of the coming month’s sales needs. How many units should be produced in June —
(A) 20,000 Units
(B) 11,000 Units
(C) 21,000 Units
(D) 25,000 Units
Answer:
(C) 21,000 Units
Question 149.
June 2016: PQR Ltd. has prepared the budget for the production of one lakh units of the only commodity manufactured by them for a costing period as follows:
If the actual production during the period was 60,000 units, the revised budget cost per unit will be
(A) ₹ 740
(B) ₹ 800
(C) ₹ 700
(D) ₹ 840
Answer:
(A) ₹ 740
Question 150.
June 2016: A budget in which a responsibility centre manager must justify each planned activity and its budgeted total cost is called —
(A) Traditional budget
(B) Zero based budget
(C) Master budget
(D) Functional budget
Answer:
(B) Zero based budget
Question 151.
June 2016: To produce one unit of ‘A’, two ingredients, ie., 2 kg of X and 3 kg of Y are required:
What will be the quantity of consumption of ingredients X and Y, if 20,000 units of A are sold —
(A) 46,000 kg & 69,000 kg respectively
(B) 49,000 kg & 72,000 kg respectively
(C) 40,000 kg & 60,000 kg respectively
(D) 43,000 kg & 63,000 kg respectively
Answer:
(A) 46,000 kg & 69,000 kg respectively
Question 152.
June 2016: Which one of the following would not form part of master budget —
(A) Cash budget
(B) Statement of profit and loss
(C) Statement of financial position
(D) None of the above
Answer:
(D) None of the above
Question 153.
June 2016: Which one of the following is not advantage of budgetary control?
(A) Maximization of profit through effective planning
(B) Planned approach for expenditure
(C) Create necessary conditions for setting-up of standard costs
(D) Based on quantitative data and represent only an impersonal appraisal to the conduct of business activity
Answer:
(B) Planned approach for expenditure
Question 154.
June 2016: Kriti Ltd. has provided following information for the quarter January to March:
20% of the sales are on cash basis and balance on credit basis. The amount to be collected from debtors in the month of February and March will be —
(A) Zero and ₹ 8,000 respectively
(B) ₹ 8,000 & ₹ 16,000 respectively
(C) ₹ 8,000 & ₹ 24,000 respectively
(D) ₹ 16,000 & ₹ 36,000 respectively
Answer:
(C) ₹ 8,000 & ₹ 24,000 respectively
Question 155.
June 2016: For a department, the standard overheads rate is ? 2.50 per hour and the overheads allowances are as follows:
Calculate the normal capacity level on the basis of which the standard overheads rate has been worked out —
(A) 8,000 Hours
(B) 7,000 Hours
(C) 6,000 Hours
(D) 9,000 Hours
Answer:
(A) 8,000 Hours
Question 156.
Dec. 2016: The budget which usually takes the form of budgeted profit and loss account and balance sheet is known as —
(A) Cash budget
(B) Master budget
(C) Flexible budget
(D) Sales budget
Answer:
(B) Master budget
Question 157.
Dec. 2016: While preparing cash budget, which of the following items would not be included
(A) Interest paid to debenture holders
(B) Salaries and wages
(C) Bonus shares issued
(D) Income-tax paid
Answer:
(C) Bonus shares issued
Question 158.
Dec. 2016: Budgeted standard hours of a factory are 15,000. The capacity utilization ratio for May, 2016 is 85% and efficiency ratio for the month is 120%. The standard hours for actual production in the month will be —
(A) 12,750
(B) 18,000
(C) 15,300
(D) 18,000
Answer:
(C) 15,300
Question 159.
June 2017: A plant produces a product in the quantity of 10,000 units at a cost of ₹ 3 per unit. If 20,000 units are produced, the cost per unit will be ₹ 2.50. Selling price per unit is ₹ 4. The variable cost per unit will be:
(A) ₹ 2
(B) ₹ 3
(C) ₹ 4
(D) ₹ 1
Answer:
(A) ₹ 2
Question 160.
June 2017: When demand forecasting is difficult, budget which is prepared:
(A) Sales Budget
(B) Production Budget
(C) Financial Budget
(D) Flexible Budget
Answer:
(D) Flexible Budget
Question 161.
June 2017: The budget which usually takes the form of profit and loss account and balance sheet is known as:
(A) Cash budget
(B) Master budget
(C) Flexible budget
(D) Labour budget
Answer:
(B) Master budget
Question 162.
June 2017: A fixed budget is one which:
(A) is a plan for capital expenditure in monetary terms
(B) is designed to remain unchanged irrespective of the volume of output or turnover attained
(C) deals with income and expenditure applicable to a particular function
(D) deals with none of these
Answer:
(B) is designed to remain unchanged irrespective of the volume of output or turnover attained
Question 163.
June 2017: One of the most significant tools in cost planning is:
(A) Direct material
(B) Budget
(C) Marginal costing
(D) Direct labour
Answer:
(B) Budget
Question 164.
June 2017: When standard output is 10 units per hour and actual output is 14 units per hour, the efficiency level will be:
(A) 60%
(B) 120%
(C) 140%
(D) None of the above
Answer:
(C) 140%
Question 165.
Dec. 2017: A short term budget, broken down into a quarterly or monthly period and reviewed and modified in the light of changing conditions is:
(A) Current Budget
(B) Flexible Budget
(C) Rolling Budget
(D) Zero Base Budget
Answer:
(B) Flexible Budget
Question 166.
Dec. 2017: While preparing a flexible budget indirect wages was considered as semi-variable expenses. At 50% level of production it was estimated as 1,50,000. If it has a tendency to increase by 10% between 60% to 75% capacity and further will increase by another 5% when production crosses 75%, the amount of indirect wages at 90% level of production is:
(A) ₹ 1,65,000
(B) ₹ 1,72,500
(C) ₹ 1,73,250
(D) None of the above
Answer:
(C) ₹ 1,73,250
Question 167.
Dec. 2017: The units to be sold for different months are as follows:
There will be no WIP at the end of any month. Finished units equal to half the sales for the next month will be in stock at the end of each month. The required production in units for April will be:
(A) 2,800
(B) 2,200
(C) 2,400
(D) 3,200
Answer:
(B) 2,200
Question 168.
Dec. 2017:In budgeting there was a shift from financial classification to objective classification in respect of functions, activities etc.
(A) Programme
(B) Performance
(C) Zero base
(D) None of the above
Answer:
(B) Performance
Question 169.
June 2018 & June 2019: Budget which remain unchanged regardless of the actual level of the activity is known as:
(A) Fixed Budget
(B) Functional budget
(C) Flexible budget
(D) Cash budget
Answer:
(A) Fixed Budget
Question 170.
June 2018: is prepared for the estimation of plant capacity to meet the budgeted production during the budgeted period.
(A) Plant utilization budget
(B) Production budget
(C) Manufacturing overhead budget
(D) Labour budget
Answer:
(A) Plant utilization budget
Question 171.
June 2018: A flexible budget is:
(A) A budget that is designed to furnish budgeted costs at different activity levels
(B) A budget that will be changed at the end of the month in order to reflect the actual costs of a department
(C) A budget that comprises variable costs only
(D) A budget that is designed for a specific planned output level
Answer:
(A) A budget that is designed to furnish budgeted costs at different activity levels
Question 172.
June 2018: ABC Ltd. has forecast its sales for the next three months as follows:
May : 12,000 units
June : 20,000 units
July : 25,000 units
As per the company policy, closing stock should be equal to 20% of the coming month’s sales forecast. How many units should be produced in June?
(A) 20,000 Units
(B) 11,000 Units
(C) 21,000 Units
(D) 25,000 Units
Answer:
(C) 21,000 Units
Question 173.
Dec. 2018: is a budget which, by recognizing different cost behaviour patterns, is designed to change in relation to the volume of output.
(A) Production Budget
(B) Performance Budget
(C) Zero Base Budget
(D) Flexible Budget
Answer:
(D) Flexible Budget
Question 174.
Dec. 2018: is an operating and financial plan of a business enterprise.
(A) Forecast
(B) Budget
(C) Estimate
(D) Standard
Answer:
(B) Budget
Question 175.
Dec. 2018: is based on the premise that every rupee of expenditure requires justification.
(A) Zero Base Budgeting
(B) Programme Budgeting
(C) Performance Budgeting
(D) Appraisal Budgeting
Answer:
(A) Zero Base Budgeting
Question 176.
Dec. 2018: Under Balance Sheet Method of preparing cash budget, budget is prepared on the basis of:…………
(A) Current year balance sheet
(B) Previous year balance sheet
(C) Forecasted balance sheet
(D) Consolidated balance sheet
Answer:
(C) Forecasted balance sheet
Question 177.
June 2019: The following information extracted from the records of P Ltd. Sales for October, November and December, 2018 are ₹ 90,000, ₹ 1,10,000 and ₹ 80,000 respectively. 40% of its sales are expected to be for cash. Of its credit sales 70% are expected to pay in the month after sales and take 2% discount on it. Balance is expected to pay in second month after sales and 3% of it is expected to bad debts.
What are the sales receipts to be shown in cash budget for the month of December?
(A) ₹ 92,990
(B) ₹ 1,23,174
(C) ₹ 95,609
(D) ₹ 1,25,793
Note: MCQ is wrongly drafted; for further clarification please see the hints.
Question 178.
June 2019: Which of the following is not a step for successful implementation of the budgetary control system?
(A) Budget manual
(B) Budget controller
(C) Budget period
(D) Budget standard
Answer:
(D) Budget standard
Question 179.
June 2019:
Assertion (A):
The purpose of performance budgeting is to focus on work to be done and services to be rendered.
Reason (R):
The main purpose of performance budgeting is not to interrelate physical and financial aspect of every programme, project or activity.
Select the correct answer from the options given below.
(A) Both A and Rare true and R is correct explanation of A.
(B) Both A and R true but R is not correct explanation of A.
(C) A is true but R is false
(D) A is false but R is true
Answer:
(C) A is true but R is false