Planning, Budgeting & Forecasting

Which budget is typically prepared first in the master budget process?

A flexible budget adjusts for changes in:

What is the production budget formula?

Which forecasting method uses historical data patterns to predict future values?

A company's sales budget shows 10,000 units at $50 each. Desired ending inventory is 2,000 units and beginning inventory is 1,500 units. How many units must be produced?

Zero-based budgeting requires managers to:

Which variance measures the difference between actual quantity used and standard quantity allowed, multiplied by the standard price?

In regression analysis, the coefficient of determination (R²) of 0.85 means:

A learning curve of 80% means that when cumulative production doubles, the cumulative average time per unit:

Which budgeting approach continuously adds a new period as the most recent period expires?

Which of the following budgets is prepared immediately after the sales budget?

A static budget is also known as a:

Which budget estimates the cash inflows and outflows for a given period?

The direct materials purchases budget is derived from which of the following?

In a master budget, the budgeted income statement is classified as part of the:

What is the primary purpose of a capital budget?

A favorable variance occurs when:

The direct labor budget is based on:

Which of the following is NOT typically included in a master budget?

Budgeted manufacturing overhead typically includes:

The Delphi method of forecasting relies on:

Pro forma financial statements are:

In a flexible budget, which costs remain constant in total across different activity levels?

Which forecasting technique uses weighted averages of past observations, giving more weight to recent data?

A budget committee typically includes representatives from:

The ending finished goods inventory from the current period becomes the:

Which variance measures the difference between the actual price paid for inputs and the standard price?

Activity-based budgeting focuses on:

The selling and administrative expense budget is typically classified as part of the:

What does a budget variance represent?

Which budget is most useful for evaluating a manager's performance when actual activity differs from planned activity?

Kaizen budgeting emphasizes:

In budgeting, a budget slack refers to:

The formula for the materials quantity (usage) variance is:

Which of the following best describes a participative budget?

A cash budget helps management plan for:

In a simple moving average forecast, the forecast is calculated by:

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

When budgeted sales are 5,000 units, desired ending inventory is 800 units, and beginning inventory is 600 units, how many units must be produced?

Regression analysis in forecasting establishes a relationship between:

A company has budgeted sales of 20,000 units at $50 per unit. Variable costs are $30 per unit, and total fixed costs are $250,000. What is the budgeted operating income?

A company needs 3 pounds of raw material per finished unit. Budgeted production is 8,000 units. Beginning raw materials inventory is 5,000 pounds, and desired ending inventory is 6,000 pounds. How many pounds of raw material must be purchased?

The flexible budget variance is the difference between:

A company's standard cost card shows 2 direct labor hours per unit at $15 per hour. During the month, 5,100 hours were worked to produce 2,400 units. Actual wages totaled $78,050. What is the labor rate variance?

In exponential smoothing, a higher smoothing constant (alpha) will:

A company budgeted 10,000 machine hours for the period. Fixed overhead is budgeted at $200,000 and variable overhead at $5 per machine hour. If actual machine hours are 9,500 and actual overhead is $250,000, what is the total overhead spending variance?

A company uses zero-based budgeting. Which of the following statements is most accurate?

The sales volume variance in a flexible budget framework is the difference between:

A company's standard allows 0.5 hours of direct labor per unit at $20 per hour. During May, 12,000 units were produced using 6,300 direct labor hours at a total cost of $132,300. What is the labor efficiency variance?

Which forecasting method is most appropriate when there is no historical data available and the forecast relies on subjective judgment?

A rolling budget differs from a traditional annual budget primarily because it:

Material price variances are often isolated at the point of purchase rather than usage because:

A company collects 60% of sales in the month of sale, 30% in the following month, and 10% in the second month after sale. If sales are $100,000 in January, $120,000 in February, and $110,000 in March, what are budgeted cash collections in March?

In a standard costing system, the fixed overhead volume variance arises because:

A company's flexible budget for 10,000 units shows total costs of $350,000, and for 14,000 units shows total costs of $430,000. What is the variable cost per unit?

Which of the following is an advantage of participative budgeting over top-down budgeting?

A company uses an 80% learning curve for a labor-intensive process. The first unit takes 100 hours. Using the cumulative average-time model, what is the cumulative average time per unit when cumulative production doubles to 2 units?

In the high-low method of cost estimation, which two data points are used?

Which of the following variances is most likely the responsibility of the production manager?

If the coefficient of correlation (r) between advertising expense and sales revenue is 0.92, this indicates:

The predetermined fixed overhead rate is $8 per direct labor hour based on a denominator volume of 10,000 hours. Actual production required 9,200 standard hours allowed. What is the fixed overhead volume variance?

In regression analysis, the standard error of the estimate measures:

A company budgets production at 90% of sales for each quarter. If Q1 sales are budgeted at 10,000 units and Q2 at 12,000 units, and desired ending finished goods is 20% of next quarter's sales, what is Q1 budgeted production?

An unfavorable variable overhead efficiency variance most likely indicates:

When preparing a cash budget, which of the following is a cash outflow that would NOT appear on the income statement?

A flexible budget report shows the following for 8,000 units: actual total costs $280,000 and flexible budget total costs $272,000. The static budget at 7,500 units shows total costs of $262,500. What is the flexible budget variance?

Project budgeting is most likely to use which technique for scheduling and cost estimation?

A company sets its material price standard by considering all of the following EXCEPT:

If a time series exhibits a consistent upward trend, which forecasting technique would be LEAST appropriate?

The variable overhead spending variance is calculated as:

A company produces two products, A and B. The sales mix is budgeted at 60% A and 40% B. If total budgeted sales are 10,000 units, how many units of Product B should be included in the sales budget?

The three-variance method for analyzing overhead includes spending, efficiency, and:

When a company uses activity-based budgeting, cost pools are established based on:

A seasonal index of 1.25 for the month of December means that December sales are typically:

Which of the following is a disadvantage of zero-based budgeting?

In a cash budget, depreciation expense is:

A company uses standard costing. The materials price variance was $3,000 favorable and the materials quantity variance was $4,500 unfavorable. What is the total materials variance?

In trend analysis using time-series data, the cyclical component represents:

If a company's budget assumes sales of 50,000 units but actual sales are 45,000 units, the sales volume variance for revenue (given a budgeted selling price of $30) would be:

A company budgets variable manufacturing overhead at $4 per direct labor hour. The standard allows 3 direct labor hours per unit. During the period, 6,000 units were produced using 19,000 direct labor hours, and actual variable overhead was $74,000. What is the total variable overhead variance?

A company uses an 80% learning curve (cumulative average-time model). The first unit takes 200 hours. What is the estimated total time for the first 8 units?

A company uses regression analysis and derives the equation Y = 50,000 + 12X, where Y is total manufacturing costs and X is machine hours. The R-squared is 0.78. If 10,000 machine hours are planned, what is the predicted total manufacturing cost, and what is the correct interpretation of R-squared?

A company prepares a flexible budget at three activity levels. At 5,000 units, total costs are $175,000. At 7,000 units, total costs are $215,000. What are the fixed costs and variable cost per unit?

A company's standard variable overhead rate is $6 per direct labor hour. Standard hours are 2 per unit. During the period, 4,800 units were produced, 10,200 actual direct labor hours were used, and actual variable overhead was $59,160. What are the variable overhead spending and efficiency variances?

Under a standard cost system, the fixed overhead budget (spending) variance is $5,000 unfavorable and the fixed overhead volume variance is $12,000 favorable. If budgeted fixed overhead is $180,000, what is the actual fixed overhead and the applied fixed overhead?

A company collects 50% of credit sales in the month of sale (with a 2% cash discount), 35% in the following month, and 15% in the second month after sale. Credit sales are: January $200,000, February $250,000, March $300,000. What are net cash collections from credit sales in March?

A company uses exponential smoothing with alpha = 0.3. The forecast for period 5 was 1,000 units and actual demand in period 5 was 1,200 units. What is the forecast for period 6?

A company has three decision packages for its IT department ranked by priority. Package 1 costs $100,000 (essential operations), Package 2 costs $50,000 (enhanced security), and Package 3 costs $75,000 (new development). If the zero-based budgeting committee approves a maximum of $165,000, which packages are funded?

A firm uses a four-quarter weighted moving average with weights of 0.4, 0.3, 0.2, and 0.1 (most recent quarter weighted highest). Actual sales for Q1 through Q4 were 500, 600, 700, and 800. What is the forecast for Q5?

A manufacturer's standard cost card shows: Direct materials: 4 lbs at $3/lb = $12; Direct labor: 1.5 hrs at $18/hr = $27; Variable overhead: 1.5 hrs at $8/hr = $12; Fixed overhead: 1.5 hrs at $10/hr = $15. Total standard cost = $66. If 2,000 units were produced and actual results show 8,200 lbs used at $3.10/lb, what is the total direct materials variance?

When using multiple regression for cost estimation, multicollinearity refers to:

A company has the following quarterly data: Q1 actual sales = 10,000 units with seasonal index 0.80; Q2 actual = 14,000 with index 1.10; Q3 actual = 16,000 with index 1.30; Q4 actual = 10,000 with index 0.80. What is the average deseasonalized quarterly demand?

A company budgets total overhead at $500,000 for 25,000 direct labor hours. The predetermined overhead rate is $20/hour. Actual overhead is $510,000 and actual hours are 24,000. Standard hours allowed for actual production are 23,500. Using the two-variance method, what are the budget (controllable) and volume variances?

A company uses kaizen budgeting and targets a 2% cost reduction each month. The base monthly cost is $500,000. What is the budgeted cost for month 3?

A company uses an 80% incremental unit-time learning curve model. The first unit took 1,000 hours. What is the estimated time for the second unit alone?

A company has a standard mix of two materials: Material A (60%, $5/lb) and Material B (40%, $8/lb). Actual usage was 3,200 lbs of A and 1,800 lbs of B to produce output requiring a standard total of 5,000 lbs. What is the materials mix variance?

A company's regression equation for predicting total maintenance cost is Y = 25,000 + 3.50X (where X = machine hours). The t-statistic for the slope coefficient is 8.5 and the critical t-value at the 5% significance level is 2.05. Which conclusion is correct?

A company uses a continuous (rolling) budget with quarterly updates. The original annual budget for Year 1 covers Q1-Q4. When Q1 actuals are completed, the budget is revised. What period does the revised budget now cover?

A company uses the three-variance method for overhead analysis. The following data is available: Actual overhead = $420,000; Budgeted overhead at actual hours (12,000) = $400,000; Budgeted overhead at standard hours allowed (11,500) = $390,000; Applied overhead (11,500 standard hours x $35 rate) = $402,500. What are the spending, efficiency, and volume variances?

In a multi-product company, the sales mix variance for Product X is calculated as follows: Actual total units sold = 10,000; Budgeted total units = 10,000; Actual mix for X = 35%; Budgeted mix for X = 40%; Budgeted contribution margin per unit of X = $25. What is the sales mix variance for Product X?