1. Which of the following is true? a) The direct materials purchase budget is determined from the direct labour budget. b) The only budget providing input into the revenue budget is the sales budget. c) The direct materials purchase budget and the capital expenditures budget are both determined from the production budget. d) The selling and administrative expense budget is input into the forecasted cost of goods sold.
1. Which of the following is true? a) The direct materials purchase budget is determined from the direct labour budget. b) The only budget providing input into the revenue budget is the sales budget. c) The direct materials purchase budget and the capital expenditures budget are both determined from the production budget. d) The selling and administrative expense budget is input into the forecasted cost of goods sold.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Part 1 - Cost accounting principles, concepts and techniques
1. Which of the following is true?
a) The direct materials purchase budget is determined from the direct labour budget.
b) The only budget providing input into the revenue budget is the sales budget.
c) The direct materials purchase budget and the capital expenditures budget are both
determined from the production budget.
d) The selling and administrative expense budget is input into the forecasted cost of
goods sold.
2. Which of the following describes decision making at the tactical or functional level?
a) Senior management will need to make long-term decisions about the future of the
whole business. Therefore, strategic decisions will be made about which markets
the business is to operate in, whether to bid to take over a competitor, etc.
b) These decisions are made in focusing on the medium-term future of the business,
say looking at the 12-18-month pricing strategy for a product, deciding what
products to stock over the summer months, etc. They tend to be focused on
particular business units or departments.
c) These decisions focus largely on the day-to-day running of the business and may
be made by lower-level managers, say at the branch level. They may concern
inventory levels, staffing rotas, etc.
d) None of the above
3. A business expresses its profit as a margin of 40%. The cost of the unit is £240.
What is the selling price of the unit?
a) £400
b) £600
c) £336
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