1. Should you always use a budget as a tool to guide your spending priorities? 1.Yes 2.No

2. Do all companies like The North Face use budgets to guide their spending priorities? 1.Yes 2.No

3. Does The North Face only budget for trip expenses and to plan the manufacturing costs for its outdoor clothing and equipment production? 1.Yes 2.No

4. Do you think that it is difficult for a large company to budget for the year? 1.Yes 2.No

5. Should all companies, large and small, use budgeting to help guide their spending priorities? 1.Yes 2.No

6. A budget charts a course for a business by outlining the plans of the business in financial terms. 1.True 2.False

7. A flexible budget shows the expected results of a responsibility center for only one activity level. 1.True 2.False

8. Managers often use computer spreadsheets or simulation models to represent the operating and budget relationships. 1.True 2.False

9. The budgeting process begins by estimating sales. 1.True 2.False

10. The production budget provides the starting point for preparing the sales budget and the direct labor cost budget. 1.True 2.False

11. The cash budget presents the expected receipts and payments of cash for a period of time. 1.True 2.False

12. The capital expenditures budget summarizes plans for acquiring fixed assets. 1.True 2.False

13. Which of the following is not an objective of budgeting? 1.Establishing specific goals 2.Executing plans to achieve the goals 3.Reorganizing the structure of the company 4.Periodically comparing actual results with the goals

14. Establishing specific goals for future operations is part of the 1.planning function 2.directing function 3.controlling function 4.constraining function

15. A 12-month budget which is continuously revised by removing the data for the period just ended and adding estimated budgeted data for the same period next year is called a 1.static budget 2.continuous budget 3.zero-based budget 4.master budget

16. Which of the following budgets shows the expected results of a responsibility center for several activity levels? 1.master budget 2.continuous budget 3.static budget 4.flexible budget

17. The income statement budget includes all of the following except 1.sales budget 2.production budget 3.cash budget 4.direct labor cost budget

18. The budgeted volume of production is computed from which of the following equations? 1.Expected units to be sold + desired units in ending inventory – estimated units in beginning inventory 2.Expected units to be sold + desired units in ending inventory + estimated units in beginning inventory 3.Expected units to be sold - desired units in ending inventory – estimated units in beginning inventory 4.Expected units to be sold - desired units in ending inventory + estimated units in beginning inventory

19. Which of the following is a balance sheet budget? 1.Sales budget 2.Production budget 3.Direct materials purchases budget 4.Cash budget

20. In preparing the cost of goods sold budget, which of the following will not be used? 1.Direct labor cost budget 2.Direct materials purchases budget 3.Sales budget 4.Factory overhead cost budget

21. The equation to compute the total cost of the direct materials to be purchased is 1.materials required for production - desired ending materials inventory – estimated beginning materials inventory 2.materials required for production + desired ending materials inventory – estimated beginning materials inventory 3.materials required for production + desired ending materials inventory + estimated beginning materials inventory 4.materials required for production - desired ending materials inventory + estimated beginning materials inventory

22. Which of the following would not appear on a cash budget? 1.Cash receipts from sales 2.Depreciation expense 3.Cash payments for manufacturing costs 4.Cash balance at the beginning of month