15. Which of the following is not a benefit of following a well-designed budgeti

Question

15. Which of the following is not a benefit of following a well-designed budgeting process? A. Improved decision-making processes. B. Improved performance evaluations. C. Improved coordination of business activities. D. Assurance of future profits. E. Improved commitment to meet expected performance by those affected. 16. When preparing the cash budget, all the following should be considered except A. Cash receipts from customers. B. Cash payments for merchandise C. Depreciation expense. D. Cash payments for income taxes. E. Cash payments for capital expenditures. 17. The sales level at which a company neither earns a profit nor incurs a loss is the: A. Relevant range. B. Margin of safety C. Step-wise variable level. D. Break-even point. E. Contribution margin. 18. A product sells for $30 per unit and has variable costs of $18 per unit. The fixed costs are $720,000. If the variable costs per unit were to decrease to $15 per unit and fixed costs increase to $900,000, and the selling price does not change, break-even point in units would: A. Increase by 20,000. B. Equal 6,000. C. Increase by 6,000. D. Decrease by 20,000. E. Not change. 19, Brown Company's contribution margin ratio is 24%. Total fixed costs are S84 ,000. What is Brown's break-even point in sales dollars? A. $20,160 B. $110,526 C. $350,000 D. $240,000 E. $84,000

Explanation / Answer

Solution:

Question 16 The answer to the above question is - C. Depreciation Expense. It is not considered while preparing cash budget as it does not have any influence on cash Question 17 The answer to the above question is - D. Break-even level. It is a point of revenue of no profir no loss Question 19 Break - even sales = Fixed cost / Contribution ratio Break - even sales = $ 84,000 / 24% Break - even sales = $ 350,000 The answer to the above question is C. $ 350,000 Break even point = Fixed cost / Contribution per unit Fixed cost = $ 98,000 Contrbution per unit = Sales per unit - Variable cost per unit Contribution per unit = $ 12 - $ 5 = $ 7 Break even point = $ 98,000 / $ 7 = 14,000 units

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