_____ The comprehensive set of budgets that serves as a company\'s overall finan

Question

_____ The comprehensive set of budgets that serves as a company's overall financial plan is commonly known as:
A. an integrated budget.
B. a pro-forma budget.
C. a master budget.
D. a financial budget.
E. a rolling budget.

_____ A company's plan for the acquisition of long-lived assets, such as buildings and equipment, is commonly called a:
A. pro-forma budget.
B. master budget.
C. financial budget.
D. profit plan.
E. capital budget.

_____ Bird plans to sell 5,000 units each quarter next year. During the first two quarters each unit will sell for $12; during the last two quarters the sales price will increase $1.50 per unit. What is Bird's estimated sales revenue for next year?
A. $240,000.
B. $270,000.
C. $244,000.

D. $255,000.
E. Some other amount.

_____ The budgeting technique that focuses on different phases of a product such as planning and concept design, testing, manufacturing, and distribution and customer service is known as:
A. cash-flow budgeting.
B. integrative budgeting.
C. base budgeting.
D. comprehensive budgeting.
E. life-cycle budgeting.

_____ The difference between the revenue or cost projection that a person provides, and a realistic estimate of the revenue or cost, is called:
A. passing the buck.
B. false budgeting.
C. participative budgeting.
D. resource allocation processing.

E. budgetary slack.

Explanation / Answer

Q1.

ANS: a master budget

Master budget is comprehensive set of projections for specific budgeted period. It quantify the firm’s financial plans and activities. Depending on Master budget intermediate budgets are prepared.   

Q2.

Capital budget is a plan which details out acquisition of long-term assets such as land, building, and equipment.

ANS: Capital budget

Q3.

Sales per quarter = 5000 units

Selling price for quarter 1 and 2 = $12

Selling price for quarter 3 and 4 = $ 12 + $1.50 = $13.50

Estimated sales revenue = ($12 x 2 x 5000) + ($13.5 x 2 x 5000) = $255,000

ANS: D.

Q4.

Many a times the cost estimates are inflated and revenue estimates are understated, which creates difference between realistic and estimated value of the revenue and cost. Such differences or slackness while preparing the budget is known as budgetary slack.

ANS: budgetary slack

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