Question

27. When examining a master budget, where does a company find the planned expenditures for facilities and equipment?

A) operating expense budget

B) capital budget

C) operating budget

D) purchases budget

28. In a master budget, the schedule of cash disbursements for operating expenses is used to prepare the ________.

A) capital budget

B) purchases and cost of goods sold budget

C) sales budget

D) cash budget

31. When preparing a budgeted balance sheet, the balance for the inventory account is found on the ________.

A) sales budget

B) cash budget

C) operating expense budget

D) purchases and cost of goods sold budget

32. An example of a favorable variance is ________.

A) actual revenues are less than expected revenues

C) actual material prices are greater than expected material prices

D) expected labor costs are less than actual labor costs

Answer 1

27. When examining a master budget, company compare the plan expenditure facilities and equipment in operating expense budget.

Operating expense budget was planned including all the expenses incurred in basic operations of the organisation

Examination is a manufacturing entity then all the manufacturing activities comes under operating activities and all the budgeted expenses for this operating income will be present in operating expense budget.

The answer is option A.

28.

Information about the schedule of cash disbursement for operating expenses is used to prepare the cash budget.

Cash budget involves all the transactions which require to be settled in cash and also which are expected to be get cash inflows.

So the cash disbursement in operating activities will be presented in cash budget.

31.

Preparing a budgeted balance sheet, balance for the inventory account is found on purchase and cost of goods sold budget.

Balances for the inventory account includes opening inventory and closing inventory which can be used for the production of goods. Online required for production of goods can be budgeted in purchase and cost of goods sold budget only.

So the answer is purchase and cost of goods sold budget.

32. Favourable variance

Variance refers to deviation from the expectations.

The favourable variance refers to estimated expenses are more than the actual expenses or estimated revenue is less than the actual revenue.