Chap 6,7,8,9,10 Final KTQT

A company is preparing its production budget for product Z for the forthcoming year.

Budgeted sales of product Z are 1,500 units. Opening inventory is 120 units and the company wants to reduce inventories at the end of the year by 10%.

The budgeted number of units of product Z to be produced is

• 1,392

• 1,488

• 1,500

• 1,512

• 56,200 litres

• 49,750 litres

• 48,250 litres

• 43,300 litres

5 Barlow plc manufactures two products, Vip and Bip. It intends to produce 2,000 units of each product in the next year to meet the sales budget.

Each Vip requires 2 kg of material Z and 1 kg of material Y and each Bip requires 3 kg of material Z and 4 kg of material Y.

At present there are 200 kg of Z and 500 kg of Y in inventory.

Barlow plc intends to increase the inventory levels of these materials by the end of the year to 600 kg of Z and 800 kg of Y.

Material Z costs £4 per kg and material Y costs £5 per kg.

What is the total materials purchases for the next year?

• £86,900

• £90,000

• £93,100

• £96,400

A retailing company makes a gross profit of 25% on sales. The company plans to increase inventory by 10% in June. The budgeted sales revenue for June is £25,000. Opening inventory on 1 June is valued at £5,000.

What are the budgeted inventory purchases for June?

• £18,250

• £19,125

• £19,250

• £25,500

Which of the following is a principal budget factor?

• The highest value item of cost

• A factor which limits the activities of an undertaking

• A factor common to all budget centres

• A factor controllable by the manager of the budget centre

Which of the following could be principal budget factors?

(1) Sales demand

(2) Machine capacity

(3) Key raw materials

(4) Cash flow

• (1) and (2) only

• (1), (2), (3) and (4)

• (1), (2) and (3) only

• (1), (2) and (4) only

Which of the following is not a functional budget?

• Purchases budget

• Cash budget

• Sales budget

• Marketing cost budget

In order to improve operational cash flows indicate whether a business needs to increase or decrease each of the following. Receivables

A Increase

B Decrease

Inventory

C Increase

D Decrease

The credit period from trade suppliers

E Increase

F Decrease

• A

• B

• C

• D

• E

Which two of the following actions would be appropriate if the cash budget identified a short-term cash deficit?

• Issue shares

• Pay suppliers early

• Arrange an overdraft

• Implement better credit control procedures

• Replace non-current assets

A company's cash budget highlights a short-term surplus in the near future.

Which two of the following actions would not be appropriate to make use of the surplus?

• Increase inventories and receivables to improve customer service

• Buy back the company's shares

• Increase payables by delaying payments to suppliers

• Invest in a short term deposit account