Which of the following is not correct regarding the manufacturing overhead budget?

Which of the following is not correct regarding the manufacturing overhead budget?

A.Total budgeted cash disbursements for manufacturing overhead is equal to the total of budgeted variable and fixed manufacturing overhead.
B. Manufacturing overhead costs should be broken down by cost behavior.
C.The manufacturing overhead budget should provide a schedule of all costs of production other than direct materials and direct labor.
D. A schedule showing budgeted cash disbursements for manufacturing overhead should be prepared for use in developing the cash budget.


Answer: A. Total budgeted cash disbursements for manufacturing overhead is equal to the total of budgeted variable and fixed manufacturing overhead.

Which of the following statements is not correct?

Which of the following statements is not correct?

A. The sales budget is the starting point in preparing the master budget.
B. The sales budget is constructed by multiplying the expected sales in units by the sales price.
C. The sales budget generally is accompanied by a computation of expected cash receipts for the forthcoming budget period.
D. The cash budget must be prepared prior to the sales budget because managers want to know the expected cash collections on sales made to customers in prior periods before projecting sales for the current period.


Answer: D. The cash budget must be prepared prior to the sales budget because managers want to know the expected cash collections on sales made to customers in prior periods before projecting sales for the current period.

Which of the following represents the correct order in which the indicated budget documents for a manufacturing company would be prepared?

Which of the following represents the correct order in which the indicated budget documents for a manufacturing company would be prepared?

A. Sales budget, cash budget, direct materials budget, direct labor budget
B. Production budget, sales budget, direct materials budget, direct labor budget
C. Sales budget, cash budget, production budget, direct materials budget
D. Selling and administrative expense budget, cash budget, budgeted income statement, budgeted balance sheet


Answer: D. Selling and administrative expense budget, cash budget, budgeted income statement, budgeted balance sheet

In the selling and administrative budget, the non-cash charges (such as depreciation) are added to the total budgeted selling and administrative expenses to determine the expected cash disbursements for selling and administrative expenses.

In the selling and administrative budget, the non-cash charges (such as depreciation) are added to the total budgeted selling and administrative expenses to determine the expected cash disbursements for selling and administrative expenses.

Answer: False

Both variable and fixed manufacturing overhead costs are included in the manufacturing overhead budget.

Both variable and fixed manufacturing overhead costs are included in the manufacturing overhead budget.

Answer: TRUE

The cash budget is developed from the budgeted income statement.

The cash budget is developed from the budgeted income statement. 

a. True
b. False


Answer: B

If the actual level of activity is 4% more than planned, then the fixed costs in the static budget should be increased by 4% before comparing them to actual costs.

If the actual level of activity is 4% more than planned, then the fixed costs in the static budget should be increased by 4% before comparing them to actual costs. 

a. True
b. False



Answer: B