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Supplementary objective test questions

CHAPTERS 9 AND 10 – BUDGETING AND FORECASTING

4.1 Which of the following is not considered to be a purpose of budgeting?

A Planning for future events

B Removing the need for responsibility accounting

C Ensuring the best utilisation of resources

D Communicating strategic plans to employees

4.2 A company that provides two services has prepared the following budget has
been prepared for the forthcoming period.

Service 1 Service 2
Sales volume 400 800

$ $
Sales revenue 400,000 1,200,000
Variable costs 160,000 360,000
––––––– –––––––
Contribution 240,000 840,000

The directors wish to change the sales mix so that, whilst total sales revenue
remains the same, the sales mix (by revenue) is 40% Service 1 and 60%
Service 2.

The revised budgeted contribution from Service 2 is $_________________

(Your answer should be rounded to the nearest the nearest $)

4.3 The material purchases budgeted (in kg) is determined in which manner?

A (Production units × materials per unit) less opening inventory of materials
plus closing inventory of materials

B (Sales units × materials per unit) plus opening inventory of materials less
closing inventory of materials

C (Sales units × materials per unit) less opening inventory of materials plus
closing inventory of materials

D (Production units × materials per unit) plus opening inventory of materials
less closing inventory of materials

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