1) Which of the following statements are true for forcast and budget?
a. Forecast and budget are one and same thing
b. Budget is prepared after the forecast
c. Forecast and budget both can be expressed in financial form
d. All of the above
2) A budgeting process which demands each manager to justify his entire budget in
detail from beginning is
a. Functional budget
b. Master budget
c. Zero base budgeting
d. None of the above
ANSWER: Zero base budgeting
3) Given Production at 60% activity, 600 units, Material Rs 50 per unit, Labour Rs 20 per
unit, Direct expenses Rs 5 per unit, Factory overheads Rs 20,000 ( 60% variable) and
Administration expenses Rs 15,000 ( 60% fixed). What will be the total cost per unit for
production at 80% capacity?
a. Rs 1,01,000
b. Rs 126.25
c. Rs 122
d. Rs 1,22,000
ANSWER: Rs 126.25
4) A factory produces two types of articles Y and Z. Article Y takes 8 hours to make and
Z takes 16 hours. In a month ( 25 days * 8 hours) 600 units of X and 400 units of Z are
produced. Given budgeted hours 8000 per month and men employed are 50. Determine
Activity ratio, Capacity ratio and efficiency ratio.
a. 112%, 140%, 140%
b. 140%, 112%, 140%
c. 140%, 140%, 112%
d. None of the above
ANSWER: 140%, 140%, 112%
5) The process of budgeting helps in the control of
a. Cost of production
b. Liquidity
c. Capital Expenditure
d. All of the above
ANSWER: All of the above
6) Plant utilization budget and Manufacturing overhead budgets are types of
a. Production budget
b. Sales budget
c. Cost budget
d. None of the above
ANSWER: Cost budget
7) R&D budget and Capital expenditure budget are examples of
a. Short-term budget
b. Current budget
c. Long-term budget
d. None of the above
ANSWER: Long-term budget
8) Capacity ratio * Efficiency ratio = Activity ratio.
a. True
b. False
ANSWER: True
9) The scare factors is also known as
a. Key factor
b. Abnormal factor
c. Linking factor
d. None of the above
ANSWER: Key factor
10) Match the columns
A) Activity Ratio -------------------- i) (Actual hours worked / Budgeted hours) * 100
B) Capacity Ratio ------------------ ii) (Standard hours of actual production / Actual hours
worked) * 100
C) Efficiency Ratio ----------------- iii) (Standard hours for actual output / Budgeted hours)
* 100
a. A-ii, B-iii, C-i
b. A-i, B-ii, C-iii
c. A-iii, B-i, C-ii
d. None of the above
ANSWER: A-iii, B-i, C-ii
11) In fixed budgets costs are classified according to their nature.
a. True
b. False
ANSWER: False
12) Given the budgeted output in second quarter is 8,000 units. In the first quarter,
Fixed overheads were Rs 40,000 Variable overheads were Rs 5 per unit ( Rs 40,000) and
semi variable were 20,000 ( 60% varying @ Rs 3 per unit). Determine the total
manufacturing overhead budget for the second quarter.
a. Rs 1,12,000
b. 1,12,000 units
c. Insufficient data
d. None of the above
ANSWER: Rs 1,12,000
13) ABC Company plans a sale of 96,000 units of TV product line in the first fiscal
quarter, 1,20,000 TV units in second quarter, and 1,32,000 units and 1,50,000 units in
third and fourth quarter, and 1,56,000 units in the first quarter of next year. Given that at
the beginning of first fiscal quarter, the company has 16,000 units in stock. Also, at the
end of each quarter, ABC Company wants to maintain an inventory equal to one-sixth of
the sales for the next fiscal quarter. Determine units to be manufactured in first and
second quarter of the year.
a. 10,00,000 and 1,35,000
b. 10,00,000 and 1,22,000
c. Insufficient data
d. None of the above
ANSWER: 10,00,000 and 1,22,000
14) While preparing sales budget, which of the following factors are considered?
a. Non-operational factors
b. Environmental factors
c. Both a and b
d. None of the above
ANSWER: Environmental factors
15) _______ provides an estimate of the capital amount that may be required for buying
fixed assets needed for meeting production requirements.
a. Production budget
b. Cash budget
c. Capital expenditure budget
d. None of the above
ANSWER: Cash budget
16) While preparing direct materials budget, the price and quality of the raw materials
are accounted.
a. True
b. False
ANSWER: True
17) _______ is designed after assessment of the volume of output to be produced
during budget period.
a. Cost budget
b. Sales budget
c. Production budget
d. None of the above
ANSWER: Cost budget
18) ________ is the first step of budgetary system and all other budgets depends on it.
a. Cost budget
b. Sales budget
c. Production budget
d. None of the above
ANSWER: Sales budget
19) _______also known as subsidiary budgets.
a. Master budget
b. Functional budget
c. Cost budget
d. None of the above
ANSWER: Functional budget
20) __________ contains the picture of total plans during the budget period and it
comprises information relating to sales, profit, cost, production etc.
a. Master budget
b. Functional budget
c. Cost budget
d. None of the above
ANSWER: Master budget
21) _________ is stated as a budget which is made to change as per the levels of activity
attained.
a. Fixed budget
b. Flexible budget
c. Both a and b
d. None of the above
ANSWER: Flexible budget
22) _______ is prepared for single level of activity and single set of business conditions.
a. Fixed budget
b. Flexible budget
c. Both a and b
d. None of the above
ANSWER: Fixed budget
23) On the basis of period, budgets may be classified into _________ groups.
a. Five
b. Four
c. Three
d. Two
ANSWER: Three
24) Budgetary control does not depend on changing business situations like inflation
and economic recession.
a. True
b. False
ANSWER: False
25) Budgets are based on plan estimates and therefore budgeting is an effective
substitute for management.
a. True
b. False
ANSWER: False
26) Which of the following statements are not true about budget, budgeting &
budgetary control?
a. Budgetary control works on the basis of best option
b. Budget is one of the important mediums of communication
c. Budgeting develops the quality of objectivity in planning
d. None of the above
ANSWER: None of the above
27) Budgetary control is used to make cost accounting systematic and reliable.
a. True
b. False
ANSWER: True
28) Which of the following statements are true about budget, budgeting & budgetary
control?
a. Budgeting is business estimates for future periods
b. Budget is the process of preparing business estimates
c. Budgetary control is the means to achieve performance on the basis of budget
d. None of the above
ANSWER: Budgetary control is the means to achieve performance on the basis of budget
29) Which of the following statements are true about budget, budgeting & budgetary
control?
a. Budgetary control is a wider concept whereas Budget and budgeting are narrower
concepts
b. If there is budgeting or budget, it is not necessary that there should be budgetary
control also
c. If there is budgetary control, budgeting and budget are must
d. All of the above
ANSWER: All of the above
30) Budget, Budgeting and Budgetary control are one and same thing.
a. True
b. False
ANSWER: False
31) According to George R. Terry, _________ may be described as a process of finding
out what is being done and comparing actual results with the corresponding budget
data in order to approve accomplishment.
a. Budgetary control
b. Budget
c. Budgeting
d. None of the above
ANSWER: Budgetary control
32) The process of budgeting does not establish a system of decentralization of
authority.
a. True
b. False
ANSWER: False
33) Which of the following are not the objectives of Budgeting?
A) To express the objectives of the firms in qualitative terms.
B) To prepare base for evaluation of work performance.
C) To co-ordinate organizational and managerial units of the firm.
D) To develop a strong appraisal of objectives and policies of firm.
a. A, B and C
b. B, C and D
c. D, C and A
d. None of the above
ANSWER: None of the above
34) In forecast, there is a promise or commitment to achieve estimates.
a. True
b. False
ANSWER: True
35) The process of budgeting includes
a. Preparation of budget
b. Budget Control
c. Budget co-ordination
d. All of the above
ANSWER: All of the above
36) Which of the following statements are true?
a. Budget is prepared for an indefinite period
b. Budget can be expressed in form of physical units
c. It is no way related with the management plans and policies to be pursued in future
d. It provides a base for measuring the success of expected results
ANSWER: Budget can be expressed in form of physical units
