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Question 1:

I am more concerned with taking out the potential of my team members than their
competitiveness. (True/False)

Question 2:

I just want to ahead in my career and overlook my relations with colleagues going ahead. (True/
False )

Question 3:

By my experience I prefer my standalone decisions than group decisions. (True/ False)

Question 4:

As a business manager you should at least technically know as much as your immediate
subordinates.(True/ False )

Question 5:

In presentations or motivation speeches I need to be prepared before rather than speaking on the
spot.(True/ False )

Question 6:

I learn more important things listening to other business managers at my level than to
subordinates.(True/ False )

Question 7:

Interacting with juniors is more important to me than time spent on my desk.(True/ False )

Question 8:

As a manager credit for successful project is given to subordinates and you don't think you
deserve the most as you only got the work done out of them.(True/False )

Ok, a true/false type questionnaire only outlines your qualities of manager but a multiple-choice
questionnaire confirms it...

And (T,F,F,F,F,T,T,T) are general choices of good managers.


1. Time Estimation:

How do you accurately estimate the time needed to complete a particular project? A team
member comes up to you and says, "We estimate that it will take approximately 4 months to
complete this project" Do you say: -

a) "I'll tell the customer 5 months as you people always underestimate"

b) "Good! A bonus for the team if project is completed in time"

c) "I estimate 3 months time with added features on the project"

2. Bonus:

Suppose your team worked hard for 4 months to complete a project, how do you reward them?

a) A cash bonus and some time off to refresh themselves.

b) A good at a nice restaurant with some gift and allow them to take a couple of weekends off to
get a decent work-life balance.

c) Depending on their evaluation report they will get returns only if they are there after few
months.

3. Teamwork Issues:

To be a good manager you need to manage your subordinates. Suppose some kind of grouping
arises within the team with one group refusing to cooperate with the other. Do you...?

a) Look out for the origination of the problem and solve it by reassigning the work or taking some
members out of the project.

b) Motivate them into the project by telling them the importance of the project.

c) Let it go the way it goes and ignore it.

4. Planning:

As a manager it is important to plan everything and also re-plan it when something goes out of
order. A management aptitude test tries to find out how do you plan. You may be asked a direct
question on your style of planning with options like these:

a) I plan my project and update it every day with the current progress.

b) I planned at the beginning but lost the track. Since project is going OK, I don't bother.

c) I did some presentations on how wonderful our project will be.

5. Rescheduling:

Suppose the project looses the schedule. How do you get a project back on schedule?
a) With frequent meetings with my team and minimum requirement specifications I will drop
features that seem hard to implement, document, debug and use.

b) Tell them to overtime and motivate them to concentrate on the project.

c) Tell the team, not to do testing and complete the project.

6. Quality Assurance:

Do you access quality of the project you undertake and how do you cultivate this habit among
your team members?

a) I schedule time for QA as if done properly it requires bugs to be fixed and retesting to take
place

b) No, development process is our last stage. There is no clause of testing in our project.

c) We can't afford on our schedule.

7. Creativity :

As a manager you encourage

a) Creative insight into how the company can radically improve its profitability even when it
means canceling your project

b) Creative insight into how your project can be finished two months earlier.

c) Are just concerned with project completion.

8. Organizational Structure:

Your organization is

a) Your ultimate concern

b) A place to show your abilities

c) A place that you can change for a better job.

Question 1

Which is the mostly likely purpose of budgeting?

a) Planning and control of an organization's income and expenditure


b) Preparation of a five-year business plan
c) Company valuation
d) Assess the non-financial performance of an organization
Question 2

Which of the following budgets would not form part of the master budget?

a) Cash budget
b) Statement of profit or loss
c) Sales budget
d) Statement of financial position
Question 3

Which of the following is not a functional budget?

a) Labour budget
b) Cash budget
c) Materials budget
d) Expenses budget
Question 4

A crockery company makes china cups and saucers. How much clay would they need to buy if:
- a cup uses 100g of clay
- a saucer uses 150g of clay
- it plans to make 450,000 cups and 280,000 saucers
- there is no opening inventory
- it would like to have closing inventories of 4,000kg of clay?

a) 83,000kg
b) 99,500kg
c) 87,000kg
d) 91,000kg
Question 5

Calculate the production budget from the following data: sales 89,350 units; opening inventory
23,864 units; closing inventory 33,156 units.

a) 80,058 units
b) 146,370 units
c) 32,330 units
d) 98,642 units
Question 6
A business plans to make 15,000 coats per annum, each taking the 1.5 direct labour hours. If the
direct labour rate is $8 per hour and a pay rise of 15% is awarded halfway through the year, what is
the total annual direct labour budget?

a) $120,000
b) $193,500
c) $180,000
d) $207,000
Question 7

What is meant by an incremental budget?

a) A budget prepared from first principles


b) The variable elements of a budget, excluding fixed costs
c) A budget that is based on the previous year, adjusted for known
changes
d) A budget that breaks even
Question 8

Which of the following statements can be considered to be an advantage of a bottom-up budget?

a) Uses the knowledge of all staff to build a fair budget


b) The cheapest method of producing a budget
c) Reduces the level of budget negotiation between staff
d) Prevents slack being built into budgets
Question 9

A firm has produced the following budget for an activity level of 200,000 units:

What would be the total cost for a level of activity of 225,000 units?

a) € 133,875
b) € 148,500
c) € 125,889
d) € 138,875
Question 10

What would be the most likely cause of an unfavourable labour rate variance together with a
favourable labour efficiency variance?

a) The employment of more highly skilled staff than budgeted


b) Poor wage negotiation by the Human Resources manager
c) The employment of less well-trained staff than intended
d) Improved production efficiencies

1. Which of the following is not a function of budgeting?

Your Answer: Planning

Correct Answer: Decision making

Budgets assist in the planning of future activities so as to achieve


the overall company objectives. In order to motivate employees,
they will usually be set at a level that will enable the goals of the
business to be achieved. The budgets will be prepared once it has
been decided what to do and how best to do it.

2. The term 'budgetary period' relates to:

Your Answer: The subdivisions of the main budget

Correct Answer: The period for which the budget is prepared

The budgetary period relates to the period for which the budget is
prepared. Although in most cases this will be a year, some
companies may adopt either a shorter or a longer period.

3. A budget is 'accepted' by managers when they:

Your Answer: Agree to it verbally

Correct Answer: Relates it to their own personal objectives


A budget will be accepted more readily by a manager if they can
relate it to their own personal objectives. This is known
as internalisation. The most effective budget will be one that the
employee can relate to their own objectives.

4. What functional role do management accountants play in the


budgeting process?

Your Answer: They set targets for other managers

Correct Answer: They facilitate and co-ordinate the budgeting


process

Management accountants will help to facilitate and to co-ordinate


the budgeting process. It is not their job to set targets for other
managers, they do not normally undertake the auditing of the
financial statements and they certainly do not decide what bonuses
should be paid to other staff.

5. A fixed budget is:

Your Answer: A budget that ignores inflation

Correct Answer: A budget that is set for a specified level of


activity

A fixed budget will be set for a specified level of activity and it will
not be changed as the actual activity level changes to reflect the
actual level of activity that is achieved. The budget will show the
costs of the department at the budgeted level of output and so any
variance between actual and budget will be made up of two factors:
(1) variations due to differences in output; and (2) variations due to
differences in unit cost.

6. A flexible budget is:

Your Answer: A budget that is constantly being changed

Correct Answer: A budget that is adjusted to reflect different


costs at different activity levels
A flexible budget will be adjusted to reflect the actual level of output
that is achieved. Costs will therefore be adjusted to compensate for
the fact that more or less has been produced than was expected.

7. A company has sales of 2,600 units. There are 1,400 units of


opening stock while the closing stock is planned to be 1,800 units.
What production is needed to satisfy sales?

Your Answer: 2,437 units

Correct Answer: 3,000 units

To produce enough stock to meet sales of 2,600 units the business


will not only have to produce 2,600 units, it will also have to make
additional units to satisfy the additional stock requirements. Stocks
are to be increased by 400 units (1,400 units to 1,800 units.)
Production would therefore have to meet sales of 2,600 units and
also the additional stock requirements of 400 units. So total
production would have to be 3,000 units.

8. Which of the following will not appear in a cash budget?

Your Answer: Sales revenue

Correct Answer: Depreciation of machinery

Depreciation of machinery is not a cash item as cash has changed


hands when the asset was purchased. The depreciation charge is
simply an allocation of the cost of the asset over its useful life. The
depreciation charge will therefore not appear in the cash budget.

9. A company has made the following budget forecasts for next year:

£
Opening cash balance 1 January 24,000
Net profit from trading for the year 100,000
Payment of tax 25,000
Payment of dividends 20,000
Purchase of new fixed assets 70,000
Annual depreciation charge 22,000
1 January £ 31 December £
Stocks 32,000 35,000
Debtors 41,000 28,000
Creditors 16,000 31,000
No other relevant information is available. What is the company's
budgeted cash holding at 31 December next year?

Your Answer: £56,000

10. The budgeted sales for the next four quarters are £192,000,
£288,000, £288,000 and £336,000 respectively. It is estimated that
sales will be paid for as follows:-75% of the total will be paid in the
quarter that the sales were made. Of the balance 50% will be paid in
the quarter after the sale was made. The remaining 50% will be paid
in the quarter after this. The amount of cash received in the third
quarter will be:

Your Answer: £276,000

11. A company is preparing the production budget for the second


quarter Projected sales (in units) are as follows:

April 600 Units


May 680 units
June 750 units
The company policy is to have finished goods stocks of 20% of the
next month's projected sales. Assuming that there was no opening
stock for April, what should be the production quota for May?

Your Answer: 666 units

Correct Answer: 694 units

As finished stocks are held at the beginning and end of each month
we cannot simply produce sufficient stock to meet the expected
sales for May. In April we would need to produce 600 units as well as
meeting the stock requirements for May of 136 units (20% of 680).
In May we will have to produce enough to meet the demand for May
of 680 units together with meeting the stock requirements for the
beginning of June (20% of 750 units). We would, however, need to
take account of the opening stocks that exist at the beginning of May
We can schedule the production as follows:-

April May
Sales 600 680

Less Opening stock 0 (136)

Add Closing stock 136 150

Production 736 694

Alternatively we can look at the production necessary


in the light of what we would have to produce to meet
sales and what we would have to produce to meet the
change in stocks as follows :-

April May

Production to meet sales 600 680

Production to meet change in stocks 136 14

Total production 736 694

12. The following results are available for the production department of
Gizmo ltd for May:

Budget 10,000 units £ Actual 12,000 units £


Direct materials 26,000 28,000
Direct labour 14,000 17,000
Variable overheads 2,000 2,500
Fixed overheads 3,000 3,500
Total costs 45,000 51,000

If the original budget was flexed the overall cost variance would be:

Your Answer: £3,000 favourable

Correct Answer: £2,400 favourable

Flexing the budget means that we would change the budgeted costs
in relation to the actual output for the month. This would mean
multiplying all variable costs by 12/10 as actual output was 12,000
units and budgeted output was 10,000 units. This can be shown by
simply adding a ‘flexed budget’ column to our initial data:-

Budget
Flexed Bud Actual

10,000 units
12,000 units 12,000 units

£ £ £

Direct materials 26.000 31,200

Direct labour 14,000


16,800 17,000

Variable overheads 2,000 2,400

Fixed overheads 3,000


3,000 3,500

Total costs 45,000


53,400 51,000
Fixed costs are not flexed as these are not expected to change as
output changes. The variance is, therefore, £2,400 favourable as
actual spending is lower than the flexed budget.

13. If actual output is lower than budgeted output which of the following
costs would you expect to be lower than the original budget?

Your Answer: Total fixed costs

Correct Answer: Total variable costs

If actual output is lower than budgeted output it would usually only


be the variable costs that would be lower as fixed costs would not
reduce if output fell.

14. When a production budget is being prepared the quantity that needs
to be produced is calculated by the following equation:

Your Answer: Quantity sold plus closing stock less opening stock
15. The master budget will comprise:

Your Answer: The cash budget

Correct Answer: The cash budget, the budgeted profit and loss
account and the budgeted balance sheet

The master budget will be the end result of the individual


departmental budgets. This will show the effect of the budget on the
firm as a whole in terms of profitability and in terms of financial
position. The master budget would therefore comprise the cash
budget, the budgeted profit and loss account and the budgeted
balance sheet.

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