A202 Smartbook Chapter 8

On the cash budget, what is subtracted from total cash available to find the cash excess or deficiency?

Cash disbursements

Which of the following budgets are needed to calculate unit product costs?

Manufacturing overhead budget Direct labor budget Direct materials budget

In a manufacturing company, which budget is used as the basis for creating the direct materials budget, the direct labor budget, and the manufacturing overhead budget? Multiple choice question.

Production budget

The cash budget uses information from several other budgets. Which of the following budgets is NOT used to prepare the cash budget?

Production budget

Which of the following budgets are directly based on information from the sales budget?

Production budget Selling and administrative expense budget

What number does the direct materials budget take directly from the production budget?

Required production

What is usually the major source of receipts in the receipts section of the cash budget? Multiple choice question.

Sales

Which of the following is needed to prepare a sales budget? Multiple choice question.

The budgeted number of units to be sold

A detailed plan for the future that is usually expressed in formal quantitative terms is:

a budget

Required borrowings on a cash budget is calculated by: Multiple choice question.

adding the desired ending cash balance to the amount of the cash deficiency

The cost of unsold units is computed on the ________ budget.

ending finished goods inventory

Developing goals for the budget is ______, while ______ involves steps taken to ensure that steps towards meeting the goal are being followed.

planning control

Budgets are used for two distinct purposes: ______ and ______. Multiple choice question.

planning; control

The first line of the direct labor budget consists of the budgeted units expected to be ______ during the period.

produced

In a manufacturing company, the ______ budget is used to determine the budgets for manufacturing costs, including the direct materials budget, the direct labor budget, and the manufacturing overhead budget.

production

In a manufacturing company, the _______ budget is prepared right after the sales budget.

production

In a manufacturing company, the _______ budget shows the number of units that must be manufactured to satisfy sales needs and provide for the desired ending inventory. Multiple choice question.

production

The budgeted income statement does NOT rely on information from the _______ budget. Multiple choice question.

production

Both the production and selling and administrative expense budgets are prepared using information directly from the ________ budget

sales

The first step in the budgeting process is preparing the ______ budget.

sales

To calculate total sales on the sales budget, multiply budgeted sales in units by:

sales price per unit

Budgeted expenses for areas other than manufacturing are shown on the ______ budget.

selling and administrative

In large organizations, many smaller individual budgets submitted by department heads and other responsible people comprise the ______ budget. Multiple choice question.

selling and administrative

A likely consequence of excessive inventory levels is Multiple choice question.

storage problems

A company can consider making investments or repay outstanding principal and interest when:

the cash excess is greater than the minimum required cash balance

S&P Enterprises has scheduled direct material purchases of $100,000 in January, $130,000 in February and $150,000 in March. The company pays for 75% of its purchases in the month of purchase and 25% the month after the purchase. Calculate the expected cash disbursements for the month of February.

$122,500

S&P Enterprises has scheduled direct material purchases of $120,000 in April, $140,000 in May and $160,000 in June. The company pays for 75% of its purchases in the month of purchase and 25% the month after the purchase. Calculate the expected cash disbursements for the month of May.

$135,000 Reason: May is the month after April so, the company will be paying for 75% of May purchases + 25% of April purchases.: May purchases ($140,000 x 75%) $105,000 + April purchases ($120,000 x 25%) $30,000 = $135,000

True or false: The amounts under the Year column in the cash budget always equal the sum of the amounts for the months or quarters of the budget. True false question.

- False - Beginning cash for the year equals beginning cash of the first month or quarter and ending cash for the year equals ending cash of the last month or quarter.

Master budget schedules:

- are based on estimates and assumptions. - answer several key questions for a company

The annual master budget file includes the ________ from last year because it is needed for the schedule of expected cash collections.

balance sheet

To prepare a budgeted balance sheet as of December 31, 2016, data is needed from the:

balance sheet as of December 31, 2015

A budgeted balance sheet is developed using data from the ______ of the budget period and data contained in the various schedules.

beginning

A detailed plan for the future that is usually expressed in formal quantitative terms is a(n)

budget

The final schedule of the master budget is the:

budgeted balance sheet

Budgets:

communicate management's plan throughout the organization

Gathering feedback to ensure that the plan is being followed is referred to as

control

The ending finished goods inventory budget computes the:

cost of unsold units

A significant noncash manufacturing overhead cost for many companies is:

depreciation

The number of working hours required to satisfy the production budget is shown on the _______ _________ budget

direct labor

Working hours required to satisfy the production budget are shown on the _______ budget. Multiple choice question.

direct labor

In a manufacturing company, the ______ budget details the raw materials that must be purchased to fulfill the production budget and provide for adequate inventories

direct materials

In a manufacturing company, the ________ _________ budget details the raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories.

direct materials

Payments for direct materials, direct labor, and manufacturing overhead costs are all listed in the _______ section of the cash budget.

disbursements

Budgets:

- coordinate the activities of the entire organization by integrating the plans of its various parts - force managers to think about and plan for the future - and the budgeting process can uncover potential bottlenecks before they occur - define goals and objectives that can serve as benchmarks for evaluating subsequent performance

Borrowing money is required whenever: Multiple select question.

- the cash excess is less than the minimum required cash balance - there is a cash deficiency

If a cash budget is prepared by quarter, the beginning cash balance for the year is the same as the beginning cash balance for the ______ quarter and the ending cash balance for the year is the same as the ending cash for the ______ quarter

1st, 4th

Which of the following budgets shows the company's planned profit and serves as a benchmark against which subsequent company performance can be measured?

Budgeted income statement

True or false: Control involves developing goals and preparing various budgets to achieve those goals.

False

The cash budget includes four major sections: receipts, disbursements, the cash excess or deficiency, and

financing

A company's planned net profit that serves as a benchmark against which subsequent company performance can be measured is shown on the budgeted ________ ________

income statement

If inventory levels are _______, the result can lead to lost sales or last-minute, high-cost production efforts. Multiple choice question.

insufficient

The cash budget: Multiple choice question.

is prepared near the end of the master budget process

A detailed schedule showing the expected sales for the budget period is presented on the _______ budget.

sales

Risks of not knowing in advance how much labor time will be needed throughout the budget period includes:

labor shortages erratic layoffs low employee morale

Using budget assumptions when preparing the master budget:

makes it easier to answer "what-if" questions

All costs of production other than direct materials and direct labor are shown on the ______ ______ budget

manufacturing overhead

All costs of production other than direct materials and direct labor are shown on the _________ budget.

manufacturing overhead

The calculation of unit product cost requires information from the _______ budget

manufacturing overhead

An essential management tool that communicates management's plans throughout the organization, allocates resources, and coordinates activities is called the ______ budget.

master

An essential management tool that communicates management's plans throughout the organization, allocates resources and coordinates activities is the

master budget

Facing labor shortages or having to hire or lay off workers at awkward times are consequences of:

neglecting to budget the amount of labor time that will be needed

The direct materials budget directly relies on the: Multiple choice question.

production budget