A306 Healy Ch.8 Study

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Do the amounts under the year column in the cash budget always equal the sums for months or quarters of the budget?

No, because beginning cash is included in these totals which were not accumulated during the month or quarter that is being summed

Budgeted sales 10,000 u Desired FGI 5,000 u Beginning FGI 2,000 u Required production:

10,000 budgeted sales + 5,000 ending FGI - 2,000 next Q beg. FGI = 13,000 req. production

In a quarter-based cash budget, ending cash balance for the year is the same as the cash balance for what quarter?

4th quarter

production budget

A projection of the units that must be produced to meet anticipated sales

What directly impacts the labor budget?

Budgeted number of employees Timing of promotions Amount and timing of wage rate change

Which of the following budgets are needed to calculate unit product costs? DM Cash S&A DL MOH

DM DL MOH

How does a centralized decision making environment work?

Managers work together to plan budgets and push them on to subordinates

A budget is a plan for using a company's resources.

True

Firms spend considerable amounts of time and effort preparing a revenue budget, its accuracy is crucial in putting together a good master budget

True

Strategic plans focus on long-term plans

True

How to find beginning inventory for the quarter, month, or year on production budget sheets?

Use the beginning inventory for the very first period of the budgeting period.

cash budget

a budget that estimates cash inflows and outflows during a particular period like a month or a quarter

direct labor budget

a detailed plan that shows the direct labor-hours required to fulfill the production budget

master budget

a presentation of an organization's operational and financial budgets that represents the firm's overall plan of action for a specified time period

budgeted balance sheet

a projected financial statement that forecasts the types and amounts of assets a firm will need to implement its future plans and how the firm will finance those assets

budgeted income statement

a projection showing how a firm's budgeted sales and costs will affect expected net income

sales budget

an estimate of expected sales revenue for the budget period

What budgets are dependent on the sales budget?

1. selling and administrative expense budget 2. production budget

DM purchases of $120,000 in April $140,000 in May $160,000 in June 75% same month, 25% month after Calculate May

$120,000 * .25 = $30,000 $140,000 * .75 = $105,000 = $135,000

Budgeted B/S is developed using the beginning or the end of the budget period?

beginning

What is the final schedule of the master budget?

budgeted balance sheet

The receipts, disbursements, excess or deficiency, and financing section are all parts of the...

cash budget

In a quarter-based cash budget, beginning cash balance for the year is the same as the cash balance for what quarter?

first quarter

The cash budget...

is prepared near the end of the master budget process

Using budgeting assumptions when preparing the master budget...

makes it easier to answer "what-if" questions

The purposes of budgets are

planning and control

Budgeted I/S does not rely on...

production budget

What is directly impacted by the finished goods inventory?

production budget

What is the major source of receipts in the receipts section of the cash budget?

sales

Both the production and the S&A budgets are dependent on...

sales budget


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