ACC 240 CH. 14

As budgeted activity increases, a variable cost will increase (blank) (in total/per unit) but will remain constant (blank) (in total/per unit).

1. in total 2. per unit

A (single-period/continuous) budget is generally more expensive to maintain than a (single-period/continuous) budget because more time and effort is required in its preparation.

1.continuous 2.single-period

The (sales/production) budget depends on the (sales/production) budget, and the raw materials budget depends on the (sales/production) budget.

1.production 2.sales 3.production

ABC Company collects sales as follows: 30 percent in the month of sale, 60 percent in the next month, and 8 percent in the second month after the sale; 2 percent is uncollectable. Budgeted sales are as follows: March = $22,000; April = $19,000; May = $23,000. Budgeted cash collections for May are $

20,060

ABC Company's budgeted sales are as follows: July = 3,000 units; August = 2,500 units. June ending inventory = 1,200 units. Budgeted ending inventory must equal 40 percent of next month's budgeted sales. Production budgeted for July would equal (blank) unit.

2800

In the context of a time-frame perspective, identify the costs that fixed costs are classified into.

Committed costs Discretionary costs

Which statements regarding a sales or revenue forecast are true?

It is the forecast of "activity" that is expected during the budget period. It is the key to the overall operating budget. It is developed using an estimate of the physical quantity of goods or services to be sold, multiplied by the expected selling price per unit.

Which of the following are important factors to consider when preparing a sales forecast?

New competitors in the market The state of the economy Seasonal demand variations

A budgeting process that involves the input and negotiation of several layers of management describes the management philosophy of ______ budgeting.

Participative

An interactive, collaborative approach in which lower-level managers provide significant input describes (blank) (top-down/participative) budgeting.

Participative

Which of these is the correct equation used to calculate the quantity of merchandise to be purchased or manufactured?

Purchases or production = Ending inventory + Quantity sold - Beginning inventory

The cost of goods sold budget summarizes changes in the Finished Goods Inventory account for a manufacturing firm as indicated by which results?

Purchases/production budget Ending inventory levels Sales budget

From the following list, identify the costs that would be classified as committed fixed costs.

Real estate taxes Executive management compensation Depreciation

The key information necessary for developing an organization's operating budget is found in the:

Sales forecast

From the following list, identify the costs that would be classified as discretionary fixed costs.

Staff development funds Charitable contributions Student internship program

Identify a true statement about standard costs.

They are used in the planning and control processes of service firms that perform repetitive operations in the performance of services.

Which statements are true of fixed costs?

They include costs such as property taxes, executive salaries, and plant depreciation. They do not change as the volume of activity changes. They can change from year to year, sometimes due to managerial decisions.

An authoritarian approach describes the management philosophy of ______ budgeting.

Top-down

Identify the characteristics of the budgeting process.

Uses managerial accounting concepts. Creates a financial plan for the organization. Uses financial accounting concepts. Provides a benchmark in order to compare actual performance results.

What type of costs increase or decrease in total with the budgeted volume of activity but remain constant when expressed on a per unit basis?

Variable costs

At what point is the development of the budgeted balance sheet possible?

When the cash budget is complete

A budgeting process that starts with a clean slate and involves justifying resource requirements based on an analysis and prioritization of organizational objectives is called ______ budgeting.

Zero-based

The development of the operating budget is complete when the budgeted (balance sheet/income statement) is complete.

balance sheet

Another term used to describe a rolling budget time frame is a ______ budget.

continuous

True or false: Managers have the option to reduce committed fixed costs during the annual budget planning process.

false

Budgeting is the process of (blank) planning.

financial

According to a time-frame perspective, costs that are classified into committed costs and discretionary costs are ______ costs.

fixed

Which costs remain constant in total as the budgeted volume of activity changes, but they could change as a result of the managerial decision-making process?

fixed costs

A budgeting process that starts with analyzing the actual performance for the current period and making adjustments to the amounts for the changes that are expected to occur in the next period is called ______ budgeting.

incremental

As the budgeted volume of activity changes, what type of cost will behave with both fixed and variable elements?

mixed cost

An organization's master budget is also referred to as its ______ budget

operating

A raw materials purchases budget is completed immediately after preparing the ______ budget.

production

What type of budget involves planning for segments of a year on a repetitive basis, such as every quarter?

rolling

What type of budget is also known as multiperiod or continuous?

rolling

When a budget is prepared only once prior to the budget period, it is called a ______ budget.

single-period

While preparing a budget, there are some estimates that must be made more than a year in advance. This particular aspect is not considered while preparing a ______ budget.

single-period

A budgeting approach that implies little or no input from lower levels of management describes the management philosophy of ______ budgeting.

top-down

True or false: Managers have the option to reduce discretionary fixed costs during the annual budget planning process.

true