Acct- Ch. 8

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

Selling & administrative expense Production

Which of the following is needed to prepare a sales budget?

The budgeted number of units to be sold

Many of the schedules in a master budget are based on a variety of management estimates and assumptions.

True

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 ______.

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

The receipts section of the cash budget lists ______.

all cash inflows except borrowings

Budgets ______.

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

Master budget schedules ______.

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

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

ending finished goods inventory

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

manufactured overhead

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

manufactured overhead

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

manufacturing overhead

A number of separate, but interdependent, budgets that formally lay out the company's sales, production, and financial goals are contained in the ____ budget.

master

An integrated business plan that formally lays out the company's goals is called the ______ budget.

master

A company with adequate cash balances at the beginning and end of the year, ______.

may still have cash deficiency issues during the year

If a budget initiated by top management has targets that are set too high, ______.

motivation will suffer

A budget that is prepared with the full cooperation of managers at all levels is a self-imposed or _____ budget.

participative

More accurate estimates and higher motivation are generally the result of using a(n) ______ budget.

participative

Developing goals and preparing various budgets to achieve those goals is part of ______,

planning

Budgets are used for two distinct purposes: ______ and ______.

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 shows the number of units that must be manufactured to satisfy sales needs and provide for the desired ending inventory.

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.

production

In a manufacturing company, the budgets for manufacturing costs, including the direct materials budget, the direct labor budget, and the manufacturing overhead budget are all based on the ____ budget.

production

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?

production

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

production

The direct labor budget is based directly on the ______ budget.

production

The direct materials budget directly relies on the ______ budget.

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

The first step in the budgeting process is the preparation of the ____ budget.

sales

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

sales

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

sales price per unit

Recognizing individuals at all levels of the organization as team members whose views and judgments are valued by top management is an advantage of ______.

self-imposed budgeting

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.

selling and administrative

Limitations of self-imposed budgeting include ______.

suboptimal budget recommendations budgetary slack

A company can repay outstanding principal and interest when ______.

the cash excess is greater than the minimum required cash balance

Borrowing money is required whenever ______.

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

Budgetary slack occurs when a manager submits a budget that is ______.

too easy to attain

The ending finished goods inventory budget computes the cost of ______ units.

unsold

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

Madison Corporation's expected beginning cash balance is $35,000. Cash collections are budgeted at $50,000 and cash disbursements are estimated to be $80,000. The minimum required cash balance is $20,000 and the company can borrow as much as needed in increments of $10,000. Calculate the expected ending cash balance for the month.

$25,000

Sperling Company's master budget shows expected sales of 10,000 units and expected production of 11,000 units for the month of March. Each unit requires 1/2 hour of direct labor. The direct labor rate is $15.00 per hour. Calculate the expected total direct labor cost for the month of March.

$82,500

Davidson Corporation's master budget shows expected direct labor cost of $90,000 for the month of May. During May, the company's expected sales equal 12,000 units and expected production is 15,000 units. If each unit requires 1/2 hour of direct labor, the budgeted direct labor rate is $____ per hour.

12

Given budgeted sales of 10,000 units, desired ending inventory of 5,000 units, and beginning inventory of 2,000 units, required production is ______ units.

13,000

Which of the following is needed to calculate raw materials to be purchased on the direct materials budget?

Beginning inventory of raw materials Raw materials required per unit

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

Which of the following is not found in the financing section of the cash budget?

Cash deficiency

For most companies a single, annual cash budget is sufficient.

False

Because it is needed for the schedule of expected cash collections, the annual master budget file includes the ____ ____ from last year.

balance sheet

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, 20x4, data is needed from the ______ December 31, 20x3.

balance sheet as of

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

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

budget

When a manager creates a budget that is too easy to attain, ______ occurs.

budgetary slack

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

cash

Budgets ______.

communicate management's plan throughout the organization

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

control

When creating an Excel budget and performing what-if analysis, it is generally easiest to ______.

create the budget with a budgeting assumption tab

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.

direct labor

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 material

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

The section on the cash budget that summarizes all cash payments that are planned for the budget period is the cash ____ section.

disbursement

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.

false

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.

first, fourth

When profit targets are set by top managers, ______.

goals may be unrealistically high too much slack may be allowed

Many managers believe that being empowered to create their own self-_____ budgets is the most effective method of budget preparation.

imposed

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

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