Chapter 8 (Exam 3)

Budgets: Multiple choice question. communicate management's plan throughout the organization focus on what has happened in the past primarily help managers with day-to-day emergencies

communicate management's plan throughout the organization

The calculation of unit product cost requires information from the _______ budget Multiple choice question. selling and administrative cash manufacturing overhead ending finished goods inventory

manufacturing overhead

A number of separate but interdependent budgets that formally lay out a company's sales, production, and financial goals is contained in the _____ budget. Multiple choice question. cash direct materials master

master

A number of separate but interdependent budgets that formally lay out a company's sales, production, and financial goals is contained in the _____ budget. Multiple choice question. direct materials master cash

master

An essential management tool that communicates management's plans throughout the organization, allocates resources, and coordinates activities is called the ______ budget. Multiple choice question. profit planning self-imposed master sales

master

Facing labor shortages or having to hire or lay off workers at awkward times are consequences of: Multiple choice question. a decrease in sales neglecting to budget the amount of labor time that will be needed excess beginning inventory companies having a small human resources department

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

Budgets are used for two distinct purposes: ______ and ______. Multiple choice question. planning; control benchmarking; integrating executing; overseeing advising; consulting

planning; control

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

planning; controlling

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

produced

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

sales

Because all other parts of the budget depend on it, if the _____ budget is inaccurate, the rest of the budget will be inaccurate. Multiple choice question. direct materials production sales cash

sales

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

sales

To calculate total sales on the sales budget, multiply budgeted sales in units by: Multiple choice question. budgeted unit sales sales price per unit number of units

sales price per unit

Budgeted expenses for areas other than manufacturing are shown on the ______ budget. Multiple choice question. manufacturing overhead selling and administrative cash ending finished goods inventory

selling and administrative

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

budget

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 appropriate excessive

insufficient

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. Multiple choice question. $135,000 $145,000 $125,000 $105,000

$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

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? Multiple choice question. Manufacturing overhead budget Budgeted balance sheet Budgeted income statement Budgeted selling and administrative expenses

Budgeted income statement

Which of the following is not found in the financing section of the cash budget? Multiple choice question. Cash deficiency Repayments Borrowings Interest

Cash deficiency

Select all that apply Which of the following budgets are needed to calculate unit product costs? Cash budget Manufacturing overhead budget Direct labor budget Selling and administrative budget Direct materials budget

Direct materials budgetManufacturing overhead budgetDirect labor budget

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 Reason: 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.

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

False Reason: Control involves the steps taken by management to increase the likelihood that all parts of the organization are working to achieve the goals set down in the planning stage.

What number does the direct materials budget take directly from the production budget? Multiple choice question. Required production Budgeted sales Ending inventory of finished goods Beginning raw materials inventory

Required production

What is usually the major source of receipts in the receipts section of the cash budget? Multiple choice question. Sales Gains Interest received Insurance proceeds

Sales

A detailed plan for the future that is usually expressed in formal quantitative terms is: Multiple choice question. profit planning a budget the budget period responsibility accounting

a budget

The receipts, disbursements, excess or deficiency, and financing section are all parts of the: Multiple choice question. selling and administrative expense budget cash budget sales budget production budget

cash budget

The cash budget: Multiple choice question. uses information from the budgeted balance sheet and income statement is prepared near the end of the master budget process is the first budget prepared in the master budget process

is prepared near the end of the master budget process

Using budget assumptions when preparing the master budget: Multiple choice question. increases the complexity of the process involves adjusting data inputs within each master budget schedule makes it easier to answer "what-if" questions

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

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

production

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 shows the number of units that must be manufactured to satisfy sales needs and provide for the desired ending inventory. Multiple choice question. production direct materials cash sales

production

The budgeted income statement does NOT rely on information from the _______ budget. Multiple choice question. production sales ending finished goods inventory selling and administrative expense

production

In large organizations, many smaller individual budgets submitted by department heads and other responsible people comprise the ______ budget. Multiple choice question. manufacturing overhead selling and administrative ending finished goods inventory cash

selling and administrative

A likely consequence of excessive inventory levels is Multiple choice question. lost sales high-cost production efforts storage problems last-minute production efforts

storage problems

A company can consider making investments or repay outstanding principal and interest when: Multiple choice question. the cash excess is less than the minimum required cash balance the cash excess is greater than the minimum required cash balance the cash excess equals the minimum required cash balance there is a cash deficiency

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. Multiple choice question. $122,500 $130,000 $107,500 $133,500

$122,500 Reason: February is the month after January so, the company will be paying for 75% of February purchases + 25% of January purchases.: February purchases ($130,000 x 75%) $97,500 + January purchases ($100,000 x 25%) $25,000 = $122,500.

ABC, Inc.'s expected sales for the first six months of the year are as follows. Month Expected Sales January $120,000 February $150,000 March $160,000 April $200,000 May $220,000 June $250,000 Experience has shown that 60% of sales are collected in the month of sale and 40% are collected the month after sale. Calculate expected cash collections for the month of March. Multiple choice question. $154,000 $156,000 $160,000 $176,000

$156,000 Reason: March collections will be from sales in March and sales in February (since March is the month after February). Expected cash collections = 60% of March sales ($96,000) + 40% of February sales ($60,000).

On the cash budget, what is subtracted from total cash available to find the cash excess or deficiency? Multiple choice question. Selling and administrative expenses Cash inflows Noncash items Cash disbursements

Cash disbursements

Select all that apply Which of the following budgets are needed to calculate unit product costs? Cash budget Manufacturing overhead budget Direct labor budget Selling and administrative budget Direct materials budget

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. Finished goods inventory budget Sales budget Cash budget Production budget

Production budget

The cash budget uses information from several other budgets. Which of the following budgets is NOT used to prepare the cash budget? Multiple choice question. Production budget Direct labor budget Selling and administrative budget Sales budget

Production budget

Required borrowings on a cash budget is calculated by: Multiple choice question. subtracting the beginning cash balance from the amount of the cash deficiency adding the desired ending cash balance to the amount of the cash deficiency adding the desired ending cash balance to the amount of cash excess subtracting the desired ending cash balance from the amount of cash excess

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

Select all that apply Master budget schedules: are based on estimates and assumptions. answer several key questions for a company may be prepared in any order

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. Multiple choice question. income statement balance sheet cash budget sales budget

balance sheet

To prepare a budgeted balance sheet as of December 31, 2016, data is needed from the: Multiple choice question. statement of cash flows for the year ended December 31, 2016 income statement for the year ended December 31, 2015 balance sheet as of December 31, 2015

balance sheet as of December 31, 2015

Select all that apply Budgets: provide each department with the same amount of money to spend, so that all departments are treated fairly define goals and objectives that can serve as benchmarks for evaluating subsequent performance and the budgeting process can uncover potential bottlenecks before they occur force managers to think about and plan for the future coordinate the activities of the entire organization by integrating the plans of its various parts

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

A significant noncash manufacturing overhead cost for many companies is: Multiple choice question. depreciation accounts payable direct labor direct materials

depreciation

In a manufacturing company, the ______ budget details the raw materials that must be purchased to fulfill the production budget and provide for adequate inventories Multiple choice question. direct materials sales merchandise purchases production

direct materials

The number of working hours required to satisfy the production budget is 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

The cost of unsold units is computed on the ________ budget. Multiple choice question. ending finished goods inventory production manufacturing overhead sales

ending finished goods inventory

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

financing

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

control (controlling)

ABC, Inc.'s expected sales for the first six months of the year are as follows. Month Expected Sales January $120,000 February $150,000 March $160,000 April $200,000 May $220,000 June $250,000 Experience has shown that 60% of sales are collected in the month of sale and 40% are collected the month after sale. Calculate expected cash collections for the month of March. Multiple choice question. $208,000 $176,000 $184,000 $200,000

$184,000 Reason: April collections will be from sales in April and sales in March (since April is the month after March). Expected cash collections = 40% of March sales ($64,000) + 60% of April sales ($120,000).

Select all that apply Which of the following budgets are directly based on information from the sales budget? Direct labor budget Direct materials budget Selling and administrative expense budget Production budget

Selling and administrative expense budget Production budget

Which of the following is needed to prepare a sales budget? Multiple choice question. Desired ending inventory Beginning inventory of finished goods Desired ending inventory of raw materials The budgeted number of units to be sold

The budgeted number of units to be sold

A budgeted balance sheet is developed using data from the ______ of the budget period and data contained in the various schedules. Multiple choice question. beginning end average

beginning

The final schedule of the master budget is the: Multiple choice question. budgeted balance sheet cash budget budgeted income statement sales budget

budgeted balance sheet

The ending finished goods inventory budget computes the: Multiple choice question. number of sold units cost of unsold units number of unsold units cost of sold units

cost of unsold units