Chapter 8 Managerial Accounting, Ch.7, SB 6, Chap 5, SB 4, ACT 2, Chapter 2, ACT 2

A company's planned net profit that serves as a benchmark against which subsequent company performance can be measured is shown on the budgeted (1) (2). (Enter only one word per blank.)

1. income 2. statement

All costs of production other than direct materials and direct labor are shown on the (1) (2) budget. (Enter only one word per blank.)

1. manufacturing 2. overhead

A number of separate, but interdependent, budgets that formally lay out the company's sales, production, and financial goals are contained in the (1) budget. (Enter only one word per blank.)

1. master

The amount of goods for resale to be acquired from suppliers during the period is shown on the (1) (2) budget. (Enter only one word per blank.)

1. merchandise 2. purchases

Developing goals and preparing various budgets to achieve those goals is part of the (1) process. (Enter only one word per blank.)

1. planning

In a manufacturing company, the (1) budget is prepared right after the sales budget. (Enter only one word per blank.)

1. production

In a manufacturing company, the (1) budget is used to determine the budgets for manufacturing costs, including the direct materials budget, the direct labor budget, and the manufacturing overhead budget. (Enter only one word per blank.)

1. production

In a manufacturing company, the (1) budget shows the number of units that must be manufactured to satisfy sales needs and provide for the desired ending inventory. (Enter only one word per blank.)

1. production

The first step in the budgeting process is the preparation of the (1) budget. (Enter only one word per blank.)

1. sales

A manager cannot complain that the budget was unrealistic and impossible to meet when a(n) (1)-(2) budget is in place. (Enter only one word per blank)

1. self 2. imposed

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

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

False

True or false: For most companies a single, annual cash budget is sufficient.

False

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

Which of the following is NOT another term for relevant costs?

Sunk costs

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

The budgeted number of units to be sold

Incremental analysis is a decision-making approach that compares the relevant costs and benefits of decision alternatives.

True

True or false: 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

The receipts section of the cash budget lists ______.

all cash inflows, except from financing

Select all that apply 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 force managers to think about and plan for the future

Select all that apply Master budget schedules ______.

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

Budgets that are most likely to motivate employees ______.

are tight but attainable

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, 2020, data is needed from the ______ December 31, 2019.

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 document that identifies resources and expenditures that will be required over a limited time (typically a year) is a(n) ______.

budget

Company objectives are translated into financial terms in a(n)

budget

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

budgetary slack

When a manager creates a budget that understates expected revenues or overstates expected expenses, _________ ________ 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

Another budget period is automatically added to the budget as one period passes when using a(n) ______ or rolling budget

continuous

The ending finished goods inventory budget computes the ______ units.

cost of unsold

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

create the budget with a budgeting assumption tab

Once you have identified a problem, the next step is to determine the possible solutions, which are called ____ _____.

decision alternatives

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 provide for adequate inventories

direct materials

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

ending finished goods inventory

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

false

True or false: The same budget that is used for planning should always be used for performance evaluation.

false

True or false: Using a participative approach to budgeting is less likely to motivate employees than using a top-down approach.

false

The ______ step in the decision-making process is to identify the decision problem.

first

Managers must try to find the "just-right" level of difficulty in setting budgetary goals so they ______.

have motivating effects on employee behavior

Managers put plans into action as part of ______.

implementing

Segment margin ______.

includes both variable and direct fixed costs

Comparing the relevant costs and benefits of alternative decision choices is called ______ analysis.

incremental

Determining decision alternatives ______.

is a critical step in the decision-making process

The process of making a decision ______.

is basically the same for all decisions

Continue-or-discontinue decisions are commonly known as ________-or- ________ decisions.

keep drop

Using budgeting assumptions when preparing the master budget, ______.

makes it easier to answer "what-if" questions

Long-term objectives are goals ______.

managers want to achieve in 5 to 10 years

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

manufacturing overhead

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

The amount of goods to be acquired from suppliers during the period is shown on the _______ budget.

merchandise purchases

Short-term objectives ______.

need to be achieved in one year or less are an important component of long-term objectives

If a company has a resource that could be used for something else, the ______ cost is the profit that could be derived from the best alternative use of the resource.

opportunity

Employees throughout the organization have input into the budget-setting process when ________ budgeting is used

participate

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

Setting goals and objectives for the future is done during the ______ phase

planning

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

selling and administrative

Sometimes budgetary ________ can be beneficial as a way to hedge against uncertainty or future events than cannot be anticipated.

slack

A one-time order that is not considered part of the company's normal ongoing business is called a ______ order.

special

Tactics are ______.

specific actions or mechanisms used to achieve an objective

Planning starts with managers' ______.

strategic plan

The starting point of the planning process is management's _________ ________or vision for the organization.

strategic plan

Select all that apply Limitations of self-imposed budgeting include ______.

suboptimal budget recommendations budgetary slack

Specific actions or mechanisms managers use to achieve objectives are called ________

tactics

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

the cash excess is greater than the minimum required cash balance

Select all that apply 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

When an organization uses a top-down approach to budgeting, ______.

top management sets the budget the budget is imposed on lower levels of the organization

When management sets the budget and imposes it on employees throughout the organization, a __________-_________ approach is being followed

top-down

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

selling and administrative

When evaluating a make-or-buy decision, managers should consider ______.

- qualitative factors - opportunity factors -all variable production cost

Because it is needed for the schedule of expected cash collections, the annual master budget file includes the (1) (2) from last year. (Enter only one word per blank.)

1. balance 2. sheet

A detailed plan for the future that is usually expressed in formal quantitative terms is a(n) (1). (Enter only one word per blank)

1. budget

The number of working hours required to satisfy the production budget is shown on the (1) (2) budget. (Enter only one word per blank.)

1. direct 2. labor

In a manufacturing company, the (1) (2) budget details the raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories. (Enter only one word per blank.)

1. direct 2. materials

The section on the cash budget that summarizes all cash payments that are planned for the budget period is the cash (1) section. (Enter only one word per blank.)

1. disbursements

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

Budgets are used for two distinct purposes: ______ and ______. The first of these purposes relates to developing goals and preparing various budgets, while the second involves comparing actual results to the budget.

planning controlling

Budgeting is an important part of the ______ and ______ cycle

planning control

Developing goals for the budget is part of _______, whereas ________- involves determining if goals have been followed

planning controlling

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

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

production

Advantages of budgeting include ______.

providing lead time to solve potential problems providing benchmarks for evaluating performance forcing managers to think about and plan for the future promoting cooperation and coordination among different areas within the organization

Costs and benefits that always differ between alternatives are called ______ costs and benefits.

relevant

When making a decision to drive or take the train on a trip, the cost of the train ticket is a(n) ______ cost

relevant

When planning a trip and deciding to drive your car or take the train, gasoline is a(n) ______ cost.

relevant

Because all other parts of the budget depend on it, if the ______ budget is inaccurate, the rest of the budget will be inaccurate.

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