M.ACTG Chapter 8 Smart Book

In a manufacturing company, the Blank______ budget details the raw materials that must be purchased to fulfill the production budget and provide for adequate inventories

direct materials

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

produced

A company can repay outstanding principal and interest when Blank______.

the cash excess is greater than the minimum required cash balance

A detailed plan for the future that is usually expressed in formal quantitative terms is Blank______.

a budget

The cash budget Blank______.

is prepared near the end of the master budget process

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

merchandise purchases

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

planning

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

planning; control

The first step in the budgeting process is preparing the Blank______ budget.

sales

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

Production

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 Blank______.

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 Blank______.

self-imposed budgeting

(T or F) Many of the schedules in a master budget are based on a variety of management estimates and assumptions.

True

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

budgetary slack

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

master

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

sales

The annual master budget file includes the Blank______ from last year because it is needed for the schedule of expected cash collections.

balance sheet

Budgets Blank______.

communicate management's plan throughout the organization

(T or F) For most companies a single, annual cash budget is sufficient.

False

When profit targets are set by top managers, Blank______.

too much slack may be allowed goals may be unrealistically high

In companies that do not use a self-imposed budgeting process, profit targets are generally set by Blank______.

top managers

Master budget schedules Blank______.

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

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

create the budget with a budgeting assumption tab

Budgets Blank______.

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

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

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

Budget

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

Limitations of self-imposed budgeting include Blank______.

budgetary slack suboptimal budget recommendations

Borrowing money is required whenever Blank______.

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

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

What number does the direct materials budget take directly from the production budget?

Required production

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

Selling & administrative expense Production