Managerial Accounting Ch. 23 & 25

generating motivation requires three actions

1. create and set goals - annual budget 2. measure progress - compare actual and budgeted results 3. provide feedback - accounting information feedback

which of the following is a major component of a master budget

a cash budget

cash budget is not directly affected by a budgeted net income statement but would be by

a manufacturing cost budget, a sales forecast, a capital expenditures budget

a master budget usually includes all of the following except

a projected tax return

responsibility budget

a segment of a master budget relating to that portion of a business under the control of a particular manager

DuPont system

a system that considers the earnings per sales dollar and the investment used to generate those sales dollars

last budget

budgeted balance sheet

which ratio tells managers about how the invested capital is generating sales dollars?

capital turnover

flexible budget

consists of estimates of costs and expenses for various possible levels of activity

flexible budgeting may be viewed as combining the concepts of budgeting and

cost-volume-profit analysis

variable costs

costs that rise and fall proportionately with the volume of output

operating cycle

days in inventory + days in accounts receivable

return on sales =

earnings / sales

4 benefits derived from budgeting

enhanced management responsibility, assignment of decision-making responsibilities, coordination of activities, performance evaluation

preparation of a budgeted income statement does NOT require

estimates of the timing of cash receipts and payments

capital expenditures budget is a

financial budget

as the volume of output decrease

fixed costs per unit will increase

fixed costs

fixed manufacturing overhead do not vary with the level of activity

how are standards used in budget preparation?

goals, realistic actual goals, all areas of management involved, variances

which of the following is NOT one of the strategies of the financial perspective lens of the balanced scorecard?

improve customer relations

if an organization does not yet know actual production costs, what information can be used to help develop selling prices?

industry guides, best guess of prices, simulated costs and use of gross profit rates

which of the following is NOT one of the components of the DuPont system for measuring and evaluating business performance?

inventory turnover

3 operating budgets

manufacturing cost budget (cost of goods manufactured and sold budget), production schedule (units to produce), sales forecast

capital turnover

measures the amount of sales dollars generated from each dollar of capital invested in assets

behavioral approach

most highly used budgeting philosophy

return on investment is calculated by

multiplying the capital turnover by the return on sales

six measurements from the financial perspective lens of the balanced scorecard

net income, ROI, CT, ROS, EVA, residual income

which of the following is NOT a measure used by the financial perspective lens of the balanced scorecard?

net operating income

does a master budget include a projected tax return?

no

inventory

operating cycle - days in accounts receivable

days in accounts receivable

operating cycle - days in inventory

residual income equation

operating earnings - (minimum acceptable return x invested capital)

which of the following is NOT one of the balanced scorecard lenses?

production perspective

three components of the DuPont System of performance

return on sales, capital turnover, return on investment

capital turnover (equation)

sales / capital invested in assets

1st budget

sales budget

value chain

set of activities necessary to create and distribute a desirable product or service to a customer

capital expenditures budgets are typically prepared for a period of

several years

the value chain usually starts with the _____ and ends with the ____

supplier; customer

rolling budget

technique of extending the budget period by one month as each month passes

operating budget

the customer service budget

a company that is profitable may not have sufficient cash on hand to meet its immediate needs

true

a company's operating cycle is the time between purchases of direct materials and conversion of these materials back into cash

true

costs that rise and fall proportionately with the volume of output are often referred to as

variable costs

as the volume of output increases

variable costs per unit will not change

budgeted net income

you may still end up with a net loss