Managerial Accounting Chapter 8

The manufacturing overhead budget lists all costs of production other than selling and administrative expenses.

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The cash budget is typically prepared before the direct materials budget.

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The cash budget is usually prepared after the budgeted income statement.

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The direct labor budget shows the direct labor-hours required to produce the desired ending inventory.

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The direct materials budget is typically prepared before the production budget.

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The first budget a company prepares in a master budget is the production budget.

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The manufacturing overhead budget is typically prepared before the production budget.

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Which of the following represents the normal sequence in which the below budgets are prepared

Sales Budget, Budgeted Income Statement, Budgeted Balance Sheet

Which of the following is NOT an objective of the budgeting process?

To ensure that the company continues to grow

All the following are considered to be benefits of participative budgeting, except for:

When managers set their own targets for the budget, top management need not be concerned with the overall profitability of operations

The budget method that maintains a constant twelve-month planning horizon by adding a new month on the end as the current month is completed is called:

a continuous budget.

When preparing a production budget, the required production equals

budgeted sales - beginning inventory + desired ending inventory

A benefit of self-imposed budgeting is that it may allow lower-level managers to create budgetary slack.

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A continuous or perpetual budget is a budget that almost never needs to be revised.

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Both variable and fixed manufacturing overhead costs are included in the selling and administrative expense budget.

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In a merchandising company, the required merchandise purchases for a period are determined by subtracting the desired ending inventory from the sum of the units to be sold during the period and the units in beginning inventory.

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In business, a budget is a method for putting a limit on spending.

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One disadvantage of a self-imposed budget is that budget estimates prepared by front-line managers are often less accurate and reliable than estimates prepared by top managers.

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Only variable manufacturing overhead costs are included in the manufacturing overhead budget.

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Planning involves gathering feedback to ensure that the plan is being properly executed or modified as circumstances change.

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The basic idea underlying responsibility accounting is that each manager should be held responsible for the overall profit of the company to ensure that all managers are acting together.

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The budgeted selling and administrative expense is calculated by multiplying the budgeted unit sales by the selling and administrative expense per unit.

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The number of units to be produced in a period can be determined by adding the expected sales to the beginning inventory and then deducting the desired ending inventory.

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The direct labor budget is based on

the required production for the period

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

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Budgets are used to plan and to control operations.

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In companies that do not have "no lay-off" policies, the total direct labor cost for a budget period is computed by multiplying the total direct labor hours needed to make the budgeted output of completed units by the direct labor wage rate.

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On a cash budget, the total amount of budgeted cash payments for manufacturing overhead should not include any amounts for depreciation on factory equipment.

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Self-imposed budgets prepared by lower-level managers should be scrutinized by higher levels of management.

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The sales budget is usually prepared before the production budget.

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The sales budget often includes a schedule of expected cash collections.

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When preparing a direct materials budget, the units of raw material needed to meet production should be added to desired ending inventory and the beginning inventory for raw materials should be subtracted to determine the amount of raw materials to be purchased.

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