Managerial Accounting Chapter 8 Review

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

selling and administrative

Borrowing money is required whenever Blank______.

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

Budgets Blank______.

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

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

create the budget with a budgeting assumption tab

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

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

planning; control

In a manufacturing company, the Blank______ budget shows the number of units that must be manufactured to satisfy sales needs and provide for the desired ending inventory.

prodcution

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

production

The direct materials budget directly relies on the Blank______ budget.

production

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

To calculate total sales on the sales budget, multiply budgeted sales in units by Blank______.

sales price per unit

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

selling and administrative

A likely consequence of excessive inventory levels is Blank______.

storage problems

A company can repay outstanding principal and interest when Blank______.

the cash excess is greater than the minimum required cash balance

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

The budgeted number of units to be sold

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

a budget

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

master

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

planning

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

production

In a manufacturing company, the budgets for manufacturing costs, including the direct materials budget, the direct labor budget, and the manufacturing overhead budget are all based on the blank budget.

production

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

sales

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

sales

A number of separate, but interdependent, budgets that formally lay out the company's sales, production, and financial goals are contained in the blank budget

master

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

produced

Edison Corporation's variable manufacturing overhead rate is $5.00 per direct labor-hour. Total budgeted fixed overhead is $25,000 per month. The $25,000 per month includes $7,000 in depreciation expense. Total budgeted direct labor-hours for the month of July is 20,000. Budgeted cash disbursements for manufacturing overhead for July equals Blank______.

$118,000 Reason: Variable overhead (20,000 × $5.00) $100,000 + fixed overhead $25,000 - non-cash (depreciation) expenses $7,000 = $118,000

The receipts section of the cash budget lists Blank______.

all cash inflows except borrowings

The receipts, disbursements, excess or deficiency, and financing section are all parts of the Blank______ budget.

cash

Budgets Blank______.

communicate management's plan throughout the organization

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 blank 1 quarter and the ending cash balance for the year is the same as the ending cash for blank 2 quarter.

Blank 1: 1st or first Blank 2: 4th, last, or fourth

The number of working hours required to satisfy the production budget is shown on the blank 1, blank 2 budget.

Blank 1: direct Blank 2: labor or labour

The section on the cash budget that summarizes all cash payments that are planned for the budget period is the cash blank section.

Blank 1: disbursements or disbursement

In a manufacturing company, the budgets for manufacturing costs, including the direct materials budget, the direct labor budget, and the manufacturing overhead budget are all based on the blank budget.

Blank 1: production

Which of the following is not found in the financing section of the cash budget?

Cash deficiency

On the cash budget, what is subtracted from total cash available to find the cash excess or deficiency?

Cash disbursements

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

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. True or False?

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

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

Production

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

Required production

What is usually the major source of receipts in the receipts section of the cash budget?

Sales

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

Selling & administrative expense Production

Many of the schedules in a master budget are based on a variety of management estimates and assumptions.

True

Master budget schedules Blank______.

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

If inventory levels are Blank______, the result can lead to lost sales or last-minute, high-cost production efforts.

insufficient

The cash budget Blank______.

is prepared near the end of the master budget process

Using budgeting assumptions when preparing the master budget, Blank______.

makes it easier to answer "what-if" questions

Madison Corporation's expected beginning cash balance is $35,000. Cash collections are budgeted at $50,000 and cash disbursements are estimated to be $80,000. The minimum required cash balance is $20,000 and the company can borrow as much as needed in increments of $10,000. Calculate the expected ending cash balance for the month.

$25,000 Reason: $35,000 + $50,000 - $80,000 = $5,000. Since they can borrow in increments of $10,000 they must borrow $20,000 to meet or exceed the minimum cash balance making the ending balance $25,000.

Sperling Company's master budget shows expected sales of 10,000 units and expected production of 11,000 units for the month of March. Each unit requires 1/2 hour of direct labor. The direct labor rate is $15.00 per hour. Calculate the expected total direct labor cost for the month of March.

$82,500 Reason: 11,000 × 1/2 × $15 = $82,500

Davidson Corporation's master budget shows expected direct labor cost of $90,000 for the month of May. During May, the company's expected sales equal 12,000 units and expected production is 15,000 units. If each unit requires 1/2 hour of direct labor, the budgeted direct labor rate is blank$ per hour.

12

Given budgeted sales of 10,000 units, desired ending inventory of 5,000 units, and beginning inventory of 2,000 units, required production is Blank______ units.

13,000 Reason: 10,000 + 5,000 - 2,000 = 13,000