acct random questions
In which order are the following developed? First to last: 1 = Production budget 3 = Direct materials costs budget 2 = Budgeted income statement 4 = Revenues budget
4-1-3-2
What are the potential problems of a bottom-up approach to budgets
A bottom-up approach may allow managers to build slack into their budgets
Ace Manufacturing revised its sales budget to show a 25% increase in sales. As a result of this change, which other budgets would change?
All of its budgets
When a company focuses on lower level managers as the primary source of information in setting the budget, what type of budgeting process is the company using?
Bottom-up approach
A budget that involves all levels of an organization working together is a
Bottom-up budget
Which problem might be a result of budget-based compensation
Budgetary slack
Which one of the following is needed to prepare a production budget
Budgeted unit sales
Which one of the following best defines budgeting?
Budgets are a company's document which quantifies plans to achieve goals
Which one of the following best defines budgeting
Budgets are reports which quantify how the company plans to achieve its goals
Which of the following would not appear on a manufacturing overhead budget
Direct labor
Which one of the following is true about zero-based budgeting
Each line item must be reviewed and justified each year
Which one of the following is a reason that a company may have significant deviations from budgeted performance
Economic conditions may have changed since the plan was developed
Development of a budget
Improves communication and coordination among managers of different parts of the company
. Which one of the following is false
Including some nonmonetary measures of performance in a budget is not likely to be advantageous
Which one of the following is NOT an advantage of budgeting
Increase revenues.
Which one of the following is not true concerning a bottom-up approach to budgeting
It is an approach to investigating variances.
Which statement is not true about zero-based budgeting?
It is widely practiced by business enterprises
Which statement is true about zero-based budgets
It requires companies to justify each budgeted amount each period
Which one of the following is not a reason that a company may have significant deviations from budgeted performance
Lower level managers formed the basis for the majority of the input
Which one of the following is true about management by exception
Management by exception is an economical approach to cost control
What are the potential problems of a bottom-up approach to budgets
Managers may budget costs on the high side to make targets easier to achieve
Which of the following is correct regarding the manufacturing overhead budget
Manufacturing overhead costs should be broken down by cost behavior
The accuracy of the sales forecast is usually dependent upon all of the following, EXCEPT
Number of employees
Which budget provides the information needed to prepare the direct labor budget?
Production budget
Which one of the following is a budget that would never be prepared by a merchandising company
Production budget
Which of the following is the starting point for the preparation of the master budget
Sales budget
Which of the following represents the correct order in which the listed budgets would be prepared?
Selling and administrative expense budget, cash budget, budgeted balance sheet
Which one of the following is a reason that a company may have significant deviations from budgeted performance?
The budget was poorly created.
Which of the following is not a reason for actual results to differ from budgeted performance
The company used a bottom-up approach to budgeting
Given the following budgets, which would be prepared first when completing the master budget
The direct materials purchases budget
When constructing the production budget, to what is the desired beginning inventory for the second period equal to?
The ending inventory for the first period
Why might the number of units in the sales budget and the production budget differ
The finished goods inventory levels changed
Given only the following budgets, which would be prepared first when completing the master budget
The materials purchases budget
Which is true of budgets?
They are used in performance evaluation
Which of the following statements regarding budgeting is false
They are useful in planning but not in control.
Which one of the following is a way that managers build slack into their budgets?
They may budget costs on the high side
When lower level management seeks to achieve personal departmental objectives to make variances look less than reality, management is experiencing
budgetary slack.
Which one of the following does not provide information to prepare the budgeted income statement? a. manufacturing overhead budget
budgeted balance sheet
The calculation for total purchases (reported on the purchases budget) uses all of the following data except
cash disbursements for last month's purchases
A significant difference between the direct material purchases budget and the direct labor budget is that the direct material purchases budget
considers beginning and ending inventory amounts, which are not part of a direct labor budget
A budget whereby a twelve-month projection into the future is maintained at all times is termed
continuous budgeting
Budgeted manufacturing overhead costs include all types of factory expenses EXCEPT
direct labor and direct materials.
Budgets are useful in the planning process because they
enhance coordination of manager's activities and communication among the company's managers
Planning
enhances communication and coordination
he number of units in the sales budget and the production budget may differ because of a change in
finished goods inventory levels.
Which is not a benefit derived from budgeting?
guarantee of outcomes
The sources of information for a cost of goods manufactured budget include
he manufacturing overhead budget, the direct materials budget, and the direct labor budget
Which is true of budgets?
hey are used in performance evaluation.
In a bottom-up approach to budgeting,
lower level managers are the primary source of information used in setting the budget.
when budgets are used to monitor business activities,
managers can identify potential problems early and take corrective action.
Building slack into a budget
occurs when managers estimate costs on the high side.
Managers use budgets to
plan, control and evaluate operations.
Budget slack
problems are minimized in companies that foster open communication between all levels of employees
What budget contains only units and no dollar amounts?
production budget
Which budget must be prepared before the materials purchases budget is prepared?
production budget
Zero-based budgets
requires justification of all budgeted amounts each period
The first budget customarily prepared as part of an entity's master budget is the
sales budget
Managers perform best when
there is a moderately difficult but achievable budget.
A major weakness of static budgets is that
they force management to compare actual costs at one level of activity to budgeted costs at another activity level.