ch 9 review
Which of the following budgets usually shows separate sections for fixed and variable costs?
Operating expenses budget and manufacturing overhead budget
is a budgeting process that begins with departmental managers and flows up through middle management to top management.
Participative budgeting
"Capital expenditures budget" is best described by which of the following concepts?
A company's plan to purchase property, plant and equipment, and other long−term assets
Which of the following is an example of a financial budget?
budget balance sheet
often used by companies to review submitted budgets, make revisions as needed, and approve the final budgets.
budget committees
The final step in the preparation of the financial budget is the preparation of which of the following?
budgeted balance sheet
Which of the following types of cash outlays contains its own budget?
capital expenditures
Which of the following items is a component of a cash payments budget?
cash dividends
The ________ budget is a component in a financial budget.
cash, capital expenditures and budget balance sheet
Which of the following is an advantage of the budgeting process?
coordinates the activities of the organization
A manager considers all of the following when he or she prepares the cash budget except
depreciation expense
Strategic planning is beneficial because the organization can
establish long term goals that extend 5-10 years
These budgets, ________ , project both the collection and payment of cash and forecast the company's budgeted balance sheet.
financial bugets
Which of the following is an advantage of zero−based budgeting?
forces managers to justify each dollar in the budget to ensure that some expenses are lower in a current year compared to what they were in previous years.
A rolling budget is a budget that
is continuously updated, so that the next 12 months of operations are always budgeted.
Which of the following should the organization use to initiate a budget?
last year's budget, last year's actual amounts and zero-based budgeting
Which of the following is a potential disadvantage of participative budgeting
managers may build slack into the budget
the comprehensive planning document for the entire organization.
master budget
"The comprehensive budget" is best described by which of the following terms?
master budget
The sales budget and production budget are examples of
operating budgets
Most companies use ________ when the managers develop budgets each year.
participative budgeting
Which of the following terms is useful because it compares "actual" revenues and expenses against "budgeted" revenues and expenses?
performance report
The ________ budget is a component in an operating budget.
production
The ________ budget is the only budget stated only in units, not dollars.
production
used to forecast how many units should be made to meet the sales projections.
production budget
On the direct materials budget, the total quantity of direct materials to purchase is computed as
quantity needed for production + desired end inventory of DM minus− beginning inventory of DM.
_____ is a budget that is continuously updated by adding months to the end of the budgeting period.
rolling budget
is extra inventory of finished goods that is kept on hand in case demand is higher than predicted or problems in the factory slow production
safety stock
The ________ budget begins with the number of units to be sold.
sales
In preparing the operating budget, the first step is preparing the
sales budget
The ________ is a plan that shows the units to be sold and the projected selling price and is also the starting point in the budgeting process.
sales budget
Which of the following budgets or financial statements is part of the operating budget?
sales budget
________ is a what−if technique that asks what a result will be if a predicted amount is not achieved or if an underlying assumption changes.
sensitivity analysis
Managers will sometimes build ______ into their budgets to protect themselves against unanticipated expenses or lower revenues.
slack
the process of setting long-term goals that may extend several years into the future.
strategic planning
A company sells goods and offers credit terms of "net 30 days." What does this reveal to the company that sold the goods?
the customer has up to 30 days to pay back the seller for the goods purchased without penalty
On the production budget, the number of units to be produced is computed as
unit sales + desired end inventory minus− beginning inventory.
On the direct labor budget, the total quantity of direct labor hours needed is computed as
units to be produced x direct labor hour per unit
the difference between actual and budgeted figures and is used to evaluate how well the manager controlled operations during the period.
variance
When an organization builds its budgets from the ground up, it is using
zero-based budgeting
Which of the following alternatives reflects the proper order of preparing components of the master budget? 1. Production budget 2. Sales budget 3. Direct materials budget
2,1,3
Kotrick Company has beginning inventory of 15,000 units and expected sales of 23,000 units. If the desired ending inventory is 16,000 units, how many units should be produced?
24,000
"Combined cash budget" is best defined by which of the following?
Details about how the company expects to move out of the beginning cash balance and into the desired ending cash balance
Regarding the budgeting process, which of the following statements is true?
The budget should be designed from the bottom up, with input from managers at all levels.