Chapter 8 SmartBook

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

selling and administrative

Developing goals and preparing various budgets to achieve those goals is part of the _____ process.

planning

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

planning; control

A company's planned net profit that serves as a benchmark against which subsequent company performance can be measured is shown on the budgeted _____ _____.

income statement

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

master

A company with adequate cash balances at the beginning and end of the year, ______.

may still have cash deficiency issues during the year

The amount of goods for resale to be acquired from suppliers during the period is shown on the _____ _____ budget.

merchandise purchase

The amount of goods to be acquired from suppliers during the period is shown on the _______ budget.

merchandise purchases

More accurate estimates and higher motivation are generally the result of using a(n) ______ budget.

participative

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

selling and administrative

A company can consider making investments or repay outstanding principal and interest when ______.

the cash excess is greater than the minimum required cash balance

The cash budget includes four major sections: receipts, disbursements, the cash excess or deficiency, and _____.

financing

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

master

In a manufacturing company, the _____ budget is used to determine the budgets for manufacturing costs, including the direct materials, the direct labor budget , and the manufacturing overhead budget.

production

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

production

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

sales

Using budgeting assumptions when preparing the master budget, ______.

makes it easier to answer "what-if" questions

All costs of production other than direct materials and direct labor are shown on the _____ _____ budget.

manufacturing overhead

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

production

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

production

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

sales price per unit

A manager cannot complain that the budget was unrealistic and impossible to meet when a(n) _____-_____ budget is in place.

self-imposed

When a manager creates a budget that is too easy to attain, ______ occurs.

budgetary slack

All costs of production other than direct materials and direct labor are shown on the ______ budget.

manufacturing overhead

The receipts section of the cash budget lists ______.

all cash inflows, except from financing

Master budget schedules ______.

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

The cost of unsold units is computed on the ______ budget.

ending finished goods inventory

The first step in the budgeting process is the preparation of the _____ budget.

sales

Which of the following budgets shows the company's planned profit and serves as a benchmark against which subsequent company performance can be measured?

Budgeted income statement

True or false: Control involves developing goals and preparing various budgets to achieve those goals.

False

True or false: For most companies a single, annual cash budget is sufficient.

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

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

The budgeted number of units to be sold

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

True

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

a budget

A detailed plan for the future that is usually expressed in formal quantitative terms is a(n) _____.

budget

In a manufacturing company, the ______ budget details the raw materials that must be purchased to fulfill the production budget and provide for adequate inventories

direct materials

Because all other parts of the budget depend on it, if the ______ budget is inaccurate, the rest of the budget will be inaccurate.

sales

Because it is needed for the schedule of expected cash collections, the annual master budget file includes the _____ _____ from last year.

balance sheet

The annual master budget file includes the ______ from last year because it is needed for the schedule of expected cash collections.

balance sheet

Gathering feedback to ensure that the plan is being followed is referred to as _____.

control

Budgetary slack occurs when a manager submits a budget that is ______.

too easy to attain

To prepare a budgeted balance sheet as of December 31, 2020, data is needed from the ______ December 31, 2019.

balance sheet as of

A budgeted balance sheet is developed using data from the ______ of the budget period and data contained in the various schedules.

beginning

Budgets ______.

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

The ending finished goods inventory budget computes the ______ units.

cost of unsold

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

create the budget with a budgeting assumption tab

The number of working hours required to satisfy the production budget is shown on the _____ _____ budget.

direct labor

Working hours required to satisfy the production budget are shown on the ______ budget.

direct labor

The first line of the direct labor budget consists of the budgeted units expected to be ______ during the period.

produced

Borrowing money is required whenever ______.

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