chapter 9 smartbook

For any organization to be effective, each manager throughout the organization must _______ other managers.

be aware of the plans made by

Including costs in a budget for unexpected occurrences is an example of

budgetary slack

The difference between a provided estimate and a realistic estimate is called

budgetary slack

The budgeted cost of goods manufactured schedule calculates the

budgeted cost of goods completed and transferred to budgeted finished-goods inventory

The final portion of the master budget is the preparation of the

budgeted financial statements

A comprehensive set of budgets covering all phases of an organization's operations for a specific period of time is called a

master budget

Intentionally underestimating revenue or overestimating costs is called

padding the budget

Involving employees throughout the organization in the budgeting process is called

participative budgeting

A budget is used for

planning evaluating performance and providing incentives for employees controlling profit and operations facilitating communication and coordination allocating resources

Other costs of production, besides purchases and direct labor, are called

production overhead costs

master budget is also called a

profit plan

Allocating resources is the process of

providing for the needs of competing uses of revenues

A plan that is continuously updated by adding a new time period and dropping the period just completed is a

revolving budget

The key types of master budget schedules are

sales operational financing

The production budget is based upon the

sales budget

Budget preparation should begin with the ______ budget

sales of services or goods

Finance Budget

-Budgets that project cash flow and identify likely cash shortfalls and surpluses -plan that shows how the organization will acquire financial resources

A master budget does all of the following except: -translate operational plans into a financial picture of the planned operations -aid in identifying resources required to accomplish the plans -provide a vehicle to coordinate operating and financial plans -determine the costs of identified resources -ensure the consistency of plans to meet organizational goals -choose the supplier of the resources required to accomplish the plans

-choose the supplier of the resources required to accomplish the plans

budget

A detailed plan, expressed in quantitative terms, that specifies what resources will be acquired and used during a specified period of time

Which of the following statements about a master budget are not true? Operational assumptions are identified and incorporated into the budget. It consists of a series of budget schedules. Budgets cannot use activity-based costing. Budget schedules are interdependent. Budget schedules are independent. Budgets included budgeted financial statements.

Budgets cannot use activity-based costing. Budget schedules are independent.

Which of the following is not an example of budgetary slack?

Submitting an estimate for salary increases of 2% when the union is requesting a 3% increase.

Conversion

The resources needed to turn purchased inputs into a marketable product or service

True or false: A master budget can, and should, be used by all types of businesses, governmental agencies, as well as individuals.

True

The final step in the budgeting process is the preparation of the budgeted

balance sheet

A plan for the acquisition of fixed assets is a ______ budget.

capital

The budgeted income statement shows all of the following except budgeted

cash

Pulling together the plans of all the organization's managers is the purpose of

communication and coordination

short range budgets

cover a year, quarter or month

Long-range budgets

cover periods longer than a year

Which of the following would not be found on the cash disbursement budget? payments for purchases payments for overhead payments for direct labor salaries expense depreciation expense

depreciation expense

FASB recommends using the ___________ method to prepare the budgeted statement of cash flows.

direct

On the budgeted schedule of cost of goods manufactured and sold, which of the following items must be deducted from the cost of goods available for sale to arrive at the cost of goods sold?

ending finished-goods inventory

True or false: The budgeted statement of cash flows is also known as the cash budget.

false

All of the information on the budgeted income statement comes from other schedules except budgeted

income taxes

what are the first and last budgets made?

start with sales budget and very last budget is the budgeted balance sheet

Participative budgeting

tends to make people perform better can be very effective

Reasons managers might pad their budgets include

to ensure that after cuts, there is still sufficient resources to meet organizational goals the desire to meet projections in order to receive their incentive pay to provide a cushion in the event of an unexpected cost

True or false: A budget provides a means of allocating resources among competing uses

true