Managerial Accounting - Chapter 8: Budgetary Planning

Budgeting is an important part of the ____________ and _____________cycle. (Enter only one word per blank.)

Blank 1: planning or plan Blank 2: control or controlling

Total sales on the sales budget equal budgeted unit sales multiplied by ______. Multiple choice question. - budgeted cost of goods sold - budgeted sales price per unit - gross margin percentage - budgeted units to be produced

Correct Answer - budgeted sales price per unit

Budgets are used for two distinct purposes: ______ and ______. The first of these purposes relates to developing goals and preparing various budgets, while the second involves comparing actual results to the budget. Multiple choice question. - leading; controlling - planning; controlling - directing; planning - directing; leading

Correct Answer - planning; controlling

Budgets ______. Multiple choice question. - primarily help managers with day-to-day emergencies - focus on what has happened in the past - communicate management's plan throughout the organization

Not Correct: - primarily help managers with day-to-day emergencies Reason: This is not the primary reason a budget is prepared. Without a budget, managers would most likely encounter more day-to-day emergencies. - focus on what has happened in the past Reason: A budget focuses on what management is expecting to happen in the future. communicate management's plan throughout the organization Correct Answer communicate management's plan throughout the organization

Select all that apply Advantages of budgeting include ______. Multiple select question. - forcing managers to think about and plan for the future - promoting cooperation and coordination among different areas within the organization - providing benchmarks for evaluating performance - providing each department with the same amount of money to spend, so all are treated fairly - providing lead time to solve potential problems

Not Correct: - providing each department with the same amount of money to spend, so all are treated fairly Reason: Money is allocated to each department where it can be used most effectively. - forcing managers to think about and plan for the future - promoting cooperation and coordination among different areas within the organization - providing benchmarks for evaluating performance - providing lead time to solve potential problems

Which of the following is needed to prepare a sales budget? Multiple choice question. - Beginning inventory of finished goods - Desired ending inventory of raw materials - Desired ending inventory - The budgeted number of units to be sold

Not Correct: - Beginning inventory of finished goods Reason: The beginning inventory of finished goods is needed for the production budget. - Desired ending inventory of raw materials Reason: The desired ending inventory of raw materials is for the direct materials budget. - Desired ending inventory Reason: The desired ending inventory is needed for the production budget. Correct Answer The budgeted number of units to be sold