Managerial Accounting Unit 3
The receipts section of the cash budget lists:
all cash inflows excluding financing
The final schedule of the master budget is the...
budgeted balance sheet
The receipts, disbursements, excess or deficiency, and financing section are all parts of the...
cash budget
when making a product line decision, a company may focus on lost contribution margin and avoidable fixed costs or prepare...
comparative income statements
The ending finished goods inventory computes the
cost of unsold units
In a direct materials budget, the desired ending raw materials inventory for the year is equal to the ___________
desired ending raw materials inventory for the last period
The section on the cash budget that summarizes all cash payments that are planned for the budget period is the cash ____ section:
disbursements
What is sandbagging?
employees can game the system by setting low goals that are easy to achieve
Budgeted expenses for areas other than manufacturing are shown on the ____ budget:
selling and administration
What is management by exception?
the concept that focuses on important variances and ignores trial ones
A quantity variance is calculated using...
the standard price of input
Building inventories can reduce...
unfavorable labor efficiency variances
The standard rate per unit that a company expects to pay for variable overhead equals the...
variable portion of the predetermined overhead rate
Companies use the _____________ to evaluate and improve performance.
variance analysis cycle
If managers consider it unwise to adjust the workforce in response to changes in workload...
the direct labor workforce is really fixed in the short run
Direct materials usage variance is the responsibility of...
the production manager
Direct materials price variance is the responsibility of...
the purchasing agent
When demand for the product exceeds the production capacity, a _______________________ decision must be made.
volume trade-off
Which of the following is needed to calculate raw materials to be purchased on the direct materials budget? -Raw materials required per unit -Beginning inventory of raw materials -Budgeted unit sales -Ending finished goods inventory
-Raw materials required per unit -Beginning inventory of raw materials
The labor efficiency variance is the difference between ___________ and ______________ multiplied by the _________________.
-actual hours used -standard hours -standard hourly rate
The standard rate per hour includes:
-employment taxes -fringe benefits -the DL rate per hour
Which are more controllable: fixed or variable costs?
fixed
The percentage change in net income in the flexible budget is greater than the percentage change in activity due to....
fixed costs
The present trend appears to be towards ___________ vertical integration
less
The calculation of unit product cost requires information from the...
manufacturing overhead budget
Using ________________ to assess performance is often desirable because it is more difficult for a person to manipulate.
multiple measures.
When is the cash budget prepared?
near the end of the master budget process
The materials price variance is generally calculated at the time materials are purchased because:
-it simplifies bookkeeping -management can generate more timely reports -it allows materials to be carried in the inventory accounts at standard cost
Excessive inventory on hand, especially in the works in progress inventory account, may lead to...
-obsolete goods -high defect rates -inefficient operations
Unfavorable labor rate variances may occur as a result of:
-overtime premiums being charged to the direct labor account -skilled workers being assigned easy jobs
The purchasing manager is generally responsible for the material ____________ variance, and the production manager is generally responsible for the material ______________ variance.
-price -quantity
The reduction in resale value of an asset through use over time is called _______________ or ______________.
-real depreciation -economic depreciation
What are the options to generate a favorable revenue and spending variance?
-reduce the costs of inputs -increase operating efficiency -protecting the selling price
Which of the following is deducted from the total selling and administrative expense budget to determine the cash disbursements for selling and administrative expense budget? -Advertising expense -Depreciation expense -Selling commissions -Utilities expense
Depreciation expense
Which benchmark (flex or static variances) are appropriate for analyzing production costs?
Flexible
What is the benefit of a continuous/perpetual budget?
It keeps managers focused at least one year ahead so they don't become too narrowly focused on short-term results
What are the limitations of a self-imposed budget?
Lower level managers may make suboptimal budgeting recommendations if they lack the broad strategic knowledge
What number does the direct materials budget take directly from the production budget?
Required production
The system of accountability in which managers are held responsible for those items of revenue and costs—and only those items—over which they can exert significant control is referred to as ________.
Responsibility accounting
What is USUALLY the major source of receipts in the receipts section of the cash budget?
Sales
Which benchmark (flex or static variances) are appropriate for analyzing revenue?
Static
The standard price per unit for direct materials can change based on:
a change in the delivery method
What is a merchandise purchases budget accompanied by?
a schedule of expected cash disbursements
What is a master budget?
consists of a number of separate but interdependent budgets that formally lay out the company's sales, production, and financial goals
What is a self-imposed/participative budget?
prepared with the full cooperation and participation of managers at all levels
In a budgeted income statement, _________ is subtracted from sales to arrive at gross margin.
Cost of goods sold
Operating budgets ordinarily cover a ____________ period corresponding to the company's ___________________.
One-year; fiscal year
The cash budget uses information from several other budgets. Which of the following budgets is not used to prepare the cash budget? -Direct Labor budget -Production budget -SG&A budget -Sales budget
Production budget
What is a continuous/ perpetual budget?
a 12 month budget that rolls forward one month (or quarter) as the current month (or quarter) is completed
The quantity of parts for direct material comes from....
a bill of material
The annual master budget file includes the ____________ from last year because it is needed for the schedule of expected cash collections
balance sheet
What is gaming the system?
occurs when employees attempt to influence the measurement system in order to achieve their plans/goals
The flexible budget ______________ report combines activity and revenue and spending variances
performance
The costs provided by a well-designed activity-based costing system are ______________ relevant to a decision.
potentially
A cost center's performance report does not include:
-revenue -operating income
Average costs are:
-usually sunk costs -often misleading
What are the benefits of a self-imposed/participative budget?
1) Individuals at all levels feel valued 2) Budget estimates prepared by front-line managers are often more accurate and reliable than estimates of top managers 3) Motivation is generally higher when individuals participate in setting their own goals than when goals are imposed above
What are the steps in preparing a masters budget?
1) Prepare a sales budget 2) The production budget 3) Cash budget
Which benchmark (static or flexible) is more appropriate to evaluate your performance as the manager of the product line?
Static budget