A306 SB Ch. 8, 9, 10

S&P Enterprises has scheduled direct material purchases of $100,000 in January, $130,000 in February and $150,000 in March. The company pays for 75% of its purchases in the month of purchase and 25% the month after the purchase. Calculate the expected cash disbursements for the month of February.

February: 130,000 X .75=97,500 January: 100,000 X .25= 25,000 97,500+25,000=122,500

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

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

a budget

Required borrowings on a cash budget is calculated by Blank______.

adding the desired ending cash balance to the amount of the cash deficiency

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

balance sheet

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

balance sheet

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

beginning

The final schedule of the master budget is the ______.

budgeted balance sheet

Given budgeted sales of 10,000 units, desired ending inventory of 5,000 units, and beginning inventory of 2,000 units, required production is______ units.

budgeted sales - desired ending inventory =total needed - beginning inventory =budgeted production 10,000+5,000=15,000-2,000= 13,000

What is usually the major source of receipts in the receipts section of the cash budget?

sales

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

sales price per unit

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

selling and administrative

Which of the following is not found in the financing section of the cash budget?

cash deficiency

Budgets ______.

communicate management's plan throughout the organization

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

direct labor

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

direct materials

budgets______

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

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

ending finished goods inventory

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

The cash budget Blank______.

is prepared near the end of the master budget process

Risks of not knowing in advance how much labor time will be needed throughout the budget period includes_____

low employee morale labor shortages erratic layoffs

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

The calculation of unit product cost requires information from the ______ budget

manufacturing overhead

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

master

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

sales

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/planning

Facing labor shortages or having to hire or lay off workers at awkward times are consequences of

neglecting direct labor budgeting

Developing goals and preparing various budgets to achieve those goals is part of ______

planning

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

produced budgeted units produced X labor hours per unit = budgeted direct labor hours X budgeted labor cost per hour =budgeted direct labor cost

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

production

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

The budgeted income statement does NOT rely on information from the ______ budget.

production

The cash budget uses information from several other budgets. Which of the following budgets is NOT used to prepare the cash budget?

production

Both the production and selling and administrative expense budgets are prepared using information directly from the____ budget.

sales

Both the production and selling and administrative expense budgets are prepared using information directly from the_____ budget.

sales

Beginning cash for the year equals beginning cash of the first month or quarter and ending cash for the year equals ending cash of the last month or quarter.

true

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

true

Which of the following budgets are directly based on information from the sales budget?

Selling & administrative expense Production