ACC 208 Chapters 6 & 8
One of the great dangers in allocating common _______ costs is that such allocations can make a product line look less profitable than it really is.
fixed
To maximize total contribution margin when a constrained resource exists, produce the products with the _________.
highest contribution margin per unit of the constrained resource
Using budgeting assumptions when preparing the master budget, ________________.
makes it easier to answer "what-if" questions
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
The amount of goods to be acquired from suppliers during the period is shown on the _________ budget.
merchandising purchases
Operating budgets generally cover a ______ period.
one-year
A company can repay outstanding principal and interest when ___________.
the cash excess is greater than the minimum required cash balance
When making a decision, only relevant items are included in the analysis of the alternatives when using______.
the differential cost approach only
If a company is using a resource that could be used for some other purpose, the opportunity cost of that resource is ______________.
the segment margin from the best alternative use of the resource
When a constraint exists, companies need to focus on maximizing ______.
total contribution margin
When considering decision alternatives, both relevant and irrelevant costs are included when using the __________ cost approach.
total cost approach
Activities ranging from development to production to after-sales service are called a(n) __________ _________.
value chain
When demand for products exceeds the production capacity, a __________ decision must be made.
volume trade-off companies need to trade off the production for one product for the product that has more demand
F15 Est. Acc Pay
Month purchases x % of Purchases unpaid at end of month
F15 Desired Ending Inventory
Next month sales unit x % of next month
F15 Est. Accounts Receivable
Sales Revenue x % to be collected
Sales Revenue
Sales units x selling price
Master budget schedules ______.
--are based on several key questions for a company --are based on estimates and assumptions
When considering accepting a special order, ___________.
--normal sales must not be affected --there must be idle capacity
A company is considering buying a component part that they currently make using some existing equipment. Relevant costs to this sourcing decision include ______.
--outside purchase price --variable overhead
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
Which of the following budgets are directly based on information from the sales budget?
--selling and administrative --production
Which of the following can make a product line look less profitable than it really is?
allocated common fixed costs
To prepare a budgeted balance sheet as of December 31, 2023, data is needed from the ___________ December 31, 2022.
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
The machine or process that is limiting overall output is a(n) __________.
bottleneck
Budgets ________.
communicate management's plan throughout the organization
A limited resource of some type that restricts the company's ability to satisfy demand is a(n) ________.
constraint
When considering decision alternatives, only relevant costs are included when using the ____________ cost approach.
differential
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
The first line of the direct labor budget consists of the budgeted units expected to be __________ during the period.
produced
A set of activities ranging from development to production to after-sales service is called ______.
the value chain
A special order should be accepted ________.
when the incremental revenue from the special order exceeds the incremental costs of the order
When a resource, such as space in the factory, has no alternative use, its opportunity cost is ________.
zero
F15 Estimated cost of Raw Materials
Pounds of raw material to be purchased x Cost per pound
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
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 direct labor budget is based directly on the _________ budget.
production
F15 Budgeted Production units
(Budgeted sales unit + desired ending inventory) - Beginning inventory
F15 Expected cash collection
(Units x sales price x % collected) Calculate previous month, then current month, and add both together
F15 Estimated Direct Labor Cost
Budgeted Production Units x DLHs per unit x DL rate per hour
F15 DLHs for production
Budgeted Production units x DLHs per unit
F15 How much for production
Budgeted production units x Pounds of material
F15 How much to purchase
Budgeted production units x pounds of materials + Desired ending inventory - Beginning inventory
F15 Beginning Inventory
Current month's sales unit x % of next month
F15 Estimated Raw Materials
Ending Material Inventory x Cost per pound
Andrews Co. can purchase 20,000 units of Part XYZ from a supplier for $18 per part. Andrews' per unit manufacturing costs for 20,000 units is as follows: *See McGraw Hill for Numbers* If the part is purchased, the supervisor position will be eliminated. The special equipment has no other use and no salvage value. Total allocated fixed overhead would be unaffected by the decision. The company should _____.
continue make the part--$60,000 advantage
A business segment should only be dropped if a company can avoid more in fixed costs than it gives up in _______.
contribution margin
A business segment should only be dropped if a company can avoid more in fixed costs than it gives up in __________.
contribution margin
Gathering feedback to ensure that the plan is being followed is referred to as _________.
control or controlling
When planning a trip and deciding to drive your car or take the train, your drivers license and insurance is a(n) ______ cost.
irrelevant
In order to prevent confusion and keep attention focused on critical information, it is desirable to ______.
isolate relevant costs from irrelevant costs
Product ABC has a contribution margin per unit of $10.00. Each unit of ABC requires 5 minutes of machine time. Product XYZ has a contribution margin per unit of $15.00 and each unit requires 10 minutes of machine time. If the company's constraint is machine hours, to maximize profit, they should first fill the demand for Product ___________.
product ABC The company should fill the demand for the product with the highest CM per unit of the constrained resource. ABC's is $2 per minute of machine time (CM of $10/5 minutes) while XYZ's is only $1.50 per minute of machine time (CM of $15/10 minutes.)
A merchandising company prepares a merchandise purchasing budget instead of a(n) _________ budget.
production
When planning a trip and deciding to drive your car or take the train, gasoline is a(n) Blank______ cost.
relevant
Because all other parts of the budget depend on it, if the ___________ budget is inaccurate, the rest of the budget will be inaccurate.
sales
Both the production and selling and administrative expense budgets are prepared using information directly from the ________ budget.
sales
To calculate total sales on the sales budget, multiply budgeted sales in units by __________.
sales price per unit
Whether to perform various organization activities such as payroll and accounting internally or use an external provider is a ______ decision.
sourcing
A one-time sale that is not considered part of the company's normal ongoing business is referred to as a(n) ____________ ___________decision.
special order
