Accounting M6

Manufacturing Overhead Budget

A detailed plan showing the production costs, other than direct materials and direct labor, that will be incurred over a specified time period.

False

A planning budget is prepared before the period begins and is valid for whatever the actual level of activity turns out to be.

False

Both Variable and fixed manufacturing overhead costs are included in the selling and administrative expense budget.

Budgeted balance sheet

a projection of the summary of financial balances detailing the company's assets, liabilities, and equity.

True

In companies that do not have "no lay-off" policies, the total direct labor cost for a budget period is computed by multiplying the total direct labor hours needed to make the budgeted output of completed units by the direct labor wage rate.

False

Only variable manufacturing overhead costs are included in the manufacturing overhead budget.

False

The budgeted selling and administrative expense is calculated by multiplying the budgeted unit sales by the selling and administrative expense per unit.

False

The cash budget is usually prepared after the budgeted income statement

True

The materials price variance is computed by multiplying the difference between the actual price and the standard price by the actual quantity of materials purchased

False

The number of units to be produced in a period can be determined by adding the expected sales to the beginning inventory and then deducting the desired ending inventory.

True

The sales budget often includes a schedule of expected cash collections.

is a financial plan designated for a certain period and it usually contains planned sales volumes, revenues, resources, costs, expenses, assets, liabilities, and cash flows.

What is a budget?

is the how well managers gather feedback to ensure that the plan is being properly executed or modified, monitoring and controlling costs and operations in a given period.

What is a budgetary control?

is a budget which consists of multiple individual budgets that are interdependent and formally lay out the company's sales, production, and financial goals. It amalgamates the cash budget, budgeted income statement, and budget balance sheet.

What is a master budget?

True

When preparing a direct materials budget, the units of a raw material needed to meet production should be added to desired ending inventory and the beginning inventory for raw materials should be subtracted to determine the amount of raw materials to be purchased.

budget

a detailed plan for the future that is usually expressed in formal quantitative terms

Production Budget

a detailed plan showing the number of units that must be produced during a period in order to satisfy both sales and inventory needs

merchandise purchases budget

a detailed plan used by a merchandising company that shows the amount of goods that must be purchased from suppliers during the period

Production budget

calculation of the number of units that must be manufactured based off sales forecast and planned ending inventory.

Cash budget

detailed plan showing how cash resources will be acquired and used.

Sales budget

detailed schedule showing expected sales for the period.

Manufacturing overhead budget

expected manufacturing costs that contains the costs, other than direct labor and materials, and can be traced to the production of a given unit.

Direct labor budget

the calculation of the predicted cost of labor hours that will be needed to produce the units itemized in the production cost.

Direct materials budget

the cost of the expected materials that must be purchase in the time period calculated based on the production budget.

Ending inventory budget

the expected cost of the finished good inventory at the end of each budget period.

Selling and administrative expense budget

the expected expenses for non-manufacturing items such as marketing, facilities, non-manufacturing salaries, etc.

control

the process of gathering feedback to ensure that a plan is being properly executed or modified as circumstances change

Budgeted income statement

this is the earning and expenses budget for a given time period, and is a predicted income statement.