ACCT 2101 Chapter 8

Which of the following statements about employee motivation is true? A.A budget that is too easy to achieve is more likely to motivate than a budget that is too difficult or that is tight but attainable. B.A budget that is too difficult to achieve is more likely to motivate than a budget that is too easy or that is tight but attainable. C. A budget that is tight but attainable is more likely to motivate than a budget that is too easy or too difficult to achieve. D. Budgets are difficult to use for motivation.

A budget that is tight but attainable is more likely to motivate than a budget that is too easy or too difficult to achieve.

Budgeted production is calculated by:

adding budgeted unit sales to budget ending finished goods inventory and subtracting budgeted beginning finished goods inventory

The budgeted income statement is a combination of:

all the operating budgets

The basic form of the cash budget is:

beginning cash balance + budgeted cash collections - budgeted cash payments +/- cash borrowed or repaid = ending cash balance

A detailed plan that translates the companys objectives into financial terms, identifying the resources and expenditures that will be required over the planning horizon is a:

budget

Which of the following is not included in the operating budget? - budgeted balance sheet - sales budget - selling and administrative budget - raw materials purchases budget

budgeted balance sheet

When calculating raw materials purchases, the starting point should be:

budgeted production

When calculating the direct labor budget, the starting point should be:

budgeted production

Budgeted direct labor hours are calculated as:

budgeted production units x direct labor requirements per unit

A primary financial budget is the:

cash budget

Which of the following is the backward looking phase of the planning and control cycle?

control

Which of the following is not a way to reduce the dysfunctional behaviors associated with budgeting? - create budget slack - use different budgets for planning and for performance evaluation - use a continuous or rolling budget approach - use a zero based budgeting approach

create budget slack

Which of the following is not a component of the cash budget? - budgeted cash collections - budgeted cash payments - depreciation expense - cash borrowed or repaid

depreciation expense

Which component of the cash budget is shown as a line item on the budgeted balance sheet?

ending cash balance

Which of the following would not be an example of a cost to include in a selling and administrative expense budget? - legal expenses - accounting services - fixed manufacturing overhead - franchise fees

fixed manufacturing overhead

The purpose of the cash budget is to:

help managers plan ahead to make certain they will have enough cash on hand to meet their operating needs

A top down approach to budgeting is one that is:

imposed

Participative budgeting is an approach to budgeting that:

is more likely to motivate people to work towards the organization's goals than a top down approach

Which of the following is not a benefit of budgeting? - it forces managers to look to the future - it plays an important role in communication within the organization - it serves an important role in motivating and rewarding employees - it builds organizational slack

it builds organizational slack

______ are the specific goals that mangers want to achieve over a 5 to 10 year horizon.

long term objectives

The formula for budgeted raw materials is:

materials needed for production + ending raw materials inventory - beginning raw materials inventory

Creating a budget is an important part of which phase of the planning and control process?

organizing

Which of the following is the forward looking phase of the planning and control cycle?

planning

Which of the following budgets show how many units will be produced each period?

production budget

Which of the following budgets would not exist for a merchandising firm? - sales budget - purchases budget - production budget - selling and administrative expense budget

production budget

If a company is planning to build inventory,

production should exceed sales

Budgeted cost of goods sold should include which of the following?

raw materials direct labor manufacturing overhead

The starting point for preparing the master budget is the:

sales budget

Which of the following sequences is correct? (master budget)

sales budget- production budget- direct materials budget- budgeting income statement

Which of the following budgets do not provide information needed for the budgeted balance sheet? - materials purchases budget - production budget - selling and administrative expense budget - cash budget

selling and administrative expense budget

Which of the following is not a component of the master budget? - operating budget - budgeted income statement - budgeted balance sheet - statement of return on investment

statement of return on investment

A ______ is the vision of what management wants the organization to achieve over the long term.

strategic plan

_____ are the specific actions managers use to achieve their objectives.

tactics

Which of the following is not a source that can be used in preparing the sales budget? - prior sales - the production budget - industry trends - marketing activities

the production budget