ACCT CH08 SB

The budget that shows the budgeted expenses for areas other than manufacturing is the _____ and _____ expense budget.

Blank 1: selling, sales, or marketing Blank 2: administrative or admin

The starting point of the planning process is management's _____ _____or vision for the organization.

Blank 1: strategic Blank 2: plan

When management sets the budget and imposes it on employees throughout the organization, a _____ - _____ approach is being followed

Blank 1: top Blank 2: down

Which of the following budgets shows the company's planned profit?

Budgeted income statement

What number does the raw materials budget take directly from the production budget?

Budgeted production

True or false: Controlling involves developing goals and preparing various budgets to achieve those goals.

False

True or false: The sales budget is based on the production budget.

False

True or false: Using a participative approach to budgeting is less likely to motivate employees than using a top-down approach.

False

Which of the following is NOT included on a budgeted cash payments budget?

Production in units

Budgets that are most likely to motivate employees ______.

are tight but attainable

To calculate the cash balance before financing on the cash budget, add the ______.

beginning cash balance to the budgeted cash receipts and deduct budgeted cash payments

A detailed document that identifies resources and expenditures that will be required over a limited time (typically a year) is a(n) ______.

budget

Company objectives are translated into financial terms in a(n) _____.

budget

The final step in the master budgeting process is to prepare the ______.

budgeted balance sheet

Total sales on the sales budget equal budgeted unit sales multiplied by ______.

budgeted sales price per unit

Collections on credit sales made to customers in prior period(s) plus collections on sales made in the current budget period equal ______.

cash receipts

Budgets ______.

communicate management's plan throughout the organization

Another budget period is automatically added to the budget as one period passes when using a(n) _____ or rolling budget.

continuous or perpetual

The production budget is based upon the _____ budget.

sales

Budgeted expenses for costs related to selling the product and managing the business are shown on the ______ budget.

selling and administrative

The ______ budget does not rely on the production budget.

selling and administrative

Budgetary slack occurs when a manager submits a budget that is ______.

too easy to attain

When an organization uses a top-down approach to budgeting, ______.

top management sets the budget the budget is imposed on lower levels of the organization

All costs of production other than direct materials and direct labor are shown on the _____ _____ budget

Blank 1: manufacturing or factory Blank 2: overhead

Budgeting is an important part of the _____ and _____ cycle.

Blank 1: planning or plan Blank 2: control or controlling

Which of the following budgets are needed to calculate unit product costs?

Direct materials budget Manufacturing overhead budget Direct labor budget

Which of the following is needed to prepare a sales budget?

The budgeted number of units to be sold

The first step in the process of preparing the master budget is the _____ budget or forecast.

sales

Planning starts with managers' ______.

strategic plan

The ______ budget is prepared first when creating the master budget.

sales

A continuous or _____ budget keeps managers focused at least one year ahead.

rolling or perpetual

Pastoria Enterprises has scheduled raw 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.

$122,500

Madison Corporation's expected beginning cash balance is $35,000. Cash collections are budgeted at $50,000 and cash disbursements are estimated to be $80,000. The minimum required cash balance is $20,000 and the company can borrow as much as needed in increments of $10,000. Calculate the expected ending cash balance for the month.

$25,000

Sperling Company's master budget shows expected sales of 10,000 units and expected production of 11,000 units for the month of March. Each unit requires 1/2 hour of direct labor. The direct labor rate is $15.00 per hour. Calculate the expected total direct labor cost for the month of March.

$82,500

The manufacturing overhead budget includes ______.

- depreciation on production equipment - indirect manufacturing costs

When a manager creates a budget that understates expected revenues or overstates expected expenses, _____ _____ occurs.

Blank 1: budgetary or budget Blank 2: slack

The cash budget is one of the primary _____ budgets that is prepared.

financial

Managers must try to find the "just-right" level of difficulty in setting budgetary goals so they ______.

have motivating effects on employee behavior

A continuous or rolling budget ______.

helps avoid games at the end of a budget period adds one period to the end of the budget as each period comes to a close keeps managers in continuous planning mode

Financial budgets ______.

impact the budgeted balance sheet include the cash budget include the capital expenditures budget

Managers put plans into action as part of ______.

implementing

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

manufacturing overhead

A comprehensive set of budgets that covers all phases of planned activities for a specific period is called the _____ budget.

master

Each component of a(n) _____ budget is based on or provides input for another component.

master

The budgeted income statement is formed from the combined ______ budgets.

operating

The sales, production, and purchases budgets are all _____ budgets.

operating or operational

Employees throughout the organization have input into the budget-setting process when _____ budgeting is used.

participative, bottom-up, or bottom up

Budgets are used for two distinct purposes: ______ and ______. The first of these purposes relates to developing goals and preparing various budgets, while the second involves comparing actual results to the budget.

planning; controlling

The ______ budget shows the number of units needed to satisfy sales and provide the desired ending inventory.

production

The direct materials budget directly relies on the ______ budget.

production

The direct materials purchases, direct labor, and manufacturing overhead budgets are all based on the _____ budget.

production

The number of units that must be made to satisfy sales needs and to provide for the desired ending inventory is shown on the _____ budget.

production

Advantages of budgeting include ______.

providing lead time to solve potential problems providing benchmarks for evaluating performance forcing managers to think about and plan for the future promoting cooperation and coordination among different areas within the organization

Davidson Corporation's master budget shows expected direct labor cost of $90,000 for the month of May. During May, the company's expected sales equal 12,000 units and expected production is 15,000 units. If each unit requires 1/2 hour of direct labor, the budgeted direct labor rate is $_____ per hour.

12

The operating budgets feed directly into the _____ _____, which then feeds directly into the budgeted balance sheet.

Blank 1: cash Blank 2: budget

The three sections of the cash budget are _____, _____, and financing.

Blank 1: disbursements, payments, or expenditures Blank 2: receipts or collections

The budgeted _____ _____ shows a company's planned profit.

Blank 1: income Blank 2: statement