BUS 215 - Ch8: Master Budgeting

under the concept of ___ ___, managers should only be held accountable for items they can actually control

responsibility accounting

to calculate total sales on the sales budget, multiply budget 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 ___ budget

selling and administrative

budgetary slack occurs when a manager submits a budget that is:

too easy to attain

Budgets:

-communicate management's plans throughout the organization -force managers to think about and plan for the future. -provides a means of allocating resources to those parts of the organization where they can be used most effectively -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

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

-direct materials budget -manufacturing overhead budget -direct labor budget

budget

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

gathering feedback to ensure that the plan is being followed is referred to as ___

control

the ending finished goods inventory budget computes the:

cost of unsold units

a significant noncash manufacturing overhead cost for many companies is

depreciation

planning

developing goals and preparing various budgets to achieve those goals

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

direct labor

working hours required to satisfy the production budget are shown on the ___ budget

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

The section on the cash budget that summarizes all cash payments that are planned for the budget period is the cash ____ section:

disbursement

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

if inventory levels are ___, the result can lead to lost sales or last-minute, high-cost production efforts

insufficient

risks of not knowing in advance how much labor time will be needed throughout the budget period includes:

-facing labor shortages -having to hire and lay off workers (erratic layoffs) -erratic labor policies lead to insecurity, low morale, and inefficiency

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

borrowing money is required whenever:

-the cash excess is less than the minimum required cash balance -there is a cash deficiency

if a cash budget is prepared by quarter, the beginning cash balance for the year is the same as the beginning cash balance for the ___ quarter and the ending cash balance for the year is the same as the ending cash for the ___ quarter

1st, 4th

(T/F) Control involves developing goals and preparing various budgets to achieve those goals

False

using budget assumptions when preparing the master budget:

makes it easier to answer the "what-if" questions

all costs of production other than direct materials and direct labor are shown on the ___ budget

manufacturing overhead

a company with adequate cash balances at the beginning and end of the year:

may still have cash deficiency issues during the year

the amount of goods to be purchased from suppliers during the period is shown on the ___ budget

merchandise purchases

using a budget to blame or pressure employees to do a better job leads to:

mistrust

a perpetual budget keeps managers focused at least one year ahead by adding one:

month to the end of the budget as each month comes to a close

if a budget initiated by top management has targets that are set too high:

motivation will suffer

more accurate estimates and higher motivation are generally the result of using a(n) ___ budget

participative

in a manufacturing company, the ___ budget is prepared right after the sales budget

production

the direct labor budget is based on the ___ budget

production