Chapter 7 accounting 231
A quantitative plan for acquiring and using resources over a specified time period is a(n) ______
Budget
The purpose of a(n)___ is to assist in establishing goals and measuring operating results
Budget
all cost of production other than direct materials and direct labor are shown on the ________
Manufacturing overhead budget
required borrowings on a cash budget is calculated by:
adding the desired ending cash balance to the amount of the cash deficiency
Master budget schedules:
are based on estimates and assumptions, answer several key questions for a company
if actual results do not measure up to budgeted goals, a manager should:
attempt to correct any unfavorable discrepancies
to prepare a budgeted balance sheet as of December 21,2012, the data is needed from the:
balance sheet as of december 31,2012
what consists of collections on credit sales made to customers in prior periods plus collections on sales made in the current budget period?
cash collections
which of the following is not found in the financing section of the cash budget
cash deficiency
Budgets
communicate management's plan throughout the organization
Gathering feedback to ensure that the plan is being followed is referred to as _________
control
the purpose of a budget should be to:
coordinate efforts, establish goals, motivate people
the ending finished goods inventory budget computes the:
cost of unsold units
to obtain the total number of units to be produced add______ to budgeted unit sales
desired ending inventory
the number of working hours required to satisfy the production budget is shown on the ________ __________ budget
direct labor
which of the following budgets are needed to calculate unit product costs?
direct materials, direct labor, manufacturing overhead budget
True or False: for most companies a single, annual cash budget is sufficient.
false
using budget assumptions when preparing the master budget:
makes it easier to answer "what-if" questions
Highly achievable budget targets:
may generate greater management commitment to the budget, may help build manager confidence, are are used in most companies
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 for resale 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
What is subtracted from total budgeted selling and administrative expenses to determine the cash disbursements for selling and administrative expenses?
non-cash expenses
operating budgets generally cover a _______ period
one-year
which of the following types of budgets keep managers focused one year ahead, so they do not become too narrowly focused on short-term results?
perpetual or continuous
developing goals and preparing various budgets to achieve those goals is part of:
planning
developing goals for the budget is _____while______ involves steps taken to ensure that steps towards meeting the goal are being followed
planning, control
the cash budget uses information from several other budgets. which of the following budgets is NOT used to prepare cash budget?
production budget
the direct materials budget directly relies on the:
production budget
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
The underlying idea behind________ accounting is that a manager should be held accountable for only those items the manager can actually control
responsibility
the first step in the budgeting process is preparing the ________budget
sales
what is usually the major source of receipts in the receipts section of the cash budget?
sales
A budget prepared with the full cooperation of management at all levels is a ________ budget
self-imposed, or participative
variable selling and administrative expenses are calculated by multiplying the budgeted units _______ by the variable selling and administrative expense per unit
sold
A likely consequence of excessive inventory levels is
storage problems
Edison corporation's variable manufacturing overhead rate is $5.00 per direct labor-hour. Total budgeted fixed overhead is $25,000 per month. The $25,000 per month includes $7,000 in depreciation expense. total budgeted direct labor-hours for the month of july is 20,000. Budgeted cash disbursements for manufacturing overhead for July equals
$118,000 Variable overhead(20,000 x $5.00) $100,000 + fixed overhead $25,000 - noncash (depreciation)expenses $7,000= $118,000
ABC, Incs expected sales for the first six month of year are: January: 12,000 feb: 15,000 march: 16,000 april: 20,000 may: 22,000 june:25,000 if desired ending inventory is 25% of next month's sales, the number of units to be produced in march is:
17,000 March sales 16,000+ ending inv (25% of april sales) 5,000 - beginning inv (25% of march sales) 4,000 = 17,000 units to be produced
which of the following budgets are directly based on information from the sales budget
Production budget, selling and administrative expense budget
recognizing individuals at all levels of the organization as team members whose views and judgments are valued by top management is an advantage of:
a self-imposed budget
the desired ending raw materials inventory for the year is the same as the desired ending inventory for the ___________ quarter.
fourth
a company's planned net profit that serves as a benchmark against which subsequent company performance can be measured is shown on the budget __________ ____________
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 through the budget period includes:
labor shortages, erratic layoffs, low employee morale
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 Budgeted production = 15,000 units x 1/2 hour of 7,500 required labor hours. $90,000/7,500=$12 per hour
S&P Enterprises has scheduled direct 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 february is the month after january so, the company will be paying for 75% of february purchases + 25% of january purchases.: february purchases ($130,000 x75%)$97,500+ january purchases($100,000 x 25%) 25,000= $122,500
a number of separate but interdependent budgets that formally lay out a company's sales, production, and financial goals is contained in the ___ budget
Master
when a company does not use self-imposed budgeting, top mangers initiate the budgeting process by issuing profit targets and direct_______ - level managers to prepare budgets that meet those targets
low
the first line of the direct labor budget consists of the budgeted units expected to be _______ during the period.
produced
in a manufacturing company, the _______ budget is used to determine the budgets for manufacturing costs, including the direct materials budget, the direct labor budget, and the manufacturing overhead budget
production
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
the budget that shows the budgeted expenses for areas other than manufacturing is the ________ and _________ expense budget
selling; administrative
A manager who wants to submit a budget that is easy to attain will try to put budgetary _________ into his or her budget.
slack
which of the following is needed to prepare a sales budget?
the budgeted number of units to be sold
the receipts, disbursements, excess or deficiency, and financing section are all parts of the:
the cash budget
the most common significant noncash manufacturing overhead cost in most companies is ______
depreciation