Chapter 8

Gathering feedback to ensure that the plan is being followed is referred to as BLANK

control

In a manufacturing company, the BLANK budget is used to determine the direct materials budget, the direct labor budget, and the manufacturing overhead budget.

production

In a manufacturing company, which budget is used as the basis for creating the direct materials budget, the direct labor budget, and the manufacturing overhead budget?

production

What is usually the major source of receipts in the receipts section of the cash budget?

sales

A company with adequate cash balances at the beginning and end of the year, BLANK

may still have cash deficiency issues during the year

Variable selling and administrative expenses are calculated by multiplying the budgeted units BLANK by the variable selling and administrative expense per unit.

sold

A company can repay outstanding principal and interest when BLANK Multiple choice question. the cash excess is greater than the minimum required cash balance the cash excess equals the minimum required cash balance the cash excess is less than the minimum required cash balance there is a cash deficiency

the cash excess is greater than the minimum required cash balance

Many managers believe that being empowered to create their own self-BLANK budgets is the most effective method of budget preparation.

imposed

A budget that is prepared with the full cooperation of managers at all levels is a self-imposed or BLANK budget.

participative

Developing goals and preparing various budgets to achieve those goals is part of the BLANK process.

planning

A number of separate, but interdependent, budgets that formally lay out the company's sales, production, and financial goals are contained in the BLANK budget.

planning/master

Both the production and selling and administrative expense budgets are prepared using information directly from the BLANK budget.

sales

What is added to the variable selling and administrative expenses to get the total selling and administrative expenses?

fixed selling and administrative expenses

Required borrowings on a cash budget is calculated by BLANK

adding the desired ending cash balance to the amount of the cash deficiency

Master budget schedules BLANK Multiple select question. are based on estimates and assumptions may be prepared in any order answer several key questions for a company

are based on estimates and assumptions answer several key questions for a company

An integrated business plan that formally lays out the company's goals is called the BLANK budget.

master

A manager cannot complain that the budget was unrealistic and impossible to meet when a(n) BLANK - BLANK budget, or a participative budget, is in place.

self-imposed

For most companies a single, annual cash budget is sufficient. (True/False)

False

Month Expected Unit Sales January 12,000 February 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 BLANK

March sales 16,000 + End. inv. (25% of April sales) 5,000 - Beg. inv. (25% of March sales) 4,000 = 17,000 units

What is subtracted from total budgeted selling and administrative expenses to determine the cash disbursements for selling and administrative expenses?

Non-cash expenses

The cash budget uses information from several other budgets. Which of the following budgets is NOT used to prepare the cash budget? Multiple choice question. Production Selling and administrative Sales Manufacturing cost budget

Production

Which of the following budgets are directly based on information from the sales budget? Production Selling & administrative expense Direct materials Manufacturing overhead

Production Selling & administrative expense

Identify the true statements about budgets. Multiple select question: a. They coordinate the activities of the entire organization by integrating the plans of its various parts. b. They encourage managers to think about and plan for the future. c. They define goals and objectives that can serve as benchmarks for evaluating subsequent performance. d. The budgeting process can uncover potential bottlenecks before they occur. e. They provide each department with the same amount of money to spend, so that all departments are treated fairly.

They coordinate the activities of the entire organization by integrating the plans of its various parts. They encourage managers to think about and plan for the future. They define goals and objectives that can serve as benchmarks for evaluating subsequent performance. The budgeting process can uncover potential bottlenecks before they occur.

(True/False) Many of the schedules in a master budget are based on a variety of management estimates and assumptions.

True: Managers must make a number of estimates and assumptions when preparing a master budget.

In a manufacturing company, the BLANK BLANK budget details the raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories.

direct materials

Because all other parts of the budget depend on it, if the BLANK budget is inaccurate, the rest of the budget will be inaccurate.

sales

The first step in the budgeting process is preparing the BLANK budget.

sales

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.

February purchases ($130,000 x 75%) $97,500 + January purchases ($100,000 x 25%) $25,000 = $122,500.

The amounts under the Year column in the cash budget always equal the sum of the amounts for the months or quarters of the budget. (True/False)

false

The cash budget BLANK a. is the first budget prepared in the master budget process b. uses information from the budgeted balance sheet and income statement c. is prepared near the end of the master budget process

c. is prepared near the end of the master budget process

Borrowing money is required whenever BLANK Multiple select question. there is a cash deficiency the cash excess is less than the minimum required cash balance the cash excess is greater than the minimum required cash balance the cash excess equals the minimum required cash balance

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