Chapter 8 Managerial Accounting
A continuous or perpetual budget is a budget that almost never needs to be revised.
False
The budget method that maintains a constant twelve-month planning horizon by adding a new month on the end as the current month is completed is called:
A continuous budget
A benefit of self-imposed budgeting is that it may allow lower-level managers to create budgetary slack.
False
Both variable and fixed manufacturing overhead costs are included in the selling and administrative expense budget.
False
Which of the following budgets are prepared before the production budget?
No, Yes
Which of the following might be included as a disbursement on a cash budget?
No, Yes
Which of the following represents the normal sequence in which the below budgets are prepared?
Sales Budget, Budget Income Statement, Budget Balance Sheet
The sales budget is usually prepared before the production budget.
True
The sales budget often includes a schedule of expected cash collections.
True
Which of the following benefits could an organization reasonably expect from an effective budget program?
Yes, Yes
When preparing a production budget, the required production equals:
budgeted sales - beginning inventory + desired ending inventory.
One disadvantage of a self-imposed budget is that budget estimates prepared by front-line managers are often less accurate and reliable than estimates prepared by top managers.
False
Only variable manufacturing overhead costs are included in the manufacturing overhead budget.
False
The budgeted selling and administrative expense is calculated by multiplying the budgeted unit sales by the selling and administrative expense per unit.
False
The cash budget is typically prepared before the direct materials budget.
False
The direct materials budget is typically prepared before the production budget.
False
The manufacturing overhead budget lists all costs of production other than selling and administrative expenses.
False
The number of units to be produced in a period can be determined by adding the expected sales to the beginning inventory and then deducting the desired ending inventory.
False
The direct labor budget is based on:
The required production for the period
A self-imposed budget is a budget that is prepared with the full cooperation and participation of managers at all levels.
True
In companies that do not have "no lay-off" policies, the total direct labor cost for a budget period is computed by multiplying the total direct labor hours needed to make the budgeted output of completed units by the direct labor wage rate.
True
On a cash budget, the total amount of budgeted cash payments for manufacturing overhead should not include any amounts for depreciation on factory equipment.
True
Self-imposed budgets prepared by lower-level managers should be scrutinized by higher levels of management.
True
All the following are considered to be benefits of participative budgeting, except for:
When managers set their own targets for the budget, top management need not be concerned with the overall profitability of operations.
