A306 Exam 3 Conceptual Q's

In a manufacturing company, the _____ budget is prepared right after the sales budget

PRODUCTION

In a manufacturing company, the budgets for manufacturing costs, including the direct materials budget, the direct labor budget, and the manufacturing overhead budget are all based on the ______ budget.

PRODUCTION

In a manufacturing company, the budgets for manufacturing costs, including the direct materials budget, the direct labor budget, and the manufacturing overhead budget are all based on the _______ Budget

PRODUCTION

Developing goals and preparing various budgets to achieve those goals is part of ______, the budget period control to achieve the goals set down in the planning stage. responsibility accounting Planning

Planning

The first line of the direct labor budget consists of the budgeted units expected to be ______ during the period. Produced Sold

Produced

The budgeted income statement does NOT rely on information from the ______ budget. Production selling and administrative expense sales ending finished goods inventory

Production

The budgeted income statement does NOT rely on information from the ______ budget. production sales selling and administrative expense ending finished goods inventory

Production

The cash budget uses information from several other budgets. Which of the following budgets is NOT used to prepare the cash budget? Selling and administrative Sales Production Direct labor

Production

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

Production Selling & administrative expense

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

Production Selling & administrative expense

What number does the direct materials budget take directly from the production budget? Ending inventory of finished goods Required production Beginning raw materials inventory Budgeted sales

Required production

Both the production and selling and administrative expense budgets are prepared using information directly from the ____ Budget.

SALES

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

Sales

Which of the following is needed to prepare a sales budget? Beginning inventory of finished goods Desired ending inventory of raw materials The budgeted number of units to be sold Desired ending inventory

The budgeted number of units to be sold

The ending finished goods inventory budget computes the cost of ______ units. Unsold sold

Unsold

A detailed plan for the future that is usually expressed in formal quantitative terms is ______. responsibility accounting profit planning the budget period a budget

a 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 ______. answer several key questions for a company 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

Using budgeting assumptions when preparing the master budget, ______. increases the complexity of the process makes it easier to answer "what-if" questions involves adjusting data inputs within each master budget schedule

makes it easier to answer "what-if" questions

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

manufacturing overhead

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

manufacturing overhead Reason: The calculation of unit product cost requires information about direct materials, direct labor and manufacturing overhead.

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

master

An integrated business plan that formally lays out the company's goals is called the ______ budget. sales self-imposed master profit planning

master

Facing labor shortages or having to hire or lay off workers at awkward times are consequences of______. excess beginning inventory having a small human resources department a decrease in sales neglecting direct labor budgeting

neglecting direct labor budgeting

Budgets are used for two distinct purposes:______ and ______. advising; consulting benchmarking; integrating planning; control executing; overseeing

planning; control

The direct labor budget is based directly on the______ budget. sales production manufacturing overhead raw materials

production

Because all other parts of the budget depend on it, if the ______ budget is inaccurate, the rest of the budget will be inaccurate. production cash sales direct materials

sales

The first step in the budgeting process is preparing the ______ budget. cash production direct materials sales

sales

Because all other parts of the budget depend on it, if the ______ budget is inaccurate, the rest of the budget will be inaccurate. sales direct materials production cash

sales Reason: The direct materials budget cannot be completed until a company knows how many items to produce.

To calculate total sales on the sales budget, multiply budgeted sales in units by ______. budgeted unit sales sales price per unit number of units

sales price per unit

Budgeted expenses for areas other than manufacturing are shown on the______ budget.

selling and administrative

Borrowing money is required whenever ______. there is a cash deficiency 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 less than the minimum required cash balance

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

true

S&P Enterprises has scheduled direct material purchases of $120,000 in April, $140,000 in May and $160,000 in June. 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 May.

$135,000 Reason: May purchases ($140,000 x 75%) $105,000 + April purchases ($120,000 x 25%) $30,000 = $135,000

Given budgeted sales of 10,000 units, desired ending inventory of 5,000 units, and beginning inventory of 2,000 units, required production is ______units.

13,000 Reason: 10,000 + 5,000 - 2,000 = 13,000

ABC, Inc.'s expected sales for the first six month of the year are: Month/Expected Unit Sales January / 12,000 February / 15,000 March / 16,000 April / 20,000 May / 22,000 June / 25,000 If the desired ending inventory is 25% of next month's sales, the number of units to be produced in March is ______.

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

A budgeted balance sheet is developed using data from the ______ of the budget period and data contained in the various schedules.

Beginning

Which of the following is needed to calculate raw materials to be purchased on the direct materials budget? Beginning inventory of raw materials Ending finished goods inventory Raw materials required per unit Budgeted unit sales

Beginning inventory of raw materials Raw materials required per unit

Which of the following budgets shows the company's planned profit and serves as a benchmark against which subsequent company performance can be measured?

Budgeted income statement

Which of the following is not found in the financing section of the cash budget? Interest Cash deficiency Borrowings Repayments

Cash deficiency

On the cash budget, what is subtracted from total cash available to find the cash excess or deficiency?

Cash disbursements

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

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 Manufacturing overhead Selling and administrative Direct labor Cash

Direct materials Manufacturing overhead Direct labor

A budget is a detailed plan for the future that is usually expressed in formal qualitative terms. True False

False Reason: A budget is usually expressed in formal quantitative terms.

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.

False Reason: Beginning cash for the year equals beginning cash of the first month or quarter and ending cash for the year equals ending cash of the last month or quarter.

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 STMT

All costs of production other than direct materials and direct labor are shown on the _____ ________ Budget.

MANUFACTURING OVERHEAD

The annual master budget file includes the ______ from last year because it is needed for the schedule of expected cash collections. sales budget income statement balance sheet cash budget

balance sheet

To prepare a budgeted balance sheet as of December 31, 2023, data is needed from the ______ December 31, 2022.

balance sheet as of

The receipts, disbursements, excess or deficiency, and financing section are all parts of the ______ budget. sales cash production selling and administrative expense

cash

Budgets ______. focus on what has happened in the past primarily help managers with day-to-day emergencies communicate management's plan throughout the organization

communicate management's plan throughout the organization Reason: This is not the primary reason a budget is prepared. Without a budget, managers would most likely encounter more day-to-day emergencies.

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

control

When creating an Excel budget and performing what-if analysis, it is generally easiest to ______. adjust data inputs within each master budget schedule copy the master budget and make change to the copy only create the budget with a budgeting assumption tab

create the budget with a budgeting assumption tab

Working hours required to satisfy the production budget are shown on the ______ budget. Multiple choice question. direct materials cash direct labor merchandise purchases

direct labor

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.

first, last

Budgets ______ . force managers to think about and plan for the future and the budgeting process can uncover potential bottlenecks before they occur coordinate the activities of the entire organization by integrating the plans of its various parts provide each department with the same amount of money to spend, so that all departments are treated fairly define goals and objectives that can serve as benchmarks for evaluating subsequent performance

force managers to think about and plan for the future and the budgeting process 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