ACCT 311 CHAPTER 8 MASTER BUDGETING
The section on the cash budget that summarizes all cash payments that are planned for the budget period is the cash _____ section.
disbursements
The calculation of unit product cost requires information from 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
Using a budget to blame or pressure employees to do a better job leads to:
mistrust
Developing goals and preparing various budgets to achieve those goals is part of the _____ process.
planning
Under the concept of _____ ______, managers should only be held accountable for items they can actually control.
responsibility accounting
Budgeted expenses for areas other than manufacturing are shown on the ____ budget:
selling and administrative
In companies that do NOT use a self-imposed budgeting process, profit targets are generally set by:
top managers
Risk of NOT kowing in advance how much labor time will be needed throughout the budget period includes:
-low employee morale -labor shortages -erratic layoffs
Highly achievable budget targets:
-may help build manager confidence -may generate greater management commitment to the budget -are used in most companies
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
Limitations of self-imposed budgeting include:
-suboptimal budget recommendations -budgetary slack
Borrowing money is required whenever:
-there is a cash deficiency -the cash excess is less than the minimun required cash balance
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
On the cash budget, what is subtracted from total cash available to find the cash excess or deficiency?
cash disbursements
Gathering feedback to ensure that the plan is being followed is referred to as ___.
control
The number of working hours required to satisfy the production budget is 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 provide for adequate inventories.
direct materials
The cost of unsold units is computed on the ____ budget.
ending finished goods inventory
What is added to the variable selling and administrative expenses to get the total selling and administrative expenses?
fixed selling and administrative expenses
All costs of production other than direct materials and direct labor are shown on the _____ _____ budget:
manufacturing overhead
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
Operating budgets generally cover a _________ period
one-year
A budget that is prepared with the full cooperation of managers at all levels is a self-imposed or _____ budget.
participative
More accurate estimates and higher motivation are generally the result of using a(n) _____ budget.
participative
A budget that keeps managers focused at least one year ahead is a continuous or _______ budget.
perpetual
Developing goals for the budget is _________, while ___________ involves steps taken to ensure that steps towards meeting the goal are being followed.
planning control
In a manufacturing company, the _______ budget is prepared right after the sales budget.
production
The first step in the budgeting process is the preparation of the _____ budget.
sales
A company can consider making investments or repay outstanding principal and interest when:
the cash excess is greater than the minimun required cash balance
Carter Production, Inc.'s required production for the first 6 months of the year is as follows: jan 50,000 feb. 70,000 march 85,000 april 105,000 may 110,000 june 120,000 Each unit requires 2 pounds of material. Given a desired ending inventory of 20% of next month's production needs, the pounds of material to be purchased in April is:
(110,000 X .20= 22,000) (105,000 X .20= 21,000) 105,000 + 22,000 - 21,000 = 106,000 X 2 = 212,000
Master budget schedules:
-Are based on estimates and assumptions -Answer several key questions for a company
Budgets:
-coordinate the activities of the entire organization by integrating the plans of its various parts -and the budgeting process can uncover potential bottlenecks before they occur -force managers to think about and plan for the future -define goals and objectives that can serve as benchmarks for evaluating subsequent performance
Given budgeted sales of 10,000 units, desired ending inventory of 5,000 units and beginning inventory of 2,000 units, required production is:
10,000 + 5,000 - 2,000 = 13,000
To prepare a budgeted balance sheet as of december 31, 2016, data is needed from the:
balance sheet as of december 31, 2015
a detailed plan for the future that is usually expressed in formal quantitative terms
budget
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. Based on the month of July only, the predetermined overhead rate is $________.
118,000 (20,000 X 5.00) = 100,000 + 25,000 - 7,000 = 118,000
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 15,000 units X 1/2 hour = 7,500 90,000/7,500 = 12
S&P Enterprises has scheduled direct material purchases of $100,000 in Jan., $130,000 in Feb. 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 Feb.
130,000 X .75 = 97,500 100,000 X .25 = 25,000 97,500 + 25,000 = 122,500
The amount of goods to be purchased from suppliers during the period is shown on the _____ budget.
merchandise purchases
The cash budget uses information from several other budgets. Which of the following budgets is NOT used to prepare the cash budget? a. production budget b. selling and administrative budget c. direct labor budget d. sales budget
production budget
Which of the following is needed to prepare a sales budget?
The budgeted number of units to be sold
The purpose of a budget should be to:
-measure operating results -establish goals -isolate areas needing attention
Which of the following budgets are directly based on information from the sales budget?
-production budget -selling and administrative expense budget
In a manufacuting 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
ABC, Inc's expected sales for the first six months of the year are: jan 12,000 feb 15,000 Mar 16,000 apr 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 16,000 + ending inventory (25% of April sales) 5,000 - beginning inventory (25% of march sales) 4,000 = 17,000
ABC, Inc's expected sales for the first six months of the year are: jan 120,000 feb 150,000 march 160,000 april 200,000 may 220,000 june 250,000 Experience has shown that 60% of sales are collected in the month of sale and 40% are collected the month after the sale. Calculate the expected cash collections for the month of March.
156,000 (160,000 X .60 = 96,000) + (150,000 X .40 = 60,000) =
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
