Acct ch7 q3

The cash budget uses information from several other budgets. Which of the following budgets is NOT used to prepare the cash budget?

Production budget

The direct materials budget directly relies on the:

Production budget

The following budgets are directly based on information from the sales budget:

Production budget & Selling and administrative expense budget

The cash budget includes four major sections:

Receipts Disbursements Cash excess or deficiency Financing

master budget schedules:

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

The amount of goods for resale to be purchased from suppliers during the period is shown on the :

merchandise purchases budget

The budget that shows the budgeted expenses for areas other than manufacturing is the :

selling and administrative expense budget.

Budgetary slack occurs when a manager submits a budget that is:

too easy to attain

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

Beginning

The following is needed to calculate raw materials to be purchases on the direct materials budget.

Beginning inventory of raw materials. Raw materials required per unit

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

Control

The ending finished goods inventory budget computes the:

Cost of unsold units.

Working hours required to satisfy the production budget are shown on the:

Direct labor budget.

The following budgets are needed to calculate unit product costs:

Direct labor budget. Manufacturing overhead budget. Direct materials budget.

The purpose of a budget should be to:

Establish goals. Coordinate efforts. Motivate people.

Risk of not knowing 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. Are used in most companies. May generate greater management commitment to the budget.

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

Non-cash expenses

Cash Budget

a detailed plan showing how cash resources will be acquired and used over a specific time period

Sales Budget

a detailed schedule showing the expected sales for the budget period

Requires borrowings on a cash budget is calculated by:

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

The most common significant non-cash manufacturing overhead cost in most companies is:

depreciation

To obtain the total number of units to be produced add __ to budgeted unit sales

desired ending inventory

Using budget to blame or pressure employees to do a better job leads to:

mistrust

Operating budgets generally cover a:

one- year period

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

participative

To calculate total sales on the sales budget

budgeted sales in units x sales price per unit

Budgets:

1. communicate management's plans throughout the org 2. Force managers to think about & plan for the future. 3. Process provides a means of allocating resources to those parts of the org where they can be used most effectively 4. Can uncover potential bottlenecks before they occur. 5. Coordinate the activities of the entire org by integrating the plans of its various parts. Budgeting helps to ensure that everyone in the org is pulling in the same direction. 6. Define goals and objectives that can serve as benchmarks for evaluating subsequent performance.

Master Budget

A number of separate but interdependent budgets that formally lay out a company's sales, production, & financial goals

which of the following types of budgets keep managers focused on one year ahead, so they do not become too narrowly focused on short-term results?

Perpetual. Continuous.

Developing goals and preparing various budgets to achieve those goals is part of the:

Planning process

In a manufacturing company, the __ budget shows the number of units that must be manufactured satisfy sales needs and provide for the desired ending inventory.

Production

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

Production

The idea that a manager should be held accountable for only the items the manager can actually control is the basis of:

Responsibility accounting

The first step in the budgeting process is the preparation of the __ budget

Sales

A manager cannot complain that the budget was unrealistic and impossible to meet when a ___ budget is in place.

Self-imposed

Which of the following actions should a company take id a manager consistently fails to meet budgeted goals?

Understand the source of discrepancies and communicate ideas to the manager.