acct random questions

In which order are the following developed? First to last: 1 = Production budget 3 = Direct materials costs budget 2 = Budgeted income statement 4 = Revenues budget

4-1-3-2

What are the potential problems of a bottom-up approach to budgets

A bottom-up approach may allow managers to build slack into their budgets

Ace Manufacturing revised its sales budget to show a 25% increase in sales. As a result of this change, which other budgets would change?

All of its budgets

When a company focuses on lower level managers as the primary source of information in setting the budget, what type of budgeting process is the company using?

Bottom-up approach

A budget that involves all levels of an organization working together is a

Bottom-up budget

Which problem might be a result of budget-based compensation

Budgetary slack

Which one of the following is needed to prepare a production budget

Budgeted unit sales

Which one of the following best defines budgeting?

Budgets are a company's document which quantifies plans to achieve goals

Which one of the following best defines budgeting

Budgets are reports which quantify how the company plans to achieve its goals

Which of the following would not appear on a manufacturing overhead budget

Direct labor

Which one of the following is true about zero-based budgeting

Each line item must be reviewed and justified each year

Which one of the following is a reason that a company may have significant deviations from budgeted performance

Economic conditions may have changed since the plan was developed

Development of a budget

Improves communication and coordination among managers of different parts of the company

. Which one of the following is false

Including some nonmonetary measures of performance in a budget is not likely to be advantageous

Which one of the following is NOT an advantage of budgeting

Increase revenues.

Which one of the following is not true concerning a bottom-up approach to budgeting

It is an approach to investigating variances.

Which statement is not true about zero-based budgeting?

It is widely practiced by business enterprises

Which statement is true about zero-based budgets

It requires companies to justify each budgeted amount each period

Which one of the following is not a reason that a company may have significant deviations from budgeted performance

Lower level managers formed the basis for the majority of the input

Which one of the following is true about management by exception

Management by exception is an economical approach to cost control

What are the potential problems of a bottom-up approach to budgets

Managers may budget costs on the high side to make targets easier to achieve

Which of the following is correct regarding the manufacturing overhead budget

Manufacturing overhead costs should be broken down by cost behavior

The accuracy of the sales forecast is usually dependent upon all of the following, EXCEPT

Number of employees

Which budget provides the information needed to prepare the direct labor budget?

Production budget

Which one of the following is a budget that would never be prepared by a merchandising company

Production budget

Which of the following is the starting point for the preparation of the master budget

Sales budget

Which of the following represents the correct order in which the listed budgets would be prepared?

Selling and administrative expense budget, cash budget, budgeted balance sheet

Which one of the following is a reason that a company may have significant deviations from budgeted performance?

The budget was poorly created.

Which of the following is not a reason for actual results to differ from budgeted performance

The company used a bottom-up approach to budgeting

Given the following budgets, which would be prepared first when completing the master budget

The direct materials purchases budget

When constructing the production budget, to what is the desired beginning inventory for the second period equal to?

The ending inventory for the first period

Why might the number of units in the sales budget and the production budget differ

The finished goods inventory levels changed

Given only the following budgets, which would be prepared first when completing the master budget

The materials purchases budget

Which is true of budgets?

They are used in performance evaluation

Which of the following statements regarding budgeting is false

They are useful in planning but not in control.

Which one of the following is a way that managers build slack into their budgets?

They may budget costs on the high side

When lower level management seeks to achieve personal departmental objectives to make variances look less than reality, management is experiencing

budgetary slack.

Which one of the following does not provide information to prepare the budgeted income statement? a. manufacturing overhead budget

budgeted balance sheet

The calculation for total purchases (reported on the purchases budget) uses all of the following data except

cash disbursements for last month's purchases

A significant difference between the direct material purchases budget and the direct labor budget is that the direct material purchases budget

considers beginning and ending inventory amounts, which are not part of a direct labor budget

A budget whereby a twelve-month projection into the future is maintained at all times is termed

continuous budgeting

Budgeted manufacturing overhead costs include all types of factory expenses EXCEPT

direct labor and direct materials.

Budgets are useful in the planning process because they

enhance coordination of manager's activities and communication among the company's managers

Planning

enhances communication and coordination

he number of units in the sales budget and the production budget may differ because of a change in

finished goods inventory levels.

Which is not a benefit derived from budgeting?

guarantee of outcomes

The sources of information for a cost of goods manufactured budget include

he manufacturing overhead budget, the direct materials budget, and the direct labor budget

Which is true of budgets?

hey are used in performance evaluation.

In a bottom-up approach to budgeting,

lower level managers are the primary source of information used in setting the budget.

when budgets are used to monitor business activities,

managers can identify potential problems early and take corrective action.

Building slack into a budget

occurs when managers estimate costs on the high side.

Managers use budgets to

plan, control and evaluate operations.

Budget slack

problems are minimized in companies that foster open communication between all levels of employees

What budget contains only units and no dollar amounts?

production budget

Which budget must be prepared before the materials purchases budget is prepared?

production budget

Zero-based budgets

requires justification of all budgeted amounts each period

The first budget customarily prepared as part of an entity's master budget is the

sales budget

Managers perform best when

there is a moderately difficult but achievable budget.

A major weakness of static budgets is that

they force management to compare actual costs at one level of activity to budgeted costs at another activity level.