ch.8
what does the budgeted income statement show?
the company's planned profit and serves as a benchmark against which subsequent company performance can be measured
what is prepared right after the sales budget?
the production budget
Budgetary slack occurs when a manager submits a budget that is
too easy to attain
master budget
A number of separate but interdependent budgets that formally lay out the company's sales, production, and financial goals and that culminates in a cash budget, budgeted income statement, and budgeted balance sheet.
budgets
communicate management's plan throughout the organization
the direct materials budget
details the raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories
production budget is used to
determine the direct materials budget, the direct labor budget, and the manufacturing overhead budget
The cost of unsold units is computed on the
ending finished goods inventory
A number of separate, but interdependent, budgets that formally lay out the company's sales, production, and financial goals are contained in the
master budget
An integrated business plan that formally lays out the company's goals is called the
master budget
developing goals and preparing various budgets to achieve those goals is part of
planning
budgets are used for two purposes:
planning and control
first step in budgeting process is
preparation of the sales budget
The direct labor budget is based directly on the
production budget
self-imposed/participative budget
a budget that is prepared with the full cooperation and participation of managers at all levels
the annual master budget file includes the
balance sheet from last year because it's needed for the schedule of expected cash collections
what do managers believe is the most effective method of budget preparation
being empowered to create your own self-imposed budgets