Chapter 8 LearnSmart ReadingAssignment

The three sections of the cash budget are ___ , ___ , and financing.

Blank 1: disbursements, payments, or expenditures Blank 2: receipts or collections

Each component of a(n) ___ budget is based on or provides input for another component.

Blank 1: master

Developing goals for the budget is part of ___ , whereas ___ involves determining if goals have been followed.

Blank 1: planning Blank 2: controlling or control

Budgeting is an important part of the ___ and ___ cycle.

Blank 1: planning or plan Blank 2: control or controlling

The number of units that must be made to satisfy sales needs and to provide for the desired ending inventory is shown on the ___ budget.

Blank 1: production

The budget that shows the budgeted expenses for areas other than manufacturing is the ___ and ___ expense budget.

Blank 1: selling, sales, or marketing Blank 2: administrative or admin

Which of the following statements is true?

Understanding the interrelationships of individual budgets is the key to developing a master budget.

To calculate the cash balance before financing on the cash budget, add the ______.

beginning cash balance to the budgeted cash receipts and deduct budgeted cash payments

Total sales on the sales budget equal budgeted unit sales multiplied by ______.

budgeted sales price per unit

Collections on credit sales made to customers in prior period(s) plus collections on sales made in the current budget period equal ______.

cash receipts

Budgets ______.

communicate management's plan throughout the organization

Managers put plans into action as part of ______.

implementing

The manufacturing overhead budget includes ______.

indirect manufacturing costs depreciation on production equipment

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

The ______ budget shows the number of units needed to satisfy sales and provide the desired ending inventory.

production

The direct materials budget directly relies on the ______ budget.

production

Advantages of budgeting include ______.

providing benchmarks for evaluating performance promoting cooperation and coordination among different areas within the organization providing lead time to solve potential problems forcing managers to think about and plan for the future

Budgeted expenses for costs related to selling the product and managing the business are shown on the ______ budget.

selling and administrative

When it comes to preparing budgets, ______.

the budgets needed depend upon the type of firm

The amount of goods to be purchased from suppliers during the period is shown on the ______ budget.

merchandise purchases

To calculate the direct labor requirement for each quarter, ______.

multiply the number of direct labor hours required per unit times the number of units to be produced

Budgets are used for two distinct purposes: ______ and ______. The first of these purposes relates to developing goals and preparing various budgets, while the second involves comparing actual results to the budget.

planning; controlling

What number does the raw materials budget take directly from the production budget?

Budgeted production

A comprehensive set of budgets that covers all phases of planned activities for a specific period is called the ___ budget.

Blank 1: master

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

Blank 1: merchandise Blank 2: purchases

Employees throughout the organization have input into the budget-setting process when ___ budgeting is used.

Blank 1: participative, bottom-up, or bottom up

Pastoria Enterprises has scheduled raw material purchases of $100,000 in January, $130,000 in February, 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 February.

$122,500

Madison Corporation's expected beginning cash balance is $35,000. Cash collections are budgeted at $50,000 and cash disbursements are estimated to be $80,000. The minimum required cash balance is $20,000 and the company can borrow as much as needed in increments of $10,000. Calculate the expected ending cash balance for the month.

$25,000

Sperling Company's master budget shows expected sales of 10,000 units and expected production of 11,000 units for the month of March. Each unit requires 1/2 hour of direct labor. The direct labor rate is $15.00 per hour. Calculate the expected total direct labor cost for the month of March.

$82,500

The operating budgets feed directly into the ___ ___ , which then feeds directly into the budgeted balance sheet.

Blank 1: cash Blank 2: budget

True or false: Budgeting is more important in manufacturing firms than in other types of businesses.

False

True or false: Using a participative approach to budgeting is less likely to motivate employees than using a top-down approach.

False

Which of the following budgets are needed to calculate unit product costs?

Manufacturing overhead budget Direct labor budget Direct materials budget

Which of the following budgets are NOT needed in service firms?

Production Manufacturing overhead

Which of the following is NOT included on a budgeted cash payments budget?

Production in units

Which of the following is needed to prepare a sales budget?

The budgeted number of units to be sold

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

Blank 1: manufacturing or factory Blank 2: overhead