Chapter 8: Master Budgeting

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

beginning

Budgets ______.

communicate management's plan throughout the organization

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

An integrated business plan that formally lays out the company's goals is called the ______ budget.

master

More accurate estimates and higher motivation are generally the result of using a(n) ______ budget.

participative

A manager cannot complain that the budget was unrealistic and impossible to meet when a(n) ________ - ________ budget is in place.

self imposed

Budgeted expenses for areas other than manufacturing are shown on the ______ budget.

selling and administrative

In large organizations, many smaller individual budgets submitted by department heads and other responsible people comprise the ______ budget.

selling and administrative

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

merchandise purchases

The amount of goods for resale to be acquired from suppliers during the period is shown on the ________ ________budget.

merchandise purchases

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

merchandise purchases

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

production

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

production

A company can consider making investments or repay outstanding principal and interest when ______.

the cash excess is greater than the minimum required cash balance

The ending finished goods inventory budget computes the cost of ______ units.

unsold

In a manufacturing company, the ______ ______ budget details the raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories.

direct materials

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

A number of separate, but interdependent, budgets that formally lay out the company's sales, production, and financial goals are contained in the _______ budget.

master

Highly achievable budget targets ______.

-are used in most companies -may generate greater management commitment to the budget -may help build manager confidence

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

Required borrowings on a cash budget is calculated by ______.

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

ABC, Inc.'s expected sales for the first six month of the year are as follows. Month Expected Sales January $120,000 February $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 sale. Calculate expected cash collections for the month of March.

$156,000

ABC, Inc.'s expected sales for the first six month of the year are as follows. Month Expected Sales January $120,000 February $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 sale. Calculate expected cash collections for the month of April.

$184,000

True or false: Many of the schedules in a master budget are based on a variety of management estimates and assumptions.

True

Because it is needed for the schedule of expected cash collections, the annual master budget file includes the ______ _____ from last year.

balance sheet

The annual master budget file includes the ______ from last year because it is needed for the schedule of expected cash collections.

balance sheet

To prepare a budgeted balance sheet as of December 31, 2021, data is needed from the ______ December 31, 2020.

balance sheet as of

When creating an Excel budget and performing what-if analysis, it is generally easiest to ______.

create the budget with a budgeting assumption tab

Working hours required to satisfy the production budget are shown on the ______ budget.

direct labor

True or false: Control involves developing goals and preparing various budgets to achieve those goals.

false Reason: Control involves the steps taken by management to increase the likelihood that all parts of the organization are working to achieve the goals set down in the planning stage.

True or false: Challenging but highly achievable budgets increase the likelihood that lower-level managers will engage in undesirable behavior to secure their desired compensation.

false Reason: The opposite is true. These types of budgets decrease the likelihood of undesirable behavior.

Budgets ______.

force managers to think about and plan for the future define goals and objectives that can serve as benchmarks for evaluating subsequent performance coordinate the activities of the entire organization by integrating the plans of its various parts the budgeting process can uncover potential bottlenecks before they occur

A company's planned net profit that serves as a benchmark against which subsequent company performance can be measured is shown on the budgeted _______ _______.

income statement

Using budgeting assumptions when preparing the master budget, ______.

makes it easier to answer "what-if" questions

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

manufacturing overhead

Master budget schedules ______.

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

The cost of unsold units is computed on the ______ budget.

ending finished goods inventory

All costs of production other than direct materials and direct labor are shown on the _______ _______budget.

manufacturing overhead