Managerial Accounting Ch. 23 & 25
generating motivation requires three actions
1. create and set goals - annual budget 2. measure progress - compare actual and budgeted results 3. provide feedback - accounting information feedback
which of the following is a major component of a master budget
a cash budget
cash budget is not directly affected by a budgeted net income statement but would be by
a manufacturing cost budget, a sales forecast, a capital expenditures budget
a master budget usually includes all of the following except
a projected tax return
responsibility budget
a segment of a master budget relating to that portion of a business under the control of a particular manager
DuPont system
a system that considers the earnings per sales dollar and the investment used to generate those sales dollars
last budget
budgeted balance sheet
which ratio tells managers about how the invested capital is generating sales dollars?
capital turnover
flexible budget
consists of estimates of costs and expenses for various possible levels of activity
flexible budgeting may be viewed as combining the concepts of budgeting and
cost-volume-profit analysis
variable costs
costs that rise and fall proportionately with the volume of output
operating cycle
days in inventory + days in accounts receivable
return on sales =
earnings / sales
4 benefits derived from budgeting
enhanced management responsibility, assignment of decision-making responsibilities, coordination of activities, performance evaluation
preparation of a budgeted income statement does NOT require
estimates of the timing of cash receipts and payments
capital expenditures budget is a
financial budget
as the volume of output decrease
fixed costs per unit will increase
fixed costs
fixed manufacturing overhead do not vary with the level of activity
how are standards used in budget preparation?
goals, realistic actual goals, all areas of management involved, variances
which of the following is NOT one of the strategies of the financial perspective lens of the balanced scorecard?
improve customer relations
if an organization does not yet know actual production costs, what information can be used to help develop selling prices?
industry guides, best guess of prices, simulated costs and use of gross profit rates
which of the following is NOT one of the components of the DuPont system for measuring and evaluating business performance?
inventory turnover
3 operating budgets
manufacturing cost budget (cost of goods manufactured and sold budget), production schedule (units to produce), sales forecast
capital turnover
measures the amount of sales dollars generated from each dollar of capital invested in assets
behavioral approach
most highly used budgeting philosophy
return on investment is calculated by
multiplying the capital turnover by the return on sales
six measurements from the financial perspective lens of the balanced scorecard
net income, ROI, CT, ROS, EVA, residual income
which of the following is NOT a measure used by the financial perspective lens of the balanced scorecard?
net operating income
does a master budget include a projected tax return?
no
inventory
operating cycle - days in accounts receivable
days in accounts receivable
operating cycle - days in inventory
residual income equation
operating earnings - (minimum acceptable return x invested capital)
which of the following is NOT one of the balanced scorecard lenses?
production perspective
three components of the DuPont System of performance
return on sales, capital turnover, return on investment
capital turnover (equation)
sales / capital invested in assets
1st budget
sales budget
value chain
set of activities necessary to create and distribute a desirable product or service to a customer
capital expenditures budgets are typically prepared for a period of
several years
the value chain usually starts with the _____ and ends with the ____
supplier; customer
rolling budget
technique of extending the budget period by one month as each month passes
operating budget
the customer service budget
a company that is profitable may not have sufficient cash on hand to meet its immediate needs
true
a company's operating cycle is the time between purchases of direct materials and conversion of these materials back into cash
true
costs that rise and fall proportionately with the volume of output are often referred to as
variable costs
as the volume of output increases
variable costs per unit will not change
budgeted net income
you may still end up with a net loss