smartbook ch 8
The cost of unsold units is computed on the
ending finished goods inventory budget
Risks of not knowing in advance how much labor time will be needed throughout the budget period includes
erratic layoffs; low employee morale; labor shortages
A budget is a detailed plan for the future that is usually expressed in formal qualitative terms
false
An integrated business plan that formally lays out the company's goals is called the
master budget
Budgets are used for two distinct purposes
planning and controlling
In a manufacturing company, the __________ budget is prepared right after the sales budget
production
The cash budget uses information from several other budgets. Which of the following budgets is NOT used to prepare the cash budget?
production
Which of the following is needed to prepare a sales budget?
The budgeted number of units to be sold
A detailed plan for the future that is usually expressed in formal quantitative terms is
a budget
Gathering feedback to ensure that the plan is being followed is referred to as
controlling
When creating an Excel budget and performing what-if analysis, it is generally easiest to
create the budget with a budgeting assumption tab
What is usually the major source of receipts in the receipts section of the cash budget?
sales
To calculate total sales on the sales budget, multiply budgeted sales in units by
sales price per unit
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
manufacturing overhead budget
The first line of the direct labor budget consists of the budgeted units expected to be ______ during the period
produced
A company can consider making investments or repay outstanding principal and interest when
the cash excess is greater than the minimum required cash balance
Borrowing money is required whenever
the cash excess is less than the minimum required cash balance; there is a cash deficiency
The ending finished goods inventory budget computes the cost of
unsold units
Budgeted expenses for areas other than manufacturing are shown on the
selling and administrative budget
Many of the schedules in a master budget are based on a variety of management estimates and assumptions
true
budgets
communicate management's plan throughout the organization
budgets
force managers to think about and plan for the future; the budgeting process can uncover potential bottlenecks before they occur; 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
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 budgets for manufacturing costs, including the direct materials budget, the direct labor budget, and the manufacturing overhead budget are all based on the
production budget
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
Facing labor shortages or having to hire or lay off workers at awkward times are consequences of
neglecting to budget the amount of labor time that will be needed
In a manufacturing company, which budget is used as the basis for creating the direct materials budget, the direct labor budget, and the manufacturing overhead budget?
production
Because all other parts of the budget depend on it, if the _______ budget is inaccurate, the rest of the budget will be inaccurate
sales
Both the production and selling and administrative expense budgets are prepared using information directly from the
sales budget
The first step in the budgeting process is preparing the
sales budget
In large organizations, many smaller individual budgets submitted by department heads and other responsible people comprise the
selling and administrative budget
A budgeted balance sheet is developed using data from the ______ of the budget period and data contained in the various schedules
beginning
The receipts section of the cash budget lists
all cash inflows, except from financing
Given budgeted sales of 10,000 units, desired ending inventory of 5,000 units, and beginning inventory of 2,000 units, required production is
13,000 units
If desired ending inventory is 25% of next month's sales, the number of units to be produced in March is
17,000
Which of the following is needed to calculate raw materials to be purchased on the direct materials budget?
Beginning inventory of raw materials; Raw materials required per unit
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
On the cash budget, what is subtracted from total cash available to find the cash excess or deficiency?
Cash disbursements
Which of the following budgets are needed to calculate unit product costs?
Direct labor; Manufacturing overhead; Direct materials
Required borrowings on a cash budget is calculated by
adding the desired ending cash balance to the amount of the cash deficiency
S&P Enterprises has scheduled direct 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
S&P Enterprises has scheduled direct material purchases of $120,000 in April, $140,000 in May and $160,000 in June. 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 May.
$135,000
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
What number does the direct materials budget take directly from the production budget?
Required production
Which of the following budgets are directly based on information from the sales budget?
Selling and administrative expense budget; Production budget
Because it is needed for the schedule of expected cash collections, the annual master budget file includes the
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, 2023, data is needed from the ______ December 31, 2022.
balance sheet as of
The final schedule of the master budget is the
budgeted balance sheet
The receipts, disbursements, excess or deficiency, and financing section are all parts of the
cash budget
The number of working hours required to satisfy the production budget is shown on the
direct labor budget
Working hours required to satisfy the production budget are shown on the
direct labor budget
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
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
If a cash budget is prepared by quarter, the beginning cash balance for the year is the same as the beginning cash balance for the __________ quarter and the ending cash balance for the year is the same as the ending cash for the ________quarter
first, fourth
The cash budget
is prepared near the end of the master budget process
The calculation of unit product cost requires information from the
manufacturing overhead budget
Master budget schedules
answer several key questions for a company; are based on estimates and assumptions
The amounts under the Year column in the cash budget always equal the sum of the amounts for the months or quarters of the budget.
false
