BUS 215 - Ch8: Master Budgeting
under the concept of ___ ___, managers should only be held accountable for items they can actually control
responsibility accounting
to calculate total sales on the sales budget, multiply budget sales in units by:
sales price per unit
in large organizations, many smaller individual budgets submitted by department heads and other responsible people comprise the ___ budget
selling and administrative
budgetary slack occurs when a manager submits a budget that is:
too easy to attain
Budgets:
-communicate management's plans throughout the organization -force managers to think about and plan for the future. -provides a means of allocating resources to those parts of the organization where they can be used most effectively -can uncover potential bottlenecks before they occur -coordinate the activities of the entire organization by integrating the plans of its various parts -define goals and objectives that can serve as benchmarks for evaluating subsequent performance
which of the following budgets are needed to calculate unit product costs?
-direct materials budget -manufacturing overhead budget -direct labor budget
budget
a detailed plan for the future that is usually expressed in formal quantitative terms
gathering feedback to ensure that the plan is being followed is referred to as ___
control
the ending finished goods inventory budget computes the:
cost of unsold units
a significant noncash manufacturing overhead cost for many companies is
depreciation
planning
developing goals and preparing various budgets to achieve those goals
the number of working hours required to satisfy the production budget is shown on the ___ ___ budget
direct labor
working hours required to satisfy the production budget are shown on the ___ budget
direct labor
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
The section on the cash budget that summarizes all cash payments that are planned for the budget period is the cash ____ section:
disbursement
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
if inventory levels are ___, the result can lead to lost sales or last-minute, high-cost production efforts
insufficient
risks of not knowing in advance how much labor time will be needed throughout the budget period includes:
-facing labor shortages -having to hire and lay off workers (erratic layoffs) -erratic labor policies lead to insecurity, low morale, and inefficiency
which of the following is needed to calculate raw materials to be purchased on the direct materials budget?
-raw materials required per unit -beginning inventory of raw materials
borrowing money is required whenever:
-the cash excess is less than the minimum required cash balance -there is a cash deficiency
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
1st, 4th
(T/F) Control involves developing goals and preparing various budgets to achieve those goals
False
using budget assumptions when preparing the master budget:
makes it easier to answer the "what-if" questions
all costs of production other than direct materials and direct labor are shown on the ___ budget
manufacturing overhead
a company with adequate cash balances at the beginning and end of the year:
may still have cash deficiency issues during the year
the amount of goods to be purchased from suppliers during the period is shown on the ___ budget
merchandise purchases
using a budget to blame or pressure employees to do a better job leads to:
mistrust
a perpetual budget keeps managers focused at least one year ahead by adding one:
month to the end of the budget as each month comes to a close
if a budget initiated by top management has targets that are set too high:
motivation will suffer
more accurate estimates and higher motivation are generally the result of using a(n) ___ budget
participative
in a manufacturing company, the ___ budget is prepared right after the sales budget
production
the direct labor budget is based on the ___ budget
production