ch.8

what does the budgeted income statement show?

the company's planned profit and serves as a benchmark against which subsequent company performance can be measured

what is prepared right after the sales budget?

the production budget

Budgetary slack occurs when a manager submits a budget that is

too easy to attain

master budget

A number of separate but interdependent budgets that formally lay out the company's sales, production, and financial goals and that culminates in a cash budget, budgeted income statement, and budgeted balance sheet.

budgets

communicate management's plan throughout the organization

the direct materials budget

details the raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories

production budget is used to

determine the direct materials budget, the direct labor budget, and the manufacturing overhead budget

The cost of unsold units is computed on the

ending finished goods inventory

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

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

master budget

developing goals and preparing various budgets to achieve those goals is part of

planning

budgets are used for two purposes:

planning and control

first step in budgeting process is

preparation of the sales budget

The direct labor budget is based directly on the

production budget

self-imposed/participative budget

a budget that is prepared with the full cooperation and participation of managers at all levels

the annual master budget file includes the

balance sheet from last year because it's needed for the schedule of expected cash collections

what do managers believe is the most effective method of budget preparation

being empowered to create your own self-imposed budgets