Chapter 8

Operating budgets generally cover a _________ period

1 year

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

beginning

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:

control

The ending finished goods inventory budget computes the _______ units.

cost of unsold

The number of working hours required to satisfy the production budget is 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 provide for adequate inventories.

direct materials

Payments for direct materials, direct labor, and manufacturing overhead costs are all listed in the __________ section of the cash budget.

disbursements

The purpose of a budget should be to:

establish goals; measure operating results; isolate areas needing attention

Many managers believe that being empowered to create their own self- ___________ budget is the most effective method of budget preparation.

imposed

A companies 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 __________.

labor shortages; erratic layoffs; low employee morale

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

manufacturing overhead

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

master

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 for resale to be acquired from suppliers during the period is shown on the _____ _____ budget.

merchandise purchases

When preparing a manufacturing overhead budget, the total budget cost must be adjusted for ___________ expense to determine cash disbursements for overhead.

noncash

More accurate estimates and higher motivation are generally the rsult of using a _________ budget.

participative

A budget that keeps managers focused at least one year ahead is a continuous or ________________ budget.

perpetual

Developing goals and preparing various budgets to achieve those goals is part of __________

planning

Developing goals for the budget is __________, while ____________ involves steps taken to ensure that steps towards meeting the goal are being followed.

planning; control

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

The direct labor budget is based directly on the _______ budget.

production

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

Under the concept of ______ _________, managers should only be held accountable for items they can actually control.

responsibility accounting

Both the production and selling and admin expense budgets are prepared using information directly from the ________ budget.

sales

The first step in the budgeting process is preparing the __________ budget.

sales

To calculate total sales on the sales budget, multiply budgeted 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

Variable selling and admin expenses are calculated by multiplying the budgeted units _________ by the variable selling and admin expense per unit.

sold

Borrowing money is required whenever

there is a cash deficiency; the cash excess is less than the min required balance

Budgetary slack occurs when a manager submits a budget that is

too easy to attain

When profit targets are set by top managers, ________

waste; slack allowed; unrealistic goals

Which of the following budgets are needed to calculate unit product costs?

-Direct labor -Direct Materials -Manufacturing overhead