Chapter 8 LearnSmart

f 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

a detailed plan for the future that is usually expressed in formal quantitative terms is _____.

a budget

the cash budget ______. a) is prepared near the end of the master budget process b) is the first budget prepared in the master budget process c) used information from the budgeted balance sheet & income statement

a) is prepared near the end of the master budget process

the receipts section of the cash budget list _______.

all cash inflows, except from financing

master budget schedules ______

answer several key questions for a company are based on estimates & assumptions

The cost of unsold units is computed on the ______ budget.

ending finished goods inventory

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 ______ ______ budget.

manufacturing overhead

a number of separate, but interdependent, budgets that formally lay out the company's sales, production, & financial goals are contained in the _____ budget.

master

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

merchandise purchases

What is subtracted from total budgeted selling and administrative expenses to determine the cash disbursements for selling and administrative expenses?

non-cash expenses

a budget that is prepared with the full cooperation of managers at all levels is a self-imposed or _____ budget.

participative

more accurate estimates & higher motivation are generally the result of using a ______ budget.

participative

the first line of the direct labor budget consists of the budgeted units expected to be ______ during the period.

produced

in a manufacturing company, the _____ budget shows the number of units that must be manufactured to satisfy sales needs & provide for the desired ending inventory.

production

which of the following budgets are directly based on information from the sales budget? direct materials budget production budget direct labor budget selling & administrative expense budget

production budget selling & administrative budget

What is usually the major source of receipts in the receipts section of the cash budget?

sales

because all other parts of the budget depend on it, if the ____ budget is inaccurate, the rest of the budget will be inaccurate.

sales

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

sold

a likely consequence of excessive inventory levels is ______.

storage problems

Limitations of self-imposed budgeting include ______.

suboptimal budget recommendations budgetary slack

borrowing money is required whenever _____.

there is a cash deficiency the cash excess is less than the minimum required cash balance

budgetary slack occurs when a manager submits a budget that is __________.

too easy to attain

Edison Corporation's variable manufacturing overhead rate is $5.00 per direct labor-hour. Total budgeted fixed overhead is $25,000 per month. The $25,000 per month includes $7,000 in depreciation expense. Total budgeted direct labor-hours for the month of July is 20,000. Budgeted cash disbursements for manufacturing overhead for July equals ______.

$118,000 variable overhead + fixed overhead - non-cash (depreciation) expenses (20,000 x $5) -25,000 - 7,000 = $118,000

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 February purchases $130,000 x 75% = $97,500 January purchases $100,000 x 25% = $25,000

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 May purchases (140,000 x 70%) = 105,000 April purchases (120,000 x 25%) = 30,000

Sperling Company's master budget shows expected sales of 10,000 units and expected production of 11,000 units for the month of March. Each unit requires 1/2 hour of direct labor. The direct labor rate is $15.00 per hour. Calculate the expected total direct labor cost for the month of March.

$82,500 units to be produced x time per unit x rate per hour 11,000 x 1/2 x $15 = $82,500

Given budgeted sales of 10,000 units, desired ending inventory of 5,000 units, and beginning inventory of 2,000 units, required production is ______ units.

13,000 10,000 + 5,000 - 2,000 = 13,000

True or false: 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. True false question.

False Beginning cash for the year equals beginning cash of the first month or quarter and ending cash for the year equals ending cash of the last month or quarter.

which of the following is needed to calculate "raw materials to be purchased" on the direct materials budget? a) budgeted unit sales b) beginning inventory of raw materials c) raw materials required per unit d) ending finished goods inventory

b) beginning inventory of raw materials c) raw materials required per unit

because it is needed for the schedule of expected cash collections, the annual master budget file includes the ______ ______ from last year.

balance sheet

what budget shows the company's planned profit & serves as a benchmark against which subsequent company performance can be measured?

budgeted income statement

which of the following is NOT found in the financing section of the cash budget? repayments borrowings cash deficiency interest

cash deficiency

On the cash budget, what is subtracted from total cash available to find the cash excess or deficiency?

cash disbursements

gathering feedback to ensure that the plan is being followed is referred to as _____.

control

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

risks of not knowing in advance how much labor time will be needed throughout the budget period includes _____.

erratic layoffs labor shortages low employee morale

The cash budget includes four major sections: receipts, disbursements, the cash excess or deficiency, and _______.

financing

What is added to the variable selling and administrative expenses to get the total selling and administrative expenses?

fixed selling & administrative expenses