Chapter 8 Managerial Accounting
Budgets that are most likely to motivate employees ______.
are tight but attainable
A detailed document that identifies resources and expenditures that will be required over a limited time (typically a year) is a(n) ______.
budget
Company objectives are translated into financial terms in a(n)
budget
When a manager creates a budget that understates expected revenues or overstates expected expenses, _________ ________ occurs
budgetary slack
Total sales on the sales budget equal budgeted unit sales multiplied by ________.
budgeted sales price per unit
Budgets ______.
communicate management's plan throughout the organization
Another budget period is automatically added to the budget as one period passes when using a(n) ______ or rolling budget
continuous
True or false: Controlling involves developing goals and preparing various budgets to achieve those goals.
false
True or false: The same budget that is used for planning should always be used for performance evaluation.
false
True or false: Using a participative approach to budgeting is less likely to motivate employees than using a top-down approach.
false
The cash budget is one of the primary ______ budgets that is prepared.
financial
Managers must try to find the "just-right" level of difficulty in setting budgetary goals so they ______.
have motivating effects on employee behavior
A continuous or rolling budget ______.
helps avoid games at the end of a budget period keeps managers in continuous planning mode adds one period to the end of the budget as each period comes to a close
Managers put plans into action as part of ______.
implementing
Financial budgets ______.
include the cash budget include the capital expenditures budget impact the budgeted balance sheet
Long-term objectives are goals ______.
managers want to achieve in 5 to 10 years
Each component of a(n) _____ budget is based on or provides input for another component.
master
The direct materials purchases, direct labor, and manufacturing overhead budgets are all based on the ________ budget.
production
Advantages of budgeting include ______.
providing lead time to solve potential problems providing benchmarks for evaluating performance forcing managers to think about and plan for the future promoting cooperation and coordination among different areas within the organization
Managers are kept in continuous planning mode, always looking into the future, when a continuous or _______ budget approach is used.
rolling
The first step in the process of preparing the master budget is the ______ budget or forecast.
sales
The production budget is based upon the ______ budget.
sales
When creating the master budget, the _______ budget is prepared first
sales
Sometimes budgetary ________ can be beneficial as a way to hedge against uncertainty or future events than cannot be anticipated.
slack
Tactics are ______.
specific actions or mechanisms used to achieve an objective
Planning starts with managers' ______.
strategic plan
The starting point of the planning process is management's _________ ________or vision for the organization.
strategic plan
Specific actions or mechanisms managers use to achieve objectives are called ________
tactics
Budgetary slack occurs when a manager submits a budget that is ______.
too easy to attain
When an organization uses a top-down approach to budgeting, ______.
top management sets the budget the budget is imposed on lower levels of the organization
When management sets the budget and imposes it on employees throughout the organization, a __________-_________ approach is being followed
top-down
Managers must justify their budget each year by starting from scratch under the ______ - ______budgeting approach
zero - based
The entire budget must be created from scratch every period when using ______ budgeting.
zero-based
Short-term objectives ______.
need to be achieved in one year or less are an important component of long-term objectives
The pro-forma income statement is based on the combined ______ budgets.
operating
The sales, production, and purchases budgets are all _______ budgets.
operating or operational
Employees throughout the organization have input into the budget-setting process when ________ budgeting is used
participative, bottom-up, bottom up, or participatory
Setting goals and objectives for the future is done during the ______ phase
planning
Budgets are used for two distinct purposes: ______ and ______. The first of these purposes relates to developing goals and preparing various budgets, while the second involves comparing actual results to the budget.
planning controlling
Budgeting is an important part of the ______ and ______ cycle
planning control
Developing goals for the budget is part of _______, whereas ________- involves determining if goals have been followed
planning controlling
Which of the following statements is true? A. The master budget may be prepared in any order. B. Most components of a master budget stand on their own. C. Understanding the interrelationships of individual budgets is the key to developing a master budget. D. The first step in preparing the master budget is a budgeted balance sheet.
C. Understanding the interrelationships of individual budgets is the key to developing a master budget.
True or false: The sales budget is based on the production budget.
False
All of these rely on the the production budget except for the _______ budget.
Sales and Administrative
Which of the following budgets is NOT used to calculate the budgeted manufacturing cost per unit?
Sales and Administrative