Managerial accounting chapter 8 and 9

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

Fixed selling and administrative expenses

Which of the following budgets are directly based on information from the sales budget? Direct labor budget Production budget Direct materials budget Selling and administrative expense budget

Production budget Selling and administrative expense budget

What number does the direct materials budget take directly from the production budget?

Required production

In a manufacturing company, the budget is prepared right after the sales budget

production

The cash budget uses information from several other budgets. Which of the following budgets is NOT used to prepare the cash budget?

production

The direct materials budget directly relies on the ______ budget.

production

What number does the direct materials budget take directly from the production budget?

required production

Both the production and selling and administrative expense budgets are prepared using information directly from the ? budget

sales

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

sales

The first step in the budgeting process is the preparation of the ? budget

sales

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

sales

A manager cannot complain that the budget was unrealistic and impossible to meet when a(n) ? - ? budget is in place.

self - imposed

Budgeted expenses for areas other than manufacturing are shown on the ______ budget.

selling and administrative

In large organizations, many smaller individual budgets submitted by department heads and other responsible people comprise the ______ budget.

selling and administrative

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

A company can consider making investments or repay outstanding principal and interest when ______.

the cash excess is greater than the minimum required cash balance

Budgetary slack occurs when a manager submits a budget that is ______.

too easy to attain

When creating an Excel budget and performing what-if analysis, it is generally easiest to ______.

create the budget with a budgeting assumption tab

Budgets ______. -focus on what has happened in the past -communicate management's plan throughout the organization -primarily help managers with day-to-day emergencies

communicate management's plan throughout the organization

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

master

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

Borrowing money is required whenever ______. the cash excess is greater than the minimum required cash balance there is a cash deficiency the cash excess is less than the minimum required cash balance the cash excess equals the minimum required cash balance

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

In companies that do not use a self-imposed budgeting process, profit targets are generally set by ______.

top managers

True or false: Many of the schedules in a master budget are based on a variety of management estimates and assumptions.

true

True or false: Control involves developing goals and preparing various budgets to achieve those goals.

false

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 is used to determine the direct materials budget, the direct labor budget, and the manufacturing overhead budget

production

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

In a manufacturing company, which budget is used as the basis for creating the direct materials budget, the direct labor budget, and the manufacturing overhead budget?

production

All costs of production other than direct materials and direct labor are shown on the ?? budget

manufacturing overhead

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

Davidson Corporation's master budget shows expected direct labor cost of $90,000 for the month of May. During May, the company's expected sales equal 12,000 units and expected production is 15,000 units. If each unit requires 1/2 hour of direct labor, the budgeted direct labor rate is $

12

ABC, Inc.'s expected sales for the first six month of the year are as follows. Month Expected Sales January $120,000 February $150,000 March $160,000 April $200,000 May $220,000 June $250,000 Experience has shown that 60% of sales are collected in the month of sale and 40% are collected the month after sale. Calculate expected cash collections for the month of March. Multiple choice question.

156,000

ABC, Inc.'s expected sales for the first six month of the year are: Month Expected Unit Sales January 12,000 February 15,000 March 16,000 April 20,000 May 22,000 June 25,000 If desired ending inventory is 25% of next month's sales, the number of units to be produced in March is ______.

17,000

ABC, Inc.'s expected sales for the first six month of the year are as follows. Month Expected Sales January $120,000 February $150,000 March $160,000 April $200,000 May $220,000 June $250,000 Experience has shown that 60% of sales are collected in the month of sale and 40% are collected the month after sale. Calculate expected cash collections for the month of April.

184,000

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

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

When profit targets are set by top managers, ______. -too much slack may be allowed -strategic direction may be insufficient -goals may be unrealistically high -employee motivation will increase

Too much slack may be allowed goals may be unrealistic

Master budget schedules ______. are based on estimates and assumptions answer several key questions for a company may be prepared in any order

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

When a manager creates a budget that is too easy to attain, ______ occurs.

budgetary slack

Budgets - -coordinate the activities of the entire organization by integrating the plans of its various parts -provide each department with the same amount of money to spend, so that all departments are treated fairly -define goals and objectives that can serve as benchmarks for evaluating subsequent performance -the budgeting process can uncover potential bottlenecks before they occur -force managers to think about and plan for the future

-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 -the budgeting process can uncover potential bottlenecks before they occur -force managers to think about and plan for the future

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

Madison Corporation's expected beginning cash balance is $35,000. Cash collections are budgeted at $50,000 and cash disbursements are estimated to be $80,000. The minimum required cash balance is $20,000 and the company can borrow as much as needed in increments of $10,000. Calculate the expected ending cash balance for the month.

25,000

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. Based on the month of July only, the predetermined overhead rate is $

6.25

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

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

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

Recognizing individuals at all levels of the organization as team members whose views and judgments are valued by top management is an advantage of ______.

A self imposed budget

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

Planning

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

balance sheet

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

balance sheet

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

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

True or false: For most companies a single, annual cash budget is sufficient.

false

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.

false

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

imposed

If inventory levels are ______, the result can lead to lost sales or last-minute, high-cost production efforts.

insufficient

The cash budget ______.

is prepared near the end of the master budget process

Risks of not knowing in advance how much labor time will be needed throughout the budget period includes ______. excessive inventory levels labor shortages low employee morale erratic layoffs

labor shortages low employee morale erratic layoffs

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

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

merchandise purchases

The amount of goods to be acquired from suppliers during the period is shown on the _______ budget.

merchandise purchases

Facing labor shortages or having to hire or lay off workers at awkward times are consequences of ______.

neglecting to budget the amount of labor time that will be needed

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

participative budget