A306 Healy Ch.8 Study
Do the amounts under the year column in the cash budget always equal the sums for months or quarters of the budget?
No, because beginning cash is included in these totals which were not accumulated during the month or quarter that is being summed
Budgeted sales 10,000 u Desired FGI 5,000 u Beginning FGI 2,000 u Required production:
10,000 budgeted sales + 5,000 ending FGI - 2,000 next Q beg. FGI = 13,000 req. production
In a quarter-based cash budget, ending cash balance for the year is the same as the cash balance for what quarter?
4th quarter
production budget
A projection of the units that must be produced to meet anticipated sales
What directly impacts the labor budget?
Budgeted number of employees Timing of promotions Amount and timing of wage rate change
Which of the following budgets are needed to calculate unit product costs? DM Cash S&A DL MOH
DM DL MOH
How does a centralized decision making environment work?
Managers work together to plan budgets and push them on to subordinates
A budget is a plan for using a company's resources.
True
Firms spend considerable amounts of time and effort preparing a revenue budget, its accuracy is crucial in putting together a good master budget
True
Strategic plans focus on long-term plans
True
How to find beginning inventory for the quarter, month, or year on production budget sheets?
Use the beginning inventory for the very first period of the budgeting period.
cash budget
a budget that estimates cash inflows and outflows during a particular period like a month or a quarter
direct labor budget
a detailed plan that shows the direct labor-hours required to fulfill the production budget
master budget
a presentation of an organization's operational and financial budgets that represents the firm's overall plan of action for a specified time period
budgeted balance sheet
a projected financial statement that forecasts the types and amounts of assets a firm will need to implement its future plans and how the firm will finance those assets
budgeted income statement
a projection showing how a firm's budgeted sales and costs will affect expected net income
sales budget
an estimate of expected sales revenue for the budget period
What budgets are dependent on the sales budget?
1. selling and administrative expense budget 2. production budget
DM purchases of $120,000 in April $140,000 in May $160,000 in June 75% same month, 25% month after Calculate May
$120,000 * .25 = $30,000 $140,000 * .75 = $105,000 = $135,000
Budgeted B/S is developed using the beginning or the end of the budget period?
beginning
What is the final schedule of the master budget?
budgeted balance sheet
The receipts, disbursements, excess or deficiency, and financing section are all parts of the...
cash budget
In a quarter-based cash budget, beginning cash balance for the year is the same as the cash balance for what quarter?
first quarter
The cash budget...
is prepared near the end of the master budget process
Using budgeting assumptions when preparing the master budget...
makes it easier to answer "what-if" questions
The purposes of budgets are
planning and control
Budgeted I/S does not rely on...
production budget
What is directly impacted by the finished goods inventory?
production budget
What is the major source of receipts in the receipts section of the cash budget?
sales
Both the production and the S&A budgets are dependent on...
sales budget
