ACCTG 231 - Ch8 McGrawHill

To prepare a budgeted balance sheet as of December 31, 2021, data is needed from the ______ December 31, 2020. a) balance sheet as of b) statement of cash flows for the year ended c) income statement for the year ended

a) balance sheet as of

The cost of unsold units is computed on the ______ budget. a) ending finished goods inventory b) production c) sales d) manufacturing overhead

a) ending finished goods inventory

The first line of the direct labor budget consists of the budgeted units expected to be ______ during the period. a) produced b) sold

a) produced

A company's planned net profit that serves as a benchmark against which subsequent company performance can be measured is shown on the budgeted ____________ ______________.

income statement

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

merchandise purchases

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

participative (or participatory)

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. a) production b) direct materials c) sales d) cash

production

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

manufacturing overhead

An integrated business plan that formally lays out the company's goals is called the ______ budget. a) master b) sales c) self-imposed d) profit planning

master

In a manufacturing company, the ____________ budget is used to determine the budgets for manufacturing costs, including the direct materials budget, the direct labor budget, and the manufacturing overhead budget.

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. a) sales b) direct materials c) production d) cash

sales

The amount of goods to be acquired from suppliers during the period is shown on the _______ budget. a) manufacturing overhead b) sales c) direct labor d) merchandise purchases

d) merchandise purchases

Because all other parts of the budget depend on it, if the ______ budget is inaccurate, the rest of the budget will be inaccurate. a) production b) direct materials c) cash d) sales

d) sales

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

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

False

Master budget schedules ______. (select all that apply) a) may be prepared in any order b) answer several key questions for a company c) are based on estimates and assumptions

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

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

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? a) Production b) Sales c) Cash d) Finished goods inventory

a) Production

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

balance sheet

More accurate estimates and higher motivation are generally the result of using a(n) ______ budget. a) imposed b) perpetual c) participative d) continuous

c) participative

The budgeting process begins with the preparation of the ______ budget. a) cash b) direct materials c) production d) sales

d) sales

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

imposed

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

True

Which of the following is a major factor that should be taken into consideration while planning the desired level of inventories? a) Costs of carrying inventory. b) General administrative policy of the company. c) Selling price of the finished product. d) Statutory requirements.

a) Costs of carrying inventory

For a production budget, the ______ is the beginning inventory for the year. a) beginning inventory for the first quarter b) beginning inventory for the last quarter c) ending inventory for the last quarter d) sum of beginning inventories for the four quarters

a) beginning inventory for the first quarter

Budgets _________. a) communicates management's plan throughout the organization b) primarily help managers with day-to-day emergencies c) focus on what has happened in the past

a) communicates management's plan throughout the organization

The ending finished goods inventory budget computes the cost of ______ units. a) unsold b) sold

a) unsold

Using budgeting assumptions when preparing the master budget, ______. a) involves adjusting data inputs within each master budget schedule b) makes it easier to answer "what-if" questions c) increases the complexity of the process

b) makes it easier to answer "what-if" questions

Required borrowings on a cash budget is calculated by ______. a) subtracting the desired ending cash balance from the amount of cash excess b) subtracting the beginning cash balance from the amount of the cash deficiency c) adding the desired ending cash balance to the amount of the cash deficiency d) adding the desired ending cash balance to the amount of cash excess

c) adding the desired ending balance to the amount of the cash deficiency

Which of the following is not one of the reasons that organizations use budgets? a) The budgeting process enables managers to uncover bottlenecks as they occur. b) Budgets communicate financial goals throughout the organization. C) Budgets evaluate and reward employees.

a) The budgeting enables managers to uncover bottlenecks as they occur.

Companies prepare direct labor budgets to ____________. a) avoid labor shortages b) determine the direct labor-hours per unit c) ensures timely supply of raw materials d) reduce inventories

a) avoid labor shortages

A budgeted balance sheet is developed using data from the ______ of the budget period and data contained in the various schedules. a) beginning b) average c) end

a) beginning

In a direct materials budget, the desired ending raw materials inventory for the year is equal to the ________. a) beginning balance of accounts payable b) desired ending raw materials inventory for the last period c) total merchandise purchased during the year d) value of raw material used during the year

b) desired ending raw materials inventory for the last period

Which of the following is not a benefit of self-imposed budgets? a) A manager who is not able to meet a budget that has been imposed from above can always say that the budget was unrealistic and impossible to meet. b) Budget estimates prepared by front-line managers are often more accurate and reliable. c) Lower-level managers are encouraged to create budgetary slack since they are more knowledgeable of day-to-day operations. d) Motivation is generally higher.

c) Lower-level managers are encouraged to create budgetary slack since they are more knowledgeable of day-to-day operations.

The annual master budget file includes the ______ from last year because it is needed for the schedule of expected cash collections. a) sales budget b) cash budget c) income statement d) balance sheet

d) balance sheet

All costs of production other than direct materials and direct labor are shown on the ______ budget. a) cash b) ending finished goods inventory c) merchandise purchases d) manufacturing overhead

d) manufacturing overhead

Which of the following budgets are directly based on information from the sales budget? (select all that apply) a) Production budget b) Selling and administrative expense budget c) Direct labor budget d) Direct materials budget

a) Production budget b) Selling and administrative expense budget

Which of the following explains why operating budgets generally span a period of one year? a) Accounting regulations mandate that all operating budgets be prepared for one year. b) Operating budgets, by definition, are prepared for one-year periods. c) Companies choose a span of one year to correspond to their fiscal years. d) Operating budgets need to correspond with the calendar year.

c) Companies choose a span of one year to correspond to their fiscal years

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

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) continuous budgeting b) responsibility accounting c) self-imposed budgeting d) a sale budget

c) self-imposed budgeting

Gathering feedback to ensure that the plan is being followed is referred to as ____________.

control

In a budgeted income statement, ___________ is subtracted from sales to arrive at gross margin. a) cost of goods sold b) interest expense c) selling and administrative expense d) depreciation expense

a) cost of goods sold

The direct labor budget is based directly on the ______ budget. a) production b) manufacturing overhead c) sales d) raw materials

a) production

Limitations of self-imposed budgeting include ______. (select all that apply) a) suboptimal budget recommendations b) budgetary slack c) a broad strategic perspective d) unrealistic profit targets

a) suboptimal budget recommendations b) budgetary slack

The value of the ending inventory is calculated by multiplying the number of units in ending inventory by the ________. a) unit product cost b) variable overhead cost per unit c) total overhead cost per unit d) the sum of the direct materials and direct labor cost per unit

a) unit product cost

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

b) force managers to think about and plan for the future c) define goals and objectives that can serve as benchmarks for evaluating subsequent performance d) the budgeting process can uncover potential bottlenecks before they occur coordinate the activities of the entire organization by integrating the plans of its various parts

A company can consider making investments or repay outstanding principal and interest when ______. a) the cash excess is less than the minimum required cash balance b) there is a cash deficiency c) the cash excess equals the minimum required cash balance d) the cash excess is greater than the minimum required cash balance

d) the cash excess is greater than the minimum required cash balance

Budgetary slack occurs when a manager submits a budget that is ______. a) much like budgets submitted over the previous few years b) too difficult to attain c) vague d) too easy to attain

d) too easy to attain

The number of working hours required to satisfy the production budget is shown on the _____________ _____________ budget.

direct labor

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

False

Which of the following is deducted from the total selling and administrative expense budget to determine the cash disbursements for selling and administrative expense budget? a) Advertising expense b) Depreciation expense c) Selling commissions d) Utilities expense

b) Depreciation expense

A company with adequate cash balances at the beginning and end of the year, ______. a) does not need a financing section on their cash budget b) may still have cash deficiency issues during the year c) will have a positive net income for the year d) only needs to prepare a single annual cash budget

b) may still have cash deficiency issues during the year

In large organizations, many smaller individual budgets submitted by department heads and other responsible people comprise the ______ budget. a) cash b) selling and administrative c) manufacturing overhead d) ending finished goods inventory

b) selling and administative

When creating an Excel budget and performing what-if analysis, it is generally easiest to ______. a) adjust data inputs within each master budget schedule b) copy the master budget and make change to the copy only c) create the budget with a budgeting assumption tab

c) create the budget with a budgeting assumption tab

Working hours required to satisfy the production budget are shown on the ______ budget. a) direct materials b) merchandise purchases c) direct labor d) cash

c) 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 a) production b) sales c) direct materials d) merchandise purchases

c) direct materials

The purpose of preparing a direct materials budget is to ________. a) allocate the cost of raw materials to production departments b) estimate the manufacturing overhead c) estimate the quantity of raw materials to be purchased d) estimate the unit cost of direct materials to be purchased

c) estimate the quantity of raw materials to be purchased

A company determines that the number of units sold is the cost driver for its variable selling and administrative expense budget. The product of its variable selling and administrative rate and budgeted unit sales will be ________. a) budgeted sales revenue b) total budgeted cash disbursements for selling and administrative c) total budgeted fixed selling and administrative expenses d) total budgeted variable selling and administrative expenses

d) total budgeted variable selling and administrative expenses

Which of the following budgets shows the company's planned profit and serves as a benchmark against which subsequent company performance can be measured? a) Budgeting balance sheet b) Budgeted income statement c) Budgeted selling and administrative expenses d) Manufacturing overhead budget

b) Budgeted income statement

Budgeted expenses for areas other than manufacturing are shown on the ______ budget. a) ending finished goods inventory b) cash c) manufacturing overhead d) selling and administrative

d) selling and administrative