Chapter 7 accounting 231

A quantitative plan for acquiring and using resources over a specified time period is a(n) ______

Budget

The purpose of a(n)___ is to assist in establishing goals and measuring operating results

Budget

all cost of production other than direct materials and direct labor are shown on the ________

Manufacturing overhead budget

a number of separate but interdependent budgets that formally lay out a company's sales, production, and financial goals is contained in the ___ budget

Master

required borrowings on a cash budget is calculated by:

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

Master budget schedules:

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

if actual results do not measure up to budgeted goals, a manager should:

attempt to correct any unfavorable discrepancies

to prepare a budgeted balance sheet as of December 21,2012, the data is needed from the:

balance sheet as of december 31,2012

what consists of collections on credit sales made to customers in prior periods plus collections on sales made in the current budget period?

cash collections

which of the following is not found in the financing section of the cash budget

cash deficiency

Budgets

communicate management's plan throughout the organization

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

control

the purpose of a budget should be to:

coordinate efforts, establish goals, motivate people

the ending finished goods inventory budget computes the:

cost of unsold units

the most common significant noncash manufacturing overhead cost in most companies is ______

depreciation

to obtain the total number of units to be produced add______ to budgeted unit sales

desired ending inventory

the number of working hours required to satisfy the production budget is shown on the ________ __________ budget

direct labor

which of the following budgets are needed to calculate unit product costs?

direct materials, direct labor, manufacturing overhead budget

True or False: for most companies a single, annual cash budget is sufficient.

false

using budget assumptions when preparing the master budget:

makes it easier to answer "what-if" questions

Highly achievable budget targets:

may generate greater management commitment to the budget, may help build manager confidence, are are used in most companies

A company with adequate cash balances at the beginning and end of the year:

may still have cash deficiency issues during the year

the amount of goods for resale to be purchased from suppliers during the period is shown on the __________ ___ budget

merchandise purchases

using a budget to blame or pressure employees to do a better job leads to:

mistrust

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

non-cash expenses

operating budgets generally cover a _______ period

one-year

which of the following types of budgets keep managers focused one year ahead, so they do not become too narrowly focused on short-term results?

perpetual or continuous

developing goals and preparing various budgets to achieve those goals is part of:

planning

developing goals for the budget is _____while______ involves steps taken to ensure that steps towards meeting the goal are being followed

planning, control

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 budgets for manufacturing costs, including 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

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

production budget

the direct materials budget directly relies on the:

production budget

which of the following is needed to calculate raw materials to be purchased on the direct materials budget

raw materials required per unit, beginning inventory of raw materials

The underlying idea behind________ accounting is that a manager should be held accountable for only those items the manager can actually control

responsibility

the first step in the budgeting process is preparing the ________budget

sales

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

sales

A budget prepared with the full cooperation of management at all levels is a ________ budget

self-imposed, or participative

the budget that shows the budgeted expenses for areas other than manufacturing is the ________ and _________ expense budget

selling; administrative

A manager who wants to submit a budget that is easy to attain will try to put budgetary _________ into his or her budget.

slack

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

which of the following is needed to prepare a sales budget?

the budgeted number of units to be sold

the receipts, disbursements, excess or deficiency, and financing section are all parts of the:

the cash budget

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(20,000 x $5.00) $100,000 + fixed overhead $25,000 - noncash (depreciation)expenses $7,000= $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 $______ per hour

$12 Budgeted production = 15,000 units x 1/2 hour of 7,500 required labor hours. $90,000/7,500=$12 per hour

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 is the month after january so, the company will be paying for 75% of february purchases + 25% of january purchases.: february purchases ($130,000 x75%)$97,500+ january purchases($100,000 x 25%) 25,000= $122,500

ABC, Incs expected sales for the first six month of year are: January: 12,000 feb: 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 March sales 16,000+ ending inv (25% of april sales) 5,000 - beginning inv (25% of march sales) 4,000 = 17,000 units to be produced

which of the following budgets are directly based on information from the sales budget

Production budget, selling and administrative expense budget

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

the desired ending raw materials inventory for the year is the same as the desired ending inventory for the ___________ quarter.

fourth

a company's planned net profit that serves as a benchmark against which subsequent company performance can be measured is shown on the budget __________ ____________

income statement

if inventory levels are____ . the result can lead to lost sales or last minute, high- cost production efforts

insufficient

Risks of not knowing in advance how much labor time will be needed through the budget period includes:

labor shortages, erratic layoffs, low employee morale

when a company does not use self-imposed budgeting, top mangers initiate the budgeting process by issuing profit targets and direct_______ - level managers to prepare budgets that meet those targets

low