Managerial Accounting Unit 3

The receipts section of the cash budget lists:

all cash inflows excluding financing

The final schedule of the master budget is the...

budgeted balance sheet

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

cash budget

when making a product line decision, a company may focus on lost contribution margin and avoidable fixed costs or prepare...

comparative income statements

The ending finished goods inventory computes the

cost of unsold units

In a direct materials budget, the desired ending raw materials inventory for the year is equal to the ___________

desired ending raw materials inventory for the last period

The section on the cash budget that summarizes all cash payments that are planned for the budget period is the cash ____ section:

disbursements

What is sandbagging?

employees can game the system by setting low goals that are easy to achieve

Budgeted expenses for areas other than manufacturing are shown on the ____ budget:

selling and administration

What is management by exception?

the concept that focuses on important variances and ignores trial ones

A quantity variance is calculated using...

the standard price of input

Building inventories can reduce...

unfavorable labor efficiency variances

The standard rate per unit that a company expects to pay for variable overhead equals the...

variable portion of the predetermined overhead rate

Companies use the _____________ to evaluate and improve performance.

variance analysis cycle

If managers consider it unwise to adjust the workforce in response to changes in workload...

the direct labor workforce is really fixed in the short run

Direct materials usage variance is the responsibility of...

the production manager

Direct materials price variance is the responsibility of...

the purchasing agent

When demand for the product exceeds the production capacity, a _______________________ decision must be made.

volume trade-off

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 -Budgeted unit sales -Ending finished goods inventory

-Raw materials required per unit -Beginning inventory of raw materials

The labor efficiency variance is the difference between ___________ and ______________ multiplied by the _________________.

-actual hours used -standard hours -standard hourly rate

The standard rate per hour includes:

-employment taxes -fringe benefits -the DL rate per hour

Which are more controllable: fixed or variable costs?

fixed

The percentage change in net income in the flexible budget is greater than the percentage change in activity due to....

fixed costs

The present trend appears to be towards ___________ vertical integration

less

The calculation of unit product cost requires information from the...

manufacturing overhead budget

Using ________________ to assess performance is often desirable because it is more difficult for a person to manipulate.

multiple measures.

When is the cash budget prepared?

near the end of the master budget process

The materials price variance is generally calculated at the time materials are purchased because:

-it simplifies bookkeeping -management can generate more timely reports -it allows materials to be carried in the inventory accounts at standard cost

Excessive inventory on hand, especially in the works in progress inventory account, may lead to...

-obsolete goods -high defect rates -inefficient operations

Unfavorable labor rate variances may occur as a result of:

-overtime premiums being charged to the direct labor account -skilled workers being assigned easy jobs

The purchasing manager is generally responsible for the material ____________ variance, and the production manager is generally responsible for the material ______________ variance.

-price -quantity

The reduction in resale value of an asset through use over time is called _______________ or ______________.

-real depreciation -economic depreciation

What are the options to generate a favorable revenue and spending variance?

-reduce the costs of inputs -increase operating efficiency -protecting the selling price

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? -Advertising expense -Depreciation expense -Selling commissions -Utilities expense

Depreciation expense

Which benchmark (flex or static variances) are appropriate for analyzing production costs?

Flexible

What is the benefit of a continuous/perpetual budget?

It keeps managers focused at least one year ahead so they don't become too narrowly focused on short-term results

What are the limitations of a self-imposed budget?

Lower level managers may make suboptimal budgeting recommendations if they lack the broad strategic knowledge

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

Required production

The system of accountability in which managers are held responsible for those items of revenue and costs—and only those items—over which they can exert significant control is referred to as ________.

Responsibility accounting

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

Sales

Which benchmark (flex or static variances) are appropriate for analyzing revenue?

Static

The standard price per unit for direct materials can change based on:

a change in the delivery method

What is a merchandise purchases budget accompanied by?

a schedule of expected cash disbursements

What is a master budget?

consists of a number of separate but interdependent budgets that formally lay out the company's sales, production, and financial goals

What is a self-imposed/participative budget?

prepared with the full cooperation and participation of managers at all levels

In a budgeted income statement, _________ is subtracted from sales to arrive at gross margin.

Cost of goods sold

Operating budgets ordinarily cover a ____________ period corresponding to the company's ___________________.

One-year; fiscal year

The cash budget uses information from several other budgets. Which of the following budgets is not used to prepare the cash budget? -Direct Labor budget -Production budget -SG&A budget -Sales budget

Production budget

What is a continuous/ perpetual budget?

a 12 month budget that rolls forward one month (or quarter) as the current month (or quarter) is completed

The quantity of parts for direct material comes from....

a bill of material

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

balance sheet

What is gaming the system?

occurs when employees attempt to influence the measurement system in order to achieve their plans/goals

The flexible budget ______________ report combines activity and revenue and spending variances

performance

The costs provided by a well-designed activity-based costing system are ______________ relevant to a decision.

potentially

A cost center's performance report does not include:

-revenue -operating income

Average costs are:

-usually sunk costs -often misleading

What are the benefits of a self-imposed/participative budget?

1) Individuals at all levels feel valued 2) Budget estimates prepared by front-line managers are often more accurate and reliable than estimates of top managers 3) Motivation is generally higher when individuals participate in setting their own goals than when goals are imposed above

What are the steps in preparing a masters budget?

1) Prepare a sales budget 2) The production budget 3) Cash budget

Which benchmark (static or flexible) is more appropriate to evaluate your performance as the manager of the product line?

Static budget