B4-M5

Question 1

Order in which 4 budgets must be prepared

Answer 1

1. Sales
2. Production, Inventory, Administrative, Marketing
3. Direct material purchases, Labor, Overhead
   COGS
4. Cash disbursements
   Trial balance
   Pro Forma Financial statements

Question 2

Sales budget

Answer 2

• foundation of entire budget process, prepared 1st
• anticipated sales of org in units and dollars
• sales forecast
• 1st step is to develop management sales guidelines

Question 3

Flexible budget

Answer 3

• can be adjusted to any activity level

- shows how costs vary with production volume

Question 4

Flexible budget

Answer 4

• can be adjusted to any activity level (within relevant range)
• shows how costs vary with production volume

Question 5

Material budget

Answer 5

• specific short term operating performance goals

- one specific level of production

Question 6

Budgeting

Answer 6

-process of creating a formal plan translating goals into a quantitative format