CH 5:Master Budgeting

Question 1

Budget:

Answer 1

detailed plan for the future that is usually expressed in formal quantitative terms

Question 2

period of a budget

Answer 2

one yr period corresponding to fiscal year

-broken into monthly/quarterly budgets

Question 3

perpetual budget

Answer 3

rolling 12 month budget

Question 4

2 purposes of budgets

Answer 4

-planning
-control

Question 5

planning purpose of budget

Answer 5

developing goals and preparing various budgets to achieve these goals

Question 6

control purpose of budget

Answer 6

gathering feedback to ensure the plan is being properly executed and modified as circumstances change

Question 7

why orgs create budget for planning purpose

Answer 7

-define goals and objs.
-think ab plans for the future
-allocating resources
-coordinate activities
-uncover bottlenecks
-communicate plans

Question 8

why orgs create budget for control purpose

Answer 8

-prepare budget to actual analysis
-improve efficiency/effectiveness of operations

-evaluate/reward employees

Question 9

what is a self imposed budget and what is the order

Answer 9

budget prepared with the cooperation of mgmt from all levels

-top mgers, middle mngers, supervisors

Question 10

why in a self imposed budget do they work with lower level managers

Answer 10

they create challenging but highly achievable goals to build LL managers confidence

Question 11

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

Answer 11

The budgeted number of units to be sold

Question 12

production budget layout

Answer 12

Budgeted unit sales
+desired units of ending finished goods inventory
=total needs
-beginning finished goods inventory
=required production in units

Question 13

how to find desired unit of ending finished goods for quarter 1

Answer 13

quarter 1 budgeted sales X finished goods inventory percentage

Question 14

how to find beginning finished goods inventory

Answer 14

for first quarter take from balance sheet

Q2 take desired ending finsihed goods from quarter 1

Question 15

is the year colum for desired ending finished goods the sum of qaurterly amts

Answer 15

nope
its the same as ending finsihed goods for the 4th quarter

Question 16

is the year colum for beginning finished goods the sum of qaurterly amts

Answer 16

nope
same as 1st quarter

Question 17

Merchandise purchases budget layout

Answer 17

Budgeted cogs
+desired ending merch inventory
=total needs
-less beginning merch inventory
=required purchases

Question 18

Direct material budget layout

Answer 18

Required production in units of finished goods
Units of raw materials need per unit of finished goods
Units of raw mats needed to meet production
+ desired units of ending raw mats inventory
=total units of raw materials needed
-beginning raw mats inventory
Units of raw amts to be purchased
Unit cost of raw mats
Cost of raw mats to be purchased

Question 19

direct labor budget

Answer 19

required production
direct labor hours
=direct labor hours needed
direct labor cost per hour
=total direct labor cost

Question 20

manufacturing overhead budget

Answer 20

budgeted directed labor hours
X variable man overhead rate per direct LH
=total variable manufautirng overhead
+fixed MO cost
=depreciation
=total cash disbursments
=MO cost per hour

Question 21

S&A budget

Answer 21

budgeted unit sales
X variable expense per unit
=total budgeted variable s&a
fixed s&a
-depreciated
=cash s&a expenses

Question 22

cash receipts

Answer 22

all cash inflows except
cash from financing activities.

Question 23

cash disbursements

Answer 23

all cash payments
except payments of principal and interest

Question 24

cash excess/deficency

Answer 24

determines if
the company will need to borrow money
or can repay money (both are Financing
Activities)

Question 25

financing sections

Answer 25

details the
borrowings and repayments projected for
the budget period

Question 26

for year section in direct material budget-Units of raw materials needed per unit of finished goods- what do u put

Answer 26

same amt of mats needed per unit- dont add up