Ch 7 Flashcards
What is a budget?
A detailed plan for the future that is usually expressed in formal quantitative terms
What is responsibility accounting?
The idea that a manager should be held responsible for those items, and ONLY those items, that the manager can actually control
What is a self-imposed budget (participative budget)?
A budget that is prepared with the full cooperation and participation of managers at all levels
What is a master budget?
Consists of a number of separate but interdependent budgets that formally lay out company’s sales, production, and financial goals
What is the first step in preparing a budget?
Preparing a sales budget
What is prepared after the sales budget?
Production budget
What is a cash budget?
A detailed plan showing how cash resources will be acquired and used
What is the production budget?
Lists the number of units that must be produced to satisfy sales needs and to provide the desired ending inventory
What is the direct materials budget?
Details the raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories
What is the direct labor budget?
Shows the direct labor-hours required to satisfy the production budget
What is the manufacturing overhead budget?
Lists all costs of production other than direct materials and labor
What is the ending finished goods inventory budget?
The cost of unsold units
What is the selling and administrative expense budget?
Lists the budgeted expenses for areas other than manufacturing
