chapter 7

Question 1

budget

Answer 1

a quantitative plan for acquiring and using resources over a specified time period

Question 2

cash budget

Answer 2

a detailed plan showing how cash resources will be acquired and used over a specific time period

Question 3

continuous budget

Answer 3

a 12-month budget that rolls forward one month as the current month is completed

Question 4

direct labor budget

Answer 4

a detailed plan that shows the direct labor-hours required to fulfill the production budget

Question 5

direct materials budget

Answer 5

a detailed plan showing the amount of raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories

Question 6

ending finished goods inventory budget

Answer 6

a budget showing the dollar amount of unsold finished goods inventory that will appear on the ending balance sheet

Question 7

manufacturing overhead budget

Answer 7

a detailed plan showing the production costs, other than direct materials and direct labor, that will be incurred over a specified time period

Question 8

master budget

Answer 8

a number of separate but interdependent budgets that formally lay out the company’s sales, production, and financial goals and that culminates in a cash budget, budgeted income statement, and budgeted balance sheet

Question 9

merchandise purchase budget

Answer 9

a detailed plan used by a merchandising company that shows the amounts of goods that must be purchased from suppliers during the period

Question 10

planning

Answer 10

developing goals and preparing budgets to achieve those goals

Question 11

production budget

Answer 11

a detailed plan showing the number of units that must be produced during a period in order to satisfy both sales and inventory needs

Question 12

responsibility accounting

Answer 12

a system of accountability in which managers are held responsible for those items of revenue and cost- and only those items- over which they can exert significant control. the managers are held responsible for differences between budgeted and actual results

Question 13

sales budget

Answer 13

a detailed schedule showing expected sales expressed in both dollars and units

Question 14

self-imposed budget

Answer 14

a method of preparing budgets in which managers prepare their own budgets. these budgets are then reviewed by higher=level managers and any issues are resolved by mutual agreement

Question 15

selling and administrative expense budget

Answer 15

a detailed schedule of planned expenses that will be incurred in areas other than manufacturing during a budget period