Managerial acct exam 3 Flashcards
is the process of planning future business actions and expressing them as formal plans.
Budgeting
What is an example of a benefit of budgeting
- Focuses on future opportunities and threats to the organization. Makes management devote time to plan for the future.
- Control function requires management to evaluate (benchmark) business operations against some norm.
- Helps coordinate activities so all employees and departments understand and work towards company’s overall goals.
- Written budget effectively communicate management’s specific action plans to all employees. Informal communication of business plans can create uncertainty and confusion.
- Budgets can be used to motivate employees. Provide goals to attain or exceed.
Which of the following are necessary components of the master budget:
- operating budgets
- historical income statement
- budgeted balance sheet
- prior sales reports
- capital expenditures budget
- financial budget
- sales budget
- operating budget
- historical financial budget
everything besides:
prior
hist
We use what to schedule cash payments
direct materials budget and beg bal sheet
What is the usual starting point for preparing a master budget
forecasting sales
A plan that lists dollar amounts to be recieved from disposin of plant assets and dollar amounts to be spent on purchasing additional plant assets
capital expenditure budget
Preset costs for delivering a product or service under normal conditions
standard costs
the difference between actual price per unit of iput and standard price per unit of input results in
price variance
an analytical technique used by management to focus attention on the most significant variances and give less attention to the areas where performance is reasonable close to standard is
management by exception
Static budget is another name for
master budget
Actual sales< Budgeted sales
unfavorable vairance
Actual sales> budgeted sales
favorable
an expense that is readily traced to a department bc it is incurred for that dept sole benefit
direct expense
Costs that the manager has the power to determine of affect
controllable costs
When preparing a departmental income statement, what steps should we take?
- identify direct expenses
- Allocate indirect expenses
- Allocate service department expenses
What is least likely to be considered in preparing a sales budget
capital expenditures budget
Incurs costs without directly generating revenues
cost center
generates revenues and incurs costs
profit center
generates revenues and incurs costs, and its manager is also responsible for the investments made in its operating assets
investment center
What does a responsibility performance report list?
actual expenses that a manger is responsible for and their budgeted amounts
What type of budgeting does responsibility acct use?
flexible budgeting
Which isn't an ex of a cost center? research dept at microsoft juice division at coca cola accounting dept at Warner advertising dept at Hertz purchasing dept at best buy
juice
regardless of the system in departmental cost analysis
indirect costs are allocated, direct costs are not
A challenge in calculating the total costs and expenses of a dept is
allocating indirect expenses to the dept
The most useful data for evaluation of a managers cost performance is based on
controllable costs
As volume increases, ____ stays the same
fixed overhead
When there is a favorable variance what does the journal entry look like?
credit to COGS
When there is a unfavorable variance what does the journal entry look like?
debit COGS
if there’s a variance in direct materials who should we go to?
purchasing manager
if theres a labor variance who should we go to?
production supervisor
how do we close factory overhead?
in COGS
two parts of fixed overhead
spending variance and volume variance
2 parts of variable overhead
spending variance and efficiency variance
Rent and utilities are ex of what?
unavoidable costs
direct expenses are traced directly to
a department and incurred for their benefit
indirect expenses are the costs incurred for
the join benefit; not traced to only 1 dept
If contribution margin exceeds avoidable costs it causes income to
decrease
Budget that a company continually revises as time passes; revise the old budget by adding a new quarterly budget to place the quarter that just elapsed
rolling budget
Operating budget is made up of
sales budget, production budgets, and general admin budget
What budget shows number of units to be produced in a period. Is based on the budgeted unit sales in the sales budget and inventory considerations.
production budget
Which of the following is not a step in creating operating departmental income statements
prepare the depart income statement eliminate the uncontrollable costs allocate service depart expenses accumulate rev and direct expenses by dept allocate indirect expenses
eliminate uncontrollable costs
actual expenses>budgeted expenses
unfavorable
actual expenses
favorable
