Test 3

Question 1

Budget

Answer 1

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

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

Control

Answer 3

The process of gathering feedback to ensure that a plan is being properly executed or modified as circumstances change

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 to 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, 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 a company’s sales, production, and financial goals and culminate in a cash budget, budgeted income statement, and budgeted balance sheet

Question 9

Merchandise purchases budget

Answer 9

A detailed plan used by a merchandising company that shows the amount of goods that must be purchases from suppliers during the period

Question 10

Planning

Answer 10

The process of establishing goals and specifying how to achieve them

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

Sales budget

Answer 12

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

Question 13

Self-imposed budget/participative budget

Answer 13

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 14

Selling and administrative expense budget

Answer 14

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

Question 15

Activity variance

Answer 15

The difference between a revenue or cost item in the flexible budget and the same item in the static planning budget. An activity variance is due solely to the difference between the actual level of activity used in the flexible budget and the level of activity assumed in the planning budget

Question 16

Flexible budget

Answer 16

A report showing estimates of what revenues and costs should have been, given the actual level of activity for the period

Question 17

Management by exception

Answer 17

A management system in which actual results are compared to a budget. Significant deviations from the budget are flagged as exceptions and investigated further.

Question 18

Planning budget

Answer 18

A budget created at the beginning of the budgeting period that is valid only for the planned level of activity

Question 19

Revenue variance

Answer 19

The difference between the actual revenue for the period and how much the revenue should have been, given the actual level of activity. A favorable (unfavorable) revenue variance occurs because the revenue is higher (lower) than expected, given the actual level of activity

Question 20

Spending variance

Answer 20

The difference between the actual amount of the cost and how much the cost should have been, given the actual level of activity. A favorable (unfavorable) spending variance occurs because the cost is lower (higher) than expected, given the actual level of activity for the period

Question 21

Flexible

Answer 21

Actual

Question 22

Planning

Answer 22

Budgeted

Question 23

F

Answer 23

When flexible expense is less than planning

Question 24

UF

Answer 24

Actual expense is greater than the fixed budget