Study ACCT ch 9 Flash Cards

 
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ACCT ch 9

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The production budget is prepared based on what factors?
-sales forecast (sales volume)
-inventory
The operating budget includes the budgeted _________ ________ and it's supporting budgets
budgeted income statement
In which order are the individual budgets in the operating budget prepared?
-Sales budget
-Ending finished goods inventory budget
-Selling and administrative expense budget
-Cash budget

The complete list:
-sales budget
-production budget
-direct material budget
-direct labor budget
-manufacturing overhead budget
-ending inventory budget
-selling and admin exp budget
-cash budget
-budgeted income statement
-budgeted balance sheet
What factors should be taken into consideration in preparing a production budget?
-Production must be adequate to meet budgeted sales and provide for sufficient ending inventory.
-Production requirements are influenced by the desired level of the ending inventory.
-From the standpoint of the entire year, the beginning finished goods inventory is the same as the beginning finished goods inventory FOR THE FIRST QUARTER- it is NOT the sum of the beginning finished goods inventories for all quarters.
-The ending finished goods inventory is the same as the ending finished good inventory FOR THE FOURTH QUARTER- it is NOT the sum of ending finished goods inventories for all four quarters.
The starting point of the master budget is the _____ _____
sales budget
In large organizations, the selling and administrative expense budget would be a compilation of many smaller, individual budgets submitted by department heads and other persons responsible for selling and administrative expenses.
-
The ___________ (not one word) budget lists the budgeted expenses for areas other than manufacturing
selling and administrative expense budget
the direct-labor budget shows the direct _____-____ required to satisfy the production budget.
labor-hours
the direct labor budget is based off of the ___________ budget
production budget
In responsiblity accounting, the point is ____ to penalize individuals for missing targets.
NOT
In effect, responsibility accounting __________ accounting information by holding individuals responsible for revenues and costs
personalizes
In Resonsibility Accounting, Managers are usually responsible for _______ and _______ in the budget
-revenue
-cost
In Responsibility Accounting, Managers should be held responsible for those items — and ONLY those items — that the manager can actually control to a significant extent.
-
a system that measures the plans, budgets, actions, and actual results of a business function or subunit of an organization whose manager is held responsible for a specified set of activities
Responsibility Accounting
Responsibility Centers consists of what 3 centers?
-Investment Centers
-Cost Centers
-Profit Centers
The annual operating budget
may be divided into __________
or ________ budgets.
quarterly or monthly budgets
Self-imposed budgets tend to be _____________ and may not wind up going in the direction that top management would like the company to go in a strategic sense.
uncoordinated
Typically, top managers initiate the budgeting process by issuing ____ ____
profit targets.
If the whole organization doesn't understand the self-imposed budget's strategy, the budgets proposed by the lower-level management will lack _______ ________
coherent direction
a self-imposed approach to setting budgets works best when all managers.....
...understand the organization's strategy.
Budgets prepared by lower-level managers (self-imposed budget) should be scrutinized (examined closely) by higher levels of management to prevent ______ ______ made by the lower level management
budgetary slack
A problem with self-imposed budgets is that managers may be tempted to build “________ ________” into their budgets, i.e., underestimating budgeted revenues, or overestimating budgeted expenses, in an effort to make the budgeted goals more easily attainable
budgetary slack
In a self-imposed budget,__________ is generally higher when individuals participate in setting their own goals than when the goals are imposed from above.
motivation
Budget estimates prepared by front-line managers are often (less/more) (inaccurate/accurate) than estimates prepared by top managers.
more accurate
Self-imposed budgets generate great __________ and _______
commitment and coordination
what kind of approach is a self-imposed budget?
Bottom-up approach
a budget that is prepared with full cooperation and participation of managers are all levels.
self-imposed budgets.
a self-imposed budget is also known as a ________ budget
participative budget
According to managers, what is the most effective method of budget preparation?
creating their own self-imposed budgets
budgets are used to evaluate ___________ __________
manager's performance.
lower level people like managers need to know what to accomplish in the next fiscal year.

This is ________ ____ planning
Short-term planning;
Long-term planning is usually _________ planning by CEO’s and Executives
strategic planning
involves the steps taken by management to increase the likelihood that all parts of the organization are working together to achieve the goals set down at the planning stage.
Control
goals and preparing various budgets to achieve those goals.
Planning
Budgets are used for 2 distinct purposes...which are?
-Planning
-Control
This formally lays out the financial aspects of management’s plans for the future and assists in monitoring actual expenditures relative to those plans.
Master budget
The master budget ends in the (3):
-cash budget
-budgeted income statement
-budgeted balance sheet
a summary of a company’s plans including specific targets for sales, production, and financing activities
• Master budget
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