Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
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Textbook Question
Chapter 9, Problem 5MCQ
A moving, 12-month budget that is updated monthly is
- a. not used by manufacturing firms.
- b. a waste of time and effort.
- c. a
master budget . - d. a continuous budget.
- e. always used by firms that prepare a master budget.
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These are True/False questions.
____ 6. If the total unit cost of manufacturing Product Y is currently $36 and the total unit cost after modifying the style is estimated to be $48, the differential cost for this situation is $12.
____ 7. A process whereby the effect of fluctuations in level of activity is built into the budgeting system is referred to as flexible budgeting.
____ 8. In an investment center, the manager has the responsibility and the authority to make decisions that affect not only costs and revenues, but also the plant assets invested in the center.
____ 9. The capital expenditures budget summarizes future plans for acquisition of fixed assets.
____ 10. The process by which management plans, evaluates, and controls long-term investment decisions involving fixed assets is called capital investment analysis.
1. Budgets can have a positive or negative effect on human behavior
depending on the manner in which the budget is developed and administered.
2. The direct materials budget must be completed before the production
budget because the quantity of materials available for production must be
known.
3. The starting point in developing the master budget is the preparation of the
production budget.
4. In a production budget, if the number of units in finished goods inventory at
the end of the period is less than the number of units in finished goods
inventory at the beginning of the period, then the expected number of units
sold is less than the number of units to be produced during the period.
5. The direct labor budget begins with the required production in units from
the production budget.
Which of the above statements are FALSE?
This is the length of time it takes to initiate and complete a finished product.
O a. Fiscal year
O b. Accounting year
c. Production cycle
Od. Short-term
QUESTION 21
Costs that remain constant even with changes in production level.
O a. Variable costs
O b. Start-up costs
O c. Semi-variable costs
O d. Fixed costs
QUESTION 22
The challenge of budgeting is to determine what will change and what will stay the same.
O True
False
QUESTION 23
The numbers on tax returns (cash basis) are the same as the number we use to manage a department (accrual basis).
O True
O False
QUESTION 24
A pattern of change over several time periods which can help us make estimates for the future is
a. a gap.
Ob. a fixed cost.
Oc. a transformation.
d. a trend.
Chapter 9 Solutions
Managerial Accounting: The Cornerstone of Business Decision-Making
Ch. 9 - Define the term budget. How are budgets used in...Ch. 9 - Prob. 2DQCh. 9 - Explain how both small and large organizations can...Ch. 9 - Prob. 4DQCh. 9 - What is a master budget? An operating budget? A...Ch. 9 - Explain the role of a sales forecast in budgeting....Ch. 9 - All budgets depend on the sales budget. Is this...Ch. 9 - Why is goal congruence important?Ch. 9 - Why is it important for a manager to receive...Ch. 9 - What is participative budgeting? Discuss some of...
Ch. 9 - A budget too easily achieved will lead to...Ch. 9 - Explain why a manager has an incentive to build...Ch. 9 - Discuss the differences between static and...Ch. 9 - Explain why mixed costs must be broken down into...Ch. 9 - What is the purpose of a before-the-fact flexible...Ch. 9 - Prob. 1MCQCh. 9 - Which of the following is part of the control...Ch. 9 - Which of the following is not an advantage of...Ch. 9 - The budget committee a. reviews the budget. b....Ch. 9 - A moving, 12-month budget that is updated monthly...Ch. 9 - Which of the following is not part of the...Ch. 9 - Before a direct materials purchases budget can be...Ch. 9 - The first step in preparing the sales budget is to...Ch. 9 - Which of the following is needed to prepare the...Ch. 9 - A company requires 100 pounds of plastic to meet...Ch. 9 - A company plans to sell 220 units. The selling...Ch. 9 - Select the one budget below that is not an...Ch. 9 - A company has the following collection pattern:...Ch. 9 - The percentage of accounts receivable that is...Ch. 9 - Which of the following is not an advantage of...Ch. 9 - Prob. 16MCQCh. 9 - For performance reporting, it is best to compare...Ch. 9 - To create a meaningful performance report, actual...Ch. 9 - To help assess performance, managers should use a...Ch. 9 - A firm comparing the actual variable costs of...Ch. 9 - Preparing a Sales Budget Patrick Inc. sells...Ch. 9 - Preparing a Production Budget Patrick Inc. makes...Ch. 9 - Preparing a Direct Materials Purchases Budget...Ch. 9 - Preparing a Direct Labor Budget Patrick Inc. makes...Ch. 9 - Preparing an Overhead Budget Patrick Inc. makes...Ch. 9 - Preparing an Ending Finished Goods Inventory...Ch. 9 - Preparing a Cost of Goods Sold Budget Andrews...Ch. 9 - Preparing a Selling and Administrative Expenses...Ch. 9 - Preparing a Budgeted Income Statement Oliver...Ch. 9 - Preparing a Schedule of Cash Collections on...Ch. 9 - Preparing an Accounts Payable Schedule Wight Inc....Ch. 9 - Preparing a Cash Budget La Famiglia Pizzeria...Ch. 9 - Flexible Budget with Different Levels of...Ch. 9 - Performance Report Based on Budgeted and Actual...Ch. 9 - Preparing a Sales Budget Tulum Inc. sells powdered...Ch. 9 - Preparing a Production Budget Tulum Inc. makes a...Ch. 9 - Preparing a Direct Materials Purchases Budget...Ch. 9 - Preparing a Direct Labor Budget Tulum Inc. makes a...Ch. 9 - Preparing an Overhead Budget Tulum Inc. makes a...Ch. 9 - Prob. 40BEBCh. 9 - Preparing a Cost of Goods Sold Budget Lazlo...Ch. 9 - Preparing a Selling and Administrative Expenses...Ch. 9 - Preparing a Budgeted Income Statement Jameson...Ch. 9 - Preparing a Schedule of Cash Collections on...Ch. 9 - Pilsner Inc. purchases raw materials on account...Ch. 9 - Preparing a Cash Budget Olivers Bistro provided...Ch. 9 - Flexible Budget with Different Levels of...Ch. 9 - Performance Report Based on Budgeted and Actual...Ch. 9 - Planning and Control a. Dr. Jones, a dentist,...Ch. 9 - Use the following information for Exercises 9-50...Ch. 9 - Prob. 51ECh. 9 - Production Budget and Direct Materials Purchases...Ch. 9 - Production Budget Aqua-Pro Inc. produces...Ch. 9 - Direct Materials Purchases Budget Langer Company...Ch. 9 - Direct Labor Budget Evans Company produces asphalt...Ch. 9 - Sales Budget Alger Inc. manufactures six models of...Ch. 9 - Production Budget and Direct Materials Purchases...Ch. 9 - Schedule of Cash Collections on Accounts...Ch. 9 - Schedule of Cash Collections on Accounts...Ch. 9 - Cash Payments Schedule Fein Company provided the...Ch. 9 - Cash Budget The owner of a building supply company...Ch. 9 - Flexible Budget for Various Levels of Production...Ch. 9 - Use the following information for Exercises 9-63...Ch. 9 - Use the following information for Exercises 9-63...Ch. 9 - Prob. 65PCh. 9 - Operating Budget, Comprehensive Analysis Allison...Ch. 9 - Use the following information for Problems 9-67...Ch. 9 - Use the following information for Problems 9-67...Ch. 9 - Use the following information for Problems 9-67...Ch. 9 - Ryan Richards, controller for Grange Retailers,...Ch. 9 - Participative Budgeting, Not-for-Profit Setting...Ch. 9 - Cash Budget The controller of Feinberg Company is...Ch. 9 - Optima Company is a high-technology organization...Ch. 9 - Direct Materials and Direct Labor Budgets Willison...Ch. 9 - Prob. 75PCh. 9 - Prob. 76CCh. 9 - Prob. 77CCh. 9 - Budgetary Performance, Rewards, Ethical Behavior...
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- I. A tight budget may create ______. Why? a. budgetary slack b. discouragement c. a flexible budget d. a "spend it or lose it" mentality. 2. The first step of the budget process is ______. Why? a. plan b. direct c. control d. feedback 3. Static budgets are often by ______. Why? a. production departments b. administrative departments c. responsibility centers d. capital projects 4. The total estimated sales for the coming year is 250,000 units. the estimated inventory at the beginning of the year is 22,500 units, and the desired inventory at the end of the year is 30,000 units. The total production indicated in the production budget is _____. Show your solution. 5. Dix Company expects $650,000 of credit sales in March and $800,000 of credit sales in April. Dix historically collects 70% of its sales in the month of sales and 30% in the following month. How much cash does Dix expect to collect in April? Show your solution.…arrow_forwardA sales budget is not the starting point for the master budget. management's best estimate of sales revenue for the year. derived from the production budget. prepared only for credit sales.arrow_forwardWhich of the following statements is/are true? Select one: O a. One disadvantage of participative budgeting is employees' tendency to overestimate of revenues. O b. In a production budget, beginning inventory in units plus budgeted units to be produced equals unit sales minus targeted ending inventory in units. O C. All of the given statements are true O d. Production and inventory budgets form the basis for developing the sales budget. O e. When managers intentionally set budgeted costs too high and budgeted revenues too low, they are creating budgetary slack.arrow_forward
- Which of the following statements is not correct? The revenue budget is the starting point in preparing the master budget. The revenue budget is constructed by multiplying the expected sales in units by the sales price. The production budget is not based on the revenue budget. The cash budget is used to determine whether the firm will have enough cash on hand.arrow_forward8. Which of the following expenses would not appear in cash budget? Depreciation expense Marketing expense Interest expense а. b. с. d. Wages expense Information technology has made it easier for Amazon.com's managers to perform all of the following tasks except 9. а. preparing performance reports that identify variances between actual and budgeted revenues and costs. combining individual units' budgets into the companywide budget. sensitivity analyses. removing budgetary slack from the budget. b. с. d. 10. A company prepares a five-year budget. This budget would be considered a(n) strategic budget operational budget master budget flexible budget а. b. с. d.arrow_forwardThe master budget will be different from business to business.This is due to all of the following,except: A.varying sizes and complexities of business B.retail versus service versus manufacturing businesses C.profitability of the business D.number of different products soldarrow_forward
- A company prepares the master budget by taking each division manager's estimate of revenues and costs for the coming period and entering the data into the budget without adjustment. At the end of the year, division managers are given a bonus if their actual division profit exceeds the budgeted profit. What problems do you see with this system?arrow_forwardA Master budget is called a Static budget because a. It is developed around unchanging (static) Sales Volumes at unchanging (static) Unit Costs b. It is developed around unchanging (static) Sales Volumes with changing Unit Costs c. It is developed around changing Sales Volumes with unchanging (static) Unit Costs A Flexible Budget will show a. Budgeted Sales Volumes at the original Budgeted Unit Costs b. Actual Sales Volumes at the original Budgeted Unit Costs c. Actual Sales Volumes at the Actual Unit Costs Which of the following is true? a. The Static Budget Variance for operating income is calculated by taking the actual operating income minus the static budget operating income. b. The Static Budget Variance for operating income is calculated by taking the actual operating income minus the flexible budget operating income. c. The Static Budget Variance for operating income is calculated by taking…arrow_forwardPotter Corp., a manufacturing firm, is preparing its master budget for the upcoming year. Which of the following is true about a master budget? O It is always the same as a flexible budget. O It is developed for the actual level of output achieved. It is developed for a given level of planned output. O It is developed at the end of the period.arrow_forward
- e. Production, Sales, Income Statement Clear my choice Which of the following statements is false? Select one: Oa. The budgeted variable selling and administrative expense is calculated by multiplying the budgeted unit sales by the variable selling and administrative expense per unit. Ob. The master budget consists of a number of separate but interdependent budgets. Oc.A continuous or perpetual budget is a 12-month budget that rolls forward one month (or quarter) as the current month (or quarter) is completed. O d. The direct labor budget begins with the required production in units from the production budget. Oe. Control involves developing goals and preparing various budgets to achieve those goals. Next page Tables- Jump to.. e to seardharrow_forwardWhich of the following is NOT true about Budgets? A) Budgets start with the Sales Budget B) The Cash budget is prepared before the Operating budget C) Process of evaluating performance can be improved by using budgets D) The Master Budget is ordinarily separated into monthly and quarterly budgetsarrow_forwardPlease describe the master budget for a manufacturing firm, which budget is prepared first, and how that budget is used to prepare the next budget(s). Please provide three different items out of any of the budgets and explain how an error in one could impact other budgets that come later.arrow_forward
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