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LSU / Engineering / ACCT 2101 / davidson corporation's master budget shows expected

davidson corporation's master budget shows expected

davidson corporation's master budget shows expected

Description

School: Louisiana State University
Department: Engineering
Course: Introduction Managerial Accounting
Professor: J. chenier
Term: Fall 2016
Tags: Managerial and Accounting
Cost: 25
Name: Chapter 8 LS Notes
Description: Chapter 8 LS
Uploaded: 10/26/2016
6 Pages 478 Views 0 Unlocks
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LearnSmart Chapter 8: Budgetary Planning True/False 1. Budgetary slack can be sometimes beneficial: TRUE MULTIPLE CHOICE 2. Which of the following statements is true? ▪ Materials & labor budgets are based on the production budget 3. When preparing a raw materials purchases budget, which of the following is needed to calculate raw materials to be purchased? ▪ Beginning inventory of raw materials ▪ Raw materials per unit 4. Budgets are used for two distinct purposes: ___ and ___. The first of these  purposes relates to developing and preparing various budgets, while the  second involves comparing actual results to the budget ▪ Planning; controlling 5. Which of the following are advantages of budgeting? ▪ Budgets provide benchmarks for evaluating performance ▪ Budgets force managers to think about and plan for the future ▪ Budgets promote cooperation and coordination between different  areas within an organization ▪ The budgeting process provides lead time to solve potential  problems 6. Which of the following is needed to prepare a sales budget? ▪ The budgeted number of units to be sold 7. The implementation or action phase of the management cycle is: ▪ Directing/leading 8. Which of the following budgets shows the company’s planned profit? ▪ Budgeted income statement 9. Financial budgets: ▪ Include the capital expenditures budget ▪ Include the cash budget ▪ Impact the budgeted balance sheetLearnSmart Chapter 8: Budgetary Planning 10.Which of the following is an advantage of budgeting? ▪ Budgets communicate management’s plan throughout the  organization 11.Which of the following involves identifying resources and expenditures that  will be required over limited time (typically a year)? ▪ Budgeting 12.A continuous or rolling budget: ▪ Helps avoid games at the end of the budget period ▪ Keeps managers in continuous planning mode ▪ Adds one period to the end of the budget as each period comes  to a close 13.On the production budget, what is added to budgeted unit sales on a  production budget to obtain the total number of units to be produced? ▪ Budgeted ending inventory 14.To calculate the direct labor requirement for each quarter: ▪ Multiply the number od direct labor hours per unit times the  number of units to be produced 15.Madison Corporation’s expected beginning cash balance is $35,000. Cash  collections are budgeted at $50,000 and cash disbursements are estimated to  be $80,000. The minimum required cash balance is $20,000 and the  company can borrow as much as needed in increments of $10,000. Calculate  the expected ending cash balance for the month ▪ $25,000 ($35,000+$50,000-$80,000=$5,000. Since they can borrow in  increments of $10,000, they must borrow $20,000 to meet or exceed  the minimum cash balance making the ending balance $25,000) 16.Short-term objectives ▪ Need to be achieved in one year or less ▪ Are an important component of long-term objectives 17.When an organization uses a top-down approach to budgeting: ▪ Top management sets the budget ▪ The budget is imposed on lower-levels of the organizationLearnSmart Chapter 8: Budgetary Planning 18.To calculate the cash balance before financing on the cash budget: ▪ Add the beginning cash balance to the budgeted cash receipts  and deduct budgeted cash payments 19.The budgeted income statement is formed from the combined: ▪ Operating budgets 20.Which of the following is NOT included on a budgeted cash payment budget? ▪ Production units 21.What number does the raw materials budget take directly from the production  budget? ▪ Budgeted production 22.Which of the following is NOT a way to determine the sales forecast? ▪ Long-term objectives for R&D 23.Tactics are: ▪ Specific actions or mechanisms 24.Long-term objectives are goals: ▪ Managers want to achieve in 5-10 years 25.The entire budget must be created from scratch every period when using: ▪ Zero-based budgeting 26.Budgets that are most likely to motivate employees: ▪ Are tight but attainable 27.Planning starts with the manager’s: ▪ Strategic plan 28.The direct materials budget directly relies on the: ▪ Production budgetLearnSmart Chapter 8: Budgetary Planning 29.Carter Production, Inc’s required production for the first 6 months of the year  is as following: January 50,000 February 70,000 March 85,000 April 105,000 May 110,000 June 120,000


Which of the following budgets shows the company’s planned profit?



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Each unit required two pounds of material. Management believes than an appropriate ending inventory is 20% of next month’s production needs.  Calculate the pounds of material to be purchased in April. ▪ 212,000 pounds (105,000x2)=210,000 + Ending Inventory (20% of  May production needs: 110,000x0.2)=44,000-Beginning Inventory  (20% of April)=42,000 = 212,000 pounds) 30. Pastoria Enterprises has scheduled raw material purchases of $100,000 in  January, $130,000 in February, and $150,000 in March. The company pays  for 75% of its purchases in the month of purchase and 25% the month after purchases. Calculate the expected cash disbursements for the month of  February. ▪ $135,000 (February purchases ($130,000x75%)=$97,500 + January  purchases ($100,000x25%)=$25,000) 31.If budgeted sales are 10,000 units, the desired ending inventory of finished  goods is 5,000 units, and the beginning inventory of finished goods is 2,000  units, required production is: ▪ 13,000 units (10,000+5,000-2,000=13,000) 32.Sperling Company’s master budget shows expected sales of 10,000 units and  expected production of 11,000 units for the month of March. Each unit  requires ½ hour of direct labor. The direct labor rate is $15 per hour.  Calculate the expected total direct labor cost for the month of March. ▪ $82,500 (Units to be produced x time per unit x rate per hour = 11,000  x ½ x $15 = $82,500)LearnSmart Chapter 8: Budgetary Planning 33.ABC’s Inc’s expect sales for the first 6 month of the year are as following January 12,000 February 15,000 March 16,000 April 20,000 May 22,000 June 25,000


What number does the raw materials budget take directly from the production budget?




On the production budget, what is added to budgeted unit sales on a production budget to obtain the total number of units to be produced?



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Management believes that an appropriate ending inventory is 25% of current  period sales. Calculate the number of units to be produced in March ▪ 16,250 (March Sales 16,000 + Ending inventory (25% of March Sales)  4,000 – Beginning Inventory (25% of February Sales) 3,750 = 16,250  units)  34.Davidson Corporation’s master budget shows expected direct labor costs of  $90,000 for the month of May. During May, the company’s expected sales  equal 12,000 units and expected production is 15,000 units. If each unit  requires ½ hour of direct labor, the budgeted direct labor rate is ▪ $12 per hour (15,000 units x ½ hour = 7,500 labor hours.  $90,000/7,500 hours = $12 per hours) 35.Edison Corporation’s variable manufacturing overhead rate is %5.00 per  direct labor-hour. Budgeted direct labor cost is $20 per hour. Total budgeted  fixed overhead is $25,000 per month. Total budgeted direct labor-hours for  the month of July is 20,000. Total budgeted manufacturing overhead for July  is: ▪ $125,000 (variable overhead (20,000 x $5) = $100,000 + fixed  overhead of $25,000 = $125,000) FILL IN THE BLANK 36.A participative budget allows employees throughout the organization to  have input into the budget-settings process 37.The first step in preparing the master budget process is the sales budget or  forecastLearnSmart Chapter 8: Budgetary Planning 38.Budgeted cash receipts consist of collections on credit sales made to  customers in prior periods plus collections on sales made in the current  budget period 39.The budgeted balance sheet is prepared using information from the financial  budgets 40.The budget that shows the budgeted expenses for areas other than  manufacturing is the selling and administrative expenses budget 41.Each component of an master budget is based on or provides input for  another component 42.All costs of production other than direct materials and direct labor are shown  on the manufacturing overhead budget 43.The number of units that must be produced to satisfy sales needs and to  provide for the desired ending inventory is shown on the production budget 44.Operating Budgets include the sales, productions, and purchases budgets 45.The cash budget is a future-oriented version of the statement of cash flows 46.A budget translates company objectives into financial terms 47.Planning Involves developing goals for the budget, whereas controlling  involves determining if goals have been followed 48.The three sections of the cash budgets are collections, disbursements, and  financing 49.A continuous or rolling budget keeps managers focused at least one year  ahead 50.The production budget is based upon the sales budget 51.The raw materials purchases, direct labor, and manufacturing overhead  budgets are all based on the production budget 52.The starting point of the planning process is management’s strategic plan or  vision for the organization
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