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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Question
Chapter 9, Problem 1MCQ
To determine
Identify the correct description for a budget.
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Zero-based budgeting refers to:
a.
Budgeting from the ground up as though the budget process were being initiated for the first time
b.
Using prior year’s budget as a bas year and adjusting it based on the experiences of the prior year and the expectations for the coming year
c.
Budgeting for cash inflows and outflows to time investments and borrowings in a way to maintain bank account with a minimum balance
d.
Developing budgeted costs from clear-cut measured relationships between inputs and outputs
Clear my choice
Which of the following statements is True?
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a. Budget data are generally prepared by top management and distributed downward in anorganization
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b. The budget committee is responsible for preparing detailed budget figures in anorganization
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c. The primary purpose of the cash budget is to show the expected cash balance at the endof the budget period.
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d. Under zero-based budgeting, a manager is required to start at zero budget levels each period, as if the programs involved were being initiated for the first time
Required:
A) The business needs to have a sense of its future cash flows and therefore requires the preparation of the following:
â–Ş A cash budget, with a total column, for the quarter ending March 31, 2022, showing the expected cash receipts and payments for each month and the ending cash balance for each of the three months, given that no financing activities took place.
B) Another team member who is preparing the Budgeted Balance Sheet for the business for the same quarter ending March 31, 2022 and has asked you to furnish him with the figures for the expected trade receivables and payables to be included in the statement. Is that a reasonable request? If yes, what should these amounts be?
C) Upon receipt of the budget, the team manager, June Jackson, has now informed you that, in keeping with industry players, the management of Pelican Merchandising have indicated an industry requirement to maintain a minimum cash balance of $185,000 each month. She has also noted that management is…
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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Similar questions
- Review the completed master budget and answer the following questions: Is Ranger Industries expecting to earn a profit during the next quarter? If so, how much? Does the company need to borrow cash during the quarter? Can it make any repayments? Explain. (Carefully review rows 74 through 80.)arrow_forwardA. Discuss the purpose of the cash budget. B. If the cash for the first quarter of the fiscal year indicates excess cash at the end of each of the first two months, how might the excess cash be used?arrow_forwardA plan that shows the expected cash inflows and cash outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans, is called a. A rolling budget. d. A cash budget. b. An income statement. e. An operating budget. c. A balance sheet.arrow_forward
- The following items are included in the short-term budget: Liquidity Management of Working Capital All of the preceding must keep a tight grip on day-to-day spending.arrow_forwardCash budgeting is critical to a company’s financial information needs. The following information was extracted from the records of A & B Manufacturing Company Limited. The opening cash balances on January 01, 2021 was expected to be $30,000. The budgeted sales were as follows:                                                          Budgeted Sales Month       Year $ November    2020 80,000 December    2020 90,000 January      2021 80,000 February     2021 75,000 March       2021 60,000 April        2021 70,000 Analysis of records shows that debtors settle according to the following pattern: 70% within the month of sale 30% the following month  Extracts of the purchases budget were as follows: Purchases budget Month          Year $ December       2020 65,000 January         2021 50,000 February        2021 75,000 March…arrow_forwardWhich of the following statements is incorrect? The cash budget shows anticipated cash flows. The production budget is derived from the direct materials and direct labor budgets. A continuous twelve-month budget results from dropping the month just ended and adding a future month. In the budget process for not-for-profit organizations, the emphasis is on cash flow rather than on revenue and expenses.arrow_forward
- Which of the following statements is/correct regarding the Cash Budget? I. The cash budget is a statement of a firm's planned inflows and outflows of cash that is used to estimate its long-term cash requirement. II. Cash budgets and pro forma statements are useful not only for internal financial planning but also are routinely required by the Internal Revenue Service (IRS). III. A cash budget gives the financial manager a clear view of the timing of a firm's expected profitability over a given period. IV. Since depreciation and other noncash charges represent a scheduled write-off of an earlier cash outflow, they should not be included in the cash budget, though depreciation charges will affect the taxes that a firm pays. a. II and III b. I and IV c. IV only d. I onlyarrow_forward1. Oni Pty Ltd Limited has prepared its June half-year cash budget.  The cash budget shows a healthy cash balance at the end of the period, however negative cash balances are forecast throughout February and March. Which of the following strategies would be appropriate to address this short-term cash problem? A.Any of these strategies would be appropriate to address this short-term cash problem. B.Arrange an overdraft facility with its bank. C.Sell its goods on a cash-only basis. D.Raise additional capital via a share issue. E.Realise some non-current assets.  2.Oni Pty Ltd sells it goods at a 50% mark-up.  A review of the variance report reveals the following: A favourable variance in Sales revenue of 8% An unfavourable variance in Cost of sales of 5% Which of the following statements is correct?  A.The actual mark-up % was greater than forecast and management will be pleased with the cost of sales variance. B.The actual mark-up % was greater than forecast and management will be…arrow_forward“The principal purpose of the cash budget is to see how much cash the company will have in the bank at the end of the year.” Do you agree? Explain.arrow_forward
- Budgeting types Consider the following budgets and budget types. Which budget or budget type should be used to meet the following needs? a. Upper management is planning for the next five years. b. A store manager wants to plan for different levels of sales. c. The accountant wants to determine if the company will have sufficient funds to pay expenses. d. The CEO wants to make companywide plans for the next year.arrow_forwardYou are beginning your own business and developed a budget based on modest sales and expense assumptions. The actual results are very close to the budget at the end of the first and second months. During the third month, both cash collected and paid differ significantly from the budget. What could be the cause and what should you do?arrow_forwardWhich of the following is an example of a situation in which a company could use budget information to make operational changes:  Select one: a. Total revenues exceed projected costs.  b. Profits are expected to rise.  c. Accounts receivables are in order.  d. Estimated sales exceed actual sales.arrow_forward
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