Master Budget quiz Managerial Accounting Quiz On Aug 17, 2024 Share /20 1234567891011121314151617181920 Master Budget 20 questions in 20 minutes Pass Score 70% The questions change when you repeat the exam 1 / 20 When preparing the series of annual operating budgets, management usually starts the process with the : Balance sheet Sales budget Capital budget Cash budget The budgeting process begins with the sales budget and then proceeds to the production budget. Once the production budget is complete, then the raw materials, direct labor, overhead, and cash budgets can be prepared. The capital budget is prepared outside the operating budget process, followed by a cash budget 2 / 20 Which of the following is normally included in the financial budget of a firm ? Direct materials budget Budgeted balance sheet Selling expense budget Sales budget The financial budget normally includes the capital budget, the cash budget, the budgeted balance sheet, and the budgeted statement of cash flows 3 / 20 The master budget process usually begins with the : Production budget Financial budget Sales budget Operating budget The starting point for the annual budget is the sales forecast. All other aspects of the budget, including production, costs, and inventory levels, rely on projected sales figures 4 / 20 The preparation of a comprehensive master budget culminates with the preparation of the : Production budget Capital investment budget Cash management and working capital budget Strategic budget The creation of a comprehensive master budget begins with the preparation of the sales budget and ends with the preparation of the cash management and working capital budget 5 / 20 After the goals of the company have been established and communicated, the next step in the planning process is development of the : Production budget Direct materials budget Selling and administrative budget Sales budget The sales budget is the first step in the operating budget process because it is needed to prepare all of the other budgets. For example, the production budget cannot be prepared until the sales department has determined how many units are needed 6 / 20 Individual budget schedules are prepared to develop an annual comprehensive or master budget. The budget schedule that would provide the necessary input data for the direct labor budget would be the : Sales forecast Raw materials purchases budget Schedule of cash receipts and disbursements Production budget Once the production budget has been completed, the next step is to prepare the direct labor, raw material, and overhead budgets. Thus, the production budget provides the data for the completion of the direct labor budget 7 / 20 Which one of the following items should be done first when developing a comprehensive budget for a manufacturing company ? Determination of the advertising budget Development of the capital budget Development of a sales budget Preparation of a pro forma income statement The sales budget is the first to be prepared because all other elements of a comprehensive budget depend on projected sales. For example, the production budget is based on an estimate of unit sales and desired inventory levels. Thus, sales volume affects purchasing levels, operating expenses, and cash flow 8 / 20 The operating budget process usually begins with the : Financial budget Income statement Balance sheet Sales budget The starting point for the annual budget is the sales forecast. All other aspects of the budget, including production, costs, and inventory levels, rely on projected sales figures 9 / 20 The budget that is usually the most difficult to forecast is the : Expense budget Production budget Sales budget Manufacturing overhead budget Following the preparation of the sales budget, all other budgets are prepared based on the assumptions used in the sales budget. For this reason, the sales budget is the most difficult to prepare because there are no internal figures to use as a guide. Sales are based on the desires of consumers and the current business climate 10 / 20 The master budget : Contains the operating budget Can be used to determine manufacturing cost variances Shows forecasted and actual results Reflects controllable costs only All other budgets are subsets of the master budget. Thus, quantified estimates by management from all functional areas are contained in the master budget. These results are then combined in a formal quantitative model recognizing the organization’s objectives, inputs, and outputs 11 / 20 Which of the following is normally included in the operating budget ? Cash budget Budgeted balance sheet Selling expense budget Capital budget An operating budget normally includes sales, production, selling and administrative, and budgeted income statement components 12 / 20 The foundation of a profit plan is the : Sales forecast Capital budget Cost and expense budget Production plan The starting point for the annual budget is the sales forecast. All other aspects of the budget, including production, costs, and inventory levels, rely on projected sales figures 13 / 20 Which one of the following best describes the order in which budgets should be prepared when developing the annual master operating budget ? Production budget, direct material budget, revenue budget Production budget, revenue budget, direct material budget Revenue budget, production budget, direct material budget Revenue budget, direct material budget, production budget The components of the operating budget are prepared in the following order: sales (revenue) budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, ending finished goods inventory budget, cost of goods sold budget, and nonmanufacturing budget 14 / 20 In preparing a corporate master budget, which one of the following is most likely to be prepared last ? Sales budget Cash budget Cost of goods sold budget Production budget The cash budget is the lynchpin of the financial budget. It combines the results of the operating budget with the cash collection and disbursement schedules to produce a comprehensive picture of where the company’s cash flows are expected to come from and where they are expected to go. All the other budgets listed feed the cash budget in one way or another 15 / 20 In an organization that plans by using comprehensive budgeting, the master budget is : A compilation of all the separate operational and financial budget schedules of the organization The booklet containing budget guidelines, policies, and forms to use in the budgeting process A budget of a not-for-profit organization after it is approved by the appropriate authoritative body The current budget updated for operations for part of the current year A company’s overall budget, often called the master or comprehensive budget, encompasses the organization’s operating and financial plans for a specified period, ordinarily a year. Thus, all other budgets are subsets of the master budget. In the operating budget, the emphasis is on obtaining and using current resources. In the financial budget, the emphasis is on obtaining the funds needed to purchase operating assets 16 / 20 The financial budget process includes : All of the answers are correct The budgeted statement of cash flows The capital budget The cash budget The financial budget normally includes the capital budget, the cash budget, the budgeted balance sheet, and the budgeted statement of cash flows 17 / 20 There are various budgets within the master budget cycle. One of these budgets is the production budget. Which one of the following best describes the production budget ? It is calculated from the desired ending inventory and the sales forecast It summarizes all discretionary costs It includes required material purchases It includes required direct labor hours A production budget is based on sales forecasts, in units, with adjustments for beginning and ending inventories. It is used to plan when items will be produced. After the production budget has been completed, it is used to prepare materials purchases, direct labor, and factory overhead budgets 18 / 20 When budgeting, the items to be considered by a manufacturing firm in going from a sales quantity budget to a production budget would be the : Expected change in the quantity of finished goods and work-in-process inventories Expected change in the availability of raw material without regard to inventory levels Expected change in the quantity of finished goods and raw material inventories Expected change in the quantity of work-in-process inventories Production quantities are not identical to sales because of changes in inventory levels. Both finished goods and work-in-process inventories may change during a period, thus necessitating an analysis of both inventory levels before the production budget can be set 19 / 20 The production budget process usually begins with the : Manufacturing overhead budget Sales budget Direct labor budget Direct materials budget Neither a master budget nor a production budget can be prepared until after the sales budget has been completed. Once a firm knows its expected sales, production can be estimated. The production budget is based on assumptions appearing in the sales budget; thus, the sales budget is the first step in the preparation of a production budget 20 / 20 Which budget is prepared after the creation of the cash budget ? Sales budget Production budget Budgeted balance sheet Capital expenditures budget Budgeted financial statements, more specifically the budgeted balance sheet, are prepared after the creation of the cash budget Your score is LinkedIn Facebook Twitter VKontakte 0% Send feedback 2017. budgeted sala flexible budget variance is calculated by comparing the master budget to the flexible budget.a key difference between a master budget prepared for a merchandiser versus a manufacturer is
