Master Budget quiz Managerial Accounting Quiz Share Master Budget 20 questions in 20 minutes Pass Score 70% The questions change when you repeat the exam 1 / 20 The master budget process usually begins with the : Production budget Operating budget Financial budget 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 2 / 20 Which of the following is normally included in the operating budget ? Selling expense budget Capital budget Cash budget Budgeted balance sheet An operating budget normally includes sales, production, selling and administrative, and budgeted income statement components 3 / 20 When sales volume is seasonal in nature, certain items in the budget must be coordinated. The threemostsignificant items to coordinate in budgeting seasonal sales volume are : Direct labor hours, work-in-process inventory, and sales volume Raw material inventory, work-in-process inventory, and production volume Production volume, finished goods inventory, and sales volume Raw material inventory, direct labor hours, and manufacturing overhead costs The most important items that need to be coordinated in a seasonal business are sales volume and production. The sales budget is the basis for other budgets. The sales projection determines how much needs to be purchased and produced. In turn, projected sales and production (or purchases) must be coordinated with existing quantities on hand (inventory) and with amounts to be held in the future. If a manufacturer faces sharp variations in demand, this coordination becomes especially crucial 4 / 20 While an operating budget is a key element in planning and control, it isnotlikely to: Establish a commitment of company resources Provide subsidiary planning information Integrate organizational activities Set out long-range, strategic concepts Operating budgets seldom set out long-range strategic concepts because they usually deal with the quantitative allocation of people and resources. Strategic concepts are overall goals for the organization and are almost always stated in words 5 / 20 The operating budget process usually begins with the : Income statement Sales budget Balance sheet Financial 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 6 / 20 The master budget : Reflects controllable costs only Shows forecasted and actual results Can be used to determine manufacturing cost variances Contains the operating budget 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 7 / 20 The preparation of a comprehensive master budget culminates with the preparation of the : Capital investment budget Production 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 8 / 20 The budget that is usually themostdifficult 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 9 / 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 : Raw materials purchases budget Production budget Sales forecast Schedule of cash receipts and disbursements 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 10 / 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 availability of raw material without regard to inventory levels Expected change in the quantity of finished goods and work-in-process inventories 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 11 / 20 Which of the following is normally included in the financial budget of a firm ? Direct materials budget Sales budget Budgeted balance sheet Selling expense budget The financial budget normally includes the capital budget, the cash budget, the budgeted balance sheet, and the budgeted statement of cash flows 12 / 20 In developing a comprehensive budget for a manufacturing company, which one of the following items should be done first ? Determination of the advertising budget Determination of manufacturing capacity Development of the capital budget Development of a sales 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 The starting point for creating a master budget for a proprietary secretarial school would be : Preparing a capital expenditure budget Forecasting enrollment Estimating salaries of the instructors Preparing the student recruiting budget The sales forecast drives all the other components of the operating budget. How much revenue the firm expects to bring in affects every other decision 14 / 20 Which budget is prepared after the creation of the cash budget ? Capital expenditures budget Production budget Sales budget Budgeted balance sheet Budgeted financial statements, more specifically the budgeted balance sheet, are prepared after the creation of the cash budget 15 / 20 The financial budget process includes : The capital budget All of the answers are correct The cash budget The budgeted statement of cash flows The financial budget normally includes the capital budget, the cash budget, the budgeted balance sheet, and the budgeted statement of cash flows 16 / 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 Sales budget Selling and administrative budget Direct materials 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 17 / 20 In preparing a corporate master budget, which one of the following ismostlikely to be prepared last ? Sales budget Production budget Cash budget Cost of goods sold 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 18 / 20 All of the following are considered operating budgetsexceptthe : Production budget Capital budget Sales budget Materials budget The operating budget consists of all budgets that concern normal operating activities, including the sales budget, production budget, materials budget, direct labor budget, and factory overhead budget. The capital expenditures budget, which outlines needs for new capital investment, is not a part of normal operations. The capital expenditures budget is sometimes prepared more than a year in advance to allow sufficient time to secure financing for these major expenditures 19 / 20 The production budget process usually begins with the : Sales budget Direct materials budget Direct labor budget Manufacturing overhead 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 The foundation of a profit plan is the : Capital budget Sales forecast Production plan Cost and expense 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 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
