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25 Cards in this Set
- Front
- Back
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What's an important management objective? |
To ensure that activities of all departments contribute to meeting the company's overall goals |
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What are budgets? |
The formal statement of a company's future plans that is usually short term |
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What is budgeting? |
The process of planning future business actions and expressing them as formal plans |
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What are five benefits of budgeting? |
1. Focuses on future opportunities 2. Assist management and identifying problems 3. Helps achieve coordination across departments 4. Effective way to communicate management specific action plans to all employees 5. Can be used to motivate employees |
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What is continuous budgeting? |
A process in which a company prepares rolling budgets |
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What is a rolling budget? |
A budget that adds months on to the end as time goes by so it never expires |
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What is a master budget? |
A formal, comprehensive plan for a company's future |
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What are the 8 components of a master budget? |
Sales , production , direct materials, direct labor, factory overhead, Capital expenditures, selling and general administrative expenses , and cash |
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What is a sales budget? |
A budget which shows the planned sales units and the expected dollars from the sales |
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What is a production budget? |
The budget which shows the number of units to be produced in a period |
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What is Safety stock? |
A quantity of inventory that provides protection against lost sales caused by unfulfilled demands from customers or delays in shipments from suppliers |
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Does a production budget show cost? |
No, it shows units |
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What is the direct materials budget? |
A budget that shows budgeted cost for the direct materials that will need to be purchased to satisfy the estimated production for the period |
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What information is needed to complete the direct materials budget? |
The number of units to produce , material requirements per unit , budgeted ending inventory of direct material , beginning inventory of direct materials, and cost per unit of direct materials |
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What is a direct Labor budget? |
The budget that shows the budgeted cost for direct labor that will be needed to satisfy the estimated production for the period |
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What is the factory overhead budget? |
A budget that shows budgeted cost for factory overhead that will be needed to complete the estimated production for the period |
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What is a selling expense budget? |
A Budget that is an estimate of the types and amounts of selling expenses needed during the budget period |
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What is the general and administrative expense budget? |
A budget that plans the predicted operating expenses not included in selling expenses or manufacturing budgets |
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What is the capital expenditures budget? |
A budget that shows dollar amounts estimated to be spent to purchase additional plant assets the company will use to carry out its budgeted business activities |
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What is a cash budget? |
A budget which shows expected cash inflows and outflows during the budget period |
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What are two important schedules that need to be prepared to finish the cash budget? |
Cash receipts from sales and cash payments for materials |
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What are the six things needed to prepare a cash budget? |
1. Cash receipts from sales 2. Cash payments for direct materials 3. Cash payments for direct labor 4. Cash payments for variable overhead 5. Cash payments for selling expenses 6. Cash payments for General and administrative expenses |
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What is a budgeted income statement? |
A managerial accounting report showing predicted amounts of sales and expenses for the budget period |
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What is a budgeted balance sheet? |
A sheet that shows predicted amounts for the company's assets, liabilities, and Equity as of the end of the budget period. |
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What are variances? |
The difference between actual results and budgeted results |
