Managerial Accounting Test 2

Front 1

Advantages of Budgeting

Back 1

1. Forces managers to plan
2. Improves decision making
3. Standard for performance evaluation
4. Better communication and coordination

Front 2

Master Budget

Back 2

financial plan for the organization as a whole

Front 3

Continuous Budget

Back 3

moving 12 month budget

Front 4

Operating Budget

Back 4

Describe the income generating activities of a firm: sales, production, finished goods inventory; prepared first

Front 5

Financial Budgets

Back 5

Detail the cash inflows and outflows and overall financial position

Front 6

Preparing the Operating Budget
(S, P, DM, DL, OH, S&A, EI, COGS)

Back 6

1. Sales
2. Production
3. Direct materials
4. Direct labor
5. Overhead
6. Selling and administrative
7. Ending inventory
8. COGS

Front 7

Sales Budget

Back 7

Units x selling price = budgeted sales

Front 8

Production Budget

Back 8

Units to be produced= Expected unit sales + units in ending inventory - units in beginning inventory

Front 9

Direct materials purchases budget

Back 9

Purchases = DM needed for production + desired DM in ending inventory - DM in beginning inventory

Front 10

Direct labor budget

Back 10

Units to be produced x DL time per unit = total hours needed x average wage per hour = total DL cost

Front 11

Overhead budget

Back 11

budgeted DL hours x variable OH rate = budgeted variable OH = budgeted fixed OH (includes depreciation) = Total OH

Front 12

Ending Finished Goods Inventory Budget

Back 12

Units x unit cost

Front 13

Unit Cost

Back 13

= DM/unit + DL/unit

Front 14

Overhead

Back 14

Variable (DL/unit x Var. OH rate) + Fixed (DL/unit x (Budg. Fix. OH / Budg. DL hours)

Front 15

COGS Budget

Back 15

DM used + DL used + OH = Budg. Manufacturing Costs + Beg. Finished Goods = Goods available for sale - End finished goods = Budg COGS