COST MANAGEMENT – PART 8 Long

The process of preparing one or more budgets Range

is called A primary advantage of the budgeting process

Budgeting is the ______.

Budgets and budget preparation ______. ability to anticipate upcoming problems

communicates expectations to employees In not-for-profit (NFP) and governmental

sectors
throughout the organization
budgets serve primarily as ______.
allows time to anticipate and develop strategies
the authority to acquire and use resources
for potential problems
True or false: Budgets assist in planning and
facilitates the coordination of activities across
day to day operations, but are not useful in
subunits
assessing performance.
Budgeted amounts often serve as both approval
F
of activities and a ceiling for expenditures in
Even though it is extremely important for
NFP and organizations.
planning and budgeting, many organizations fail
Government
to link their budget to their
The control function of budgeting is best
Strategy
exemplified by ______.
Actions to be taken over a 5 to 7 year period to
comparing actual results to budgeted results
achieve the organization's strategic goal(s) are
One primary fault or limitation of traditional
identified in a ______.
budgeting systems is ______.
long-range plan
the failure to link budgets to organizational
The process of evaluating, selecting, and
strategy and goals
financing major projects of an organization is
Both financial and non-financial aspects of
referred to as budgeting.
planned operations and project are included in
Capital
a(n)
Conventional thinking is that the incentive
Budget
effects of budgeting systems are enhanced by
Required actions to be taken over a 5 to 7 year
______.
period to achieve the organization's strategic
allowing employees to participate in the setting
goal(s) are identified in a(n) - plan.
of budget targets. operating and financial

Planned spending on long-term projects, The set of operating budgets culminates in a

investments, and initiatives that lead to ______.

longterm value and competitive advantage is
budgeted income statement
called
The group within an organization that typically
______ expenditures.
has ultimate responsibility for the budgeting
strategic budget
process is the ______ committee.
The final step of the master budgeting process
budget
is budgeted ______.
True or false: In practice, the planning horizon
pro forma financial statements
for most firms (for budgeting purposes) is a
Plans that identify spending needed to carry out
single year.
sales, customer-service, production, and
F
marketing activities are called ______ budgets.
Financial budgets include the ______.
operating
budgeted statement of cash flows
True or false: An organization's capacity is a
budgeted balance sheet
result of capital investments made in prior
cash budget
budgeting period.
The collection of all short-term budgets is called
T
the ______ budget.
The set of budgets that includes the cash
master
budget, budgeted statement of cash flows, and
The budget committee ______.
budgeted balance sheet are called ______
monitors operations during the year
budgets.
sets overall budget goals
Financial
resolves budget preparation conflicts
Capital budgeting expenditures related to
reviews operating results at the end of the
sustainability are considered part of a
period
company's expenditures.
Conventional master budgeting systems
Strategic Budget
produce a budget covering the coming ______.
A master budget consists of both ______
fiscal year
budgets.
In a traditional budgeting process, the ______ is
(are) responsible for providing initial budget for the quarter is ______.

guidelines that set the tone for the budget and based on the first and last day of the quarter

govern its preparation. The sales budget is typically viewed as the

budget committee cornerstone in master budgeting process

For public companies, the group or individual because ______.

having ultimate responsibility for approving the many other budgets are directly or indirectly

organization's budget is the company's ______. affected by it

board of directors Initial budget proposals are examined by the

For most profit-seeking organizations, the ______.

starting point in the master budgeting process is executives of budget units

preparation of the ______. Planned output for a given period is shown on

sales budget the ______ budget.

The number of units to be produced each Production

period
A company's policy is to have 10% of the
is equal to ______.
estimated sales for the following month on
desired ending inventory of finished units + hand

budgeted sales (in units) - beginning inventory as ending inventory. Projected sales for

of finished units January, February, and March, respectively, are

A company anticipates sales of 10,000 units in as follows: 100 units; 120 units; 90 units.

January, 15,000 units in February and 20,000 Scheduled production for February is ______

units in March. If desired ending inventory is units.

10% of the following month's sales, expected Reason:

production for February equals ______ units. 117 = 120 + (10% × 90) - (10% × 120) = 120 +

Reason: 9 - 12

15,000 units + 2,000 units of ending inventory

(10% of March) - 1,500 units in beginning

inventory (10% of February) = 15,500 units

When preparing a quarterly production budget

by the month, beginning and ending inventory