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Managerial accounting > Chapter 8, 9, 10 > Flashcards

Chapter 8, 9, 10 Flashcards

1
Q

What happens if the sales budget is inaccurate?

A

The rest of the budget will be inaccurate

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2
Q

Where are all the budgets of a company laid under?

A

The master budget

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3
Q

Why is the balance sheet generally the first tab included in the master budget?

A

Needed for the schedule of expected cash collections

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4
Q

What does the receipts section of the cash budget list?

A

All cash inflows

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5
Q

Are master budgets based on estimates and assumptions?

A

Yes

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6
Q

What is the usually the major source of receipts in the receipts section of cash budget?

A

Sales

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7
Q

What budget are receipts, disbursements, excess, or deficiency, and financing section part of?

A

Cash budget

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8
Q

Does the budgeting income statement contain information from the ending balance sheet?

A

No

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9
Q

What is budgetary slack?

A

When a manager creates a budget that is too easy to attain

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10
Q

Do budgets communicate a management’s plan throughout the organisation

A

Yes

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11
Q

To prepare a balance sheet for Dec 31 2024 is a balance sheet needed for Dec 31 2023?

A

Yes

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12
Q

What is summarised in the cash disbursements section?

A

All cash payments except principal and interest repayments

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13
Q

Is the development of goals and preparing various budgets to achieve the goals part of the planning process?

A

Yes

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14
Q

What is the term for when feedback is gathered to ensure the plan is being followed?

A

Controlling

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15
Q

Is cash deficiency located in the financing section of the cash budget?

A

No

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16
Q

What are the two distinct purposes of budgets?

A

Planning and controlling

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17
Q

Does the receipts section of a budget list all cash flows apart from borrowings?

A

Yes

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18
Q

What does involving lower-level managers increase in the budgeting process?

A

Motivation, accuracy, and accountability

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19
Q

State 2 limitations of self-imposed budgeting?

A

Suboptimal budget recommendations and budgetary slack

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20
Q

Can budgets identify potential drawbacks before they occur?

A

Yes

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21
Q

Is the desired ending inventory of units included on the sales budget?

A

No

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22
Q

Why do companies choose to span their operating budgets over one year?

A

To correspond to their fiscal years

23
Q

What is budgetary slack?

A

The practice of overestimating expenses and/or underestimating projected revenues for the next financial period

24
Q

In a production budget what is the beginning inventory for the year?

A

Beginning inventory for the first quarter

25
Q

State one major factor that should be taken into consideration while planning the desired level of inventories?

A

Costs of carrying inventory

26
Q

State 4 types of current assets?

A

Cash, accounts receivables, finished goods inventory, raw materials inventory

27
Q

What is the first line of production budget?

A

Budgeted unit sales

28
Q

Is it assumed that all borrowing occurs on the first day of the month and all repayments occur on the last day of the month?

A

Yes

29
Q

What is an activity variance?

A

The difference between a revenue or cost item in the planning budget and the same item in the flexible budget at the actual activity

30
Q

Is revenue variance the difference between how much revenue should have been given the actual level of activity and actual revenue?

A

Yes

31
Q

What is a spending variance?

A

The difference between how much a cost should have been given the actual level of activity and actual amount of cost

32
Q

Do performance reports for cost centres include revenues or net income?

A

No

33
Q

Why may unfavourable activity variances not indicate bad performance?

A

Because increased activity should result in higher variable costs

34
Q

State 2 things a cost centre’s performance report does not include

A

Net operating income and revenue

35
Q

What do companies use to evaluate and improve performance?

A

Variance analysis cycle

36
Q

What is management by exception?

A

The system that compares actual results to a budget so that significant deviations can be flagged and investigated further

37
Q

What are planning budgets sometimes called?

A

Static

38
Q

State 3 reasons for revenue variances?

A

Changes in selling price, product mix, discount structure, poor accounting controls (NOT CHANGE IN INPUT PRICES (explanation))

39
Q

Is net operating income a column on the flexible budget performance report?

A

No

40
Q

What is the key difference between a planning and a flexible budget?

A

Planning budget: based on budgeted level of activity, whereas flexible budget: based on actual level of activity

41
Q

What happens if any actual level of activity exceeds the planned level?

A

Any variable expense will have an unfavourable activity variance

42
Q

How is the quantity variance calculated?

A

Using the standard price of the input

43
Q

Is the actual price of inputs part of the price variance rather than the quantity variance calculation?

A

Yes

44
Q

Do the standard hours per unit include both direct and indirect labor hours?

A

Yes

45
Q

State two things that are used to calculate the standard quantity per unit of direct materials?

A

Direct materials requirements per unit of finished product and allowance for normal scrap and spoilage

46
Q

Define standard hours per unit

A

The amount of direct labor hours that should be used to produce one unit of finished goods

47
Q

Is material requirements plus an allowance for normal inefficiencies added together to determine the quantity standard per unit of output for direct materials?

A

Yes

48
Q

Are standards related to the price and quantity of inputs?

A

Yes

49
Q

Do standard hours per unit include both direct and indirect labor hours?

A

No

50
Q

How is the materials price variance calculated?

A

Using the actual price

51
Q

How can the labor variance rate be calculated?

A

Multiply the actual hours worked by the actual labor rate, and compare this to actual hours worked multiplied by the standard labor rate

52
Q

Is materials quantity variance calculated using standard price per unit of materials?

A

Yes

53
Q

What does a flexible budget performance report for variable manufacturing costs show?

A

Both the activity variances and the spending variances

54
Q
A

Managerial accounting (4 decks)

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