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Flashcards in Deck 5 Deck (20):
1

First step in the budget development project is:

Forecast of sales volume

2

Dollar Production budget =

Variable production costs + Fixed manufacturing OH costs

3

Order in which budgets must be prepared:

Sales, production, DM purchases, cash disbursements

4

Which pro forma statement is prepared last?

Cash flow statement

5

Cash disbursements include both

Cost of sales and Other Cash expenses (ignores non cash operating expenses such as Deprecation)

6

3 step process to calculate the DM purchasing budget

1. Calculate production based on FG inventory; 2. calculate units of DM to be purchased; 3. calculate cost of DM to be purchased

7

Authoritative Standards in Budgeting

Set exclusively by management (More efficient)

8

Participative Standards in Budgeting

Set by both managers and individuals who are held accountable (More effective and accurate)

9

Master Budget

Documents specific short-term (one year or less) operating performance goals for a period; single level of activity

10

Production Budget =

Beginning sales + desired ending inventory - beginning inventory (based on FG)

11

Number of units to be purchased =

Units needed for production + ending inventory - beginning inventory (based on raw materials)

12

Direct materials usage budget (COGS) =

Beginning inventory + purchases - ending inventory

13

Total wages (DL budget )

Budgeted production x hours x hourly wage rate

14

Units to be manufactured =

Budgeted sales plus desired ending inventory

15

Sales volume variance can divided into which two additional variances?

Sales quantity variance and sales mix variance

16

A sales price variance is due to changes in

Unit selling prices

17

A sales volume variance results from changes in

Number of units sold

18

Flexible budget =

Budgeted costs x actual units

19

Favorable variance occurs when:

Actual costs are less than standard costs

20

DM price variance

Actual quantity purchased x (AP - SP)