Planning Techniques

Question 1

master budget is

Answer 1

comprehensive expression of management’s operating and financial plans for a future period

it is summarized as budgeted financial statements

Question 2

Master Budget consists of

Answer 2

Operating and Financial Budget

Question 3

Advantage of top down budgeting

Answer 3

faster preparation time and clearer communication of top management’s objectives

Question 4

Advantage of Participative approach to Budgeting

Answer 4

improved morale and

wider acceptance of the budget

Question 5

Disadvantage of Participative approach to Budgeting

Answer 5

possible budget slack being built in by area managers

Question 6

Participative Budgeting

Answer 6

still requires approval by top management and alignment with the company’s strategic plan

Question 7

Operating Budget is comprised of

Answer 7

1) sales,
2) production,
3) direct materials,
4) direct labor,
5) overhead,
6) research and development, and
7) selling, general, and administrative expense budgets

Question 8

Operating Budget

Answer 8

focuses on the budgeted income statement.

Question 9

Starting point for the Operating Budget

Answer 9

Sales Forecast