Project Admin & Accounting

The master budget reflects the impact of operating decisions, but not financing decisions

• True

• False

Budgeting is used to help companies

• plan to better satisfy customers

• anticipate potential problems

• focus on opportunities

• All of these answers are correct

Budgeted manufacturing overhead costs include all types of factory expenses EXCEPT:

• fixed items such as depreciation of manufacturing machinery

• variable items such as plant supplies

• indirect labor such as the salary of the plant supervisor

• direct labor and direct materials

Who is responsible for the budget?

• Accountants

• Shareholders

• Investors

• Management

What is NOT one of the benefits of budgeting

• Planning ahead

• Knowing the future will always be correct

• Creating early warning system

• Motivating personnel

The two classes of budgets are:

• Operating & Financial

• Variable & Fixed

• Sales & Product

• Direct materials & Direct labor

This budget shows both the quantity and cost of direct materials to be purchased.

• Production

• Direct materials

• Indirect materials

• Materials

Why are budgets useful in the planning process?

• They provide management with information about the company's past performance.

• They help communicate goals and provide a basis for evaluation.

• They guarantee the company will be profitable if it meets its objectives.

• They enable the budget committee to earn their paycheck.

Which one of the following is not a benefit of budgeting?

• It facilitates the coordination of activities.

• It provides definite objectives for evaluating performance.

• It provides assurance that the company will achieve its objectives.

• It requires all levels of management to plan ahead on a recurring basis.

Budgeting provides all of the following except:

• support for the management functions of planning and coordination

• a means to communicate the organization's short-term goals to its members

• an ethical framework for decision making

• a means to anticipate problems