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Chapter 22: Q2TI (page 1190)

Match the budget types to the definitions.

Budget Types Definitions

5. Financial a. Includes sales, production, and cost of goods sold budgets

6. Flexible b. Long-term budgets

7. Operating c. Includes only one level of sales volume

8. Operational d. Includes various levels of sales volumes

9. Static e. Short-term budgets

10. Strategic f. Includes the budgeted financial statements

Short Answer

Expert verified
  1. f.
  2. d.
  3. a.
  4. e.
  5. c.
  6. b.

Step by step solution

01

Meaning of Budget

A budget is afinancial planprepared by the managers to achieve the organization鈥檚 goals and objectives.

02

Matching budget types to the definitions

Type of Budget

Definitions

5. Financial

f. Includes the budgeted financial statements

6. Flexible

d. Includes various levels of sales volumes

7. Operating

a. Includes sales, production, and cost of goods sold budgets

8. Operational

e. Short-term budgets

9. Static

c. Includes only one level of sales volume

10.Strategic

b. Long-term budgets

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Most popular questions from this chapter

What are the three sections of the cash budget?

Preparing a financial budget鈥攃ash budget

Booth has \(12,500 in cash on hand on January 1 and has collected the following budget data:

January February

Sales \) 529,000 \( 568,000

Cash receipts from customers 443,000 502,200

Cash payments for direct materials purchases 180,624 160,284

Direct labor costs 135,010 113,348

Manufacturing overhead costs (includes

depreciation of \)900 per month) 55,058 53,922

Assume direct labor costs and manufacturing overhead costs are paid in the month incurred. Additionally, assume Booth has cash payments for selling and administrative expenses including salaries of \(40,000 per month plus commissions that are 1% of sales, all paid in the month of sale. The company requires a minimum cash balance of \)20,000. Prepare a cash budget for January and February. Round to the nearest dollar. Will Booth need to borrow cash by the end of February?

Preparing an operating budget鈥攄irect materials budget

Bell expects to produce 1,800 units in January and 2,155 units in February. The company budgets 3 pounds per unit of direct materials at a cost of $10 per pound. Indirect materials are insignificant and not considered for budgeting purposes. The balance in the Raw Materials Inventory account (all direct materials) on January 1 is 4,950 pounds. Bell desires the ending balance in Raw Materials Inventory to be 20% of the next month鈥檚 direct materials needed for production. Desired ending balance for February is 4,860 pounds. Prepare Bell鈥檚 direct materials budget for January and February.

Describing master budget components

Sarah Edwards, division manager for Pillows Plus, is speaking to the controller, Diana Rothman, about the budgeting process. Sarah states, 鈥淚鈥檓 not an accountant, so can you explain the three main parts of the master budget to me and tell me their purpose?鈥� Answer Sarah鈥檚 question.

Why is the sales budget considered the cornerstone of the master budget?
See all solutions

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