Exam 9: Budgeting Systems

Budgets can be used as a benchmark against which to evaluate performance and control costs.

Jasmine Coy is a barista at Tosa Cafe, which is known for its quality coffee. Her manager has set a very difficult cost target. As a result, Jasmine uses lower quality coffee beans which results in poor quality coffee. This is an example of

The Grainger Company's Budgeted Profit and Loss Statement reflects the following amounts: Sales are collected 50 per cent in the month of sale, 30 per cent in the month following sale, 19 per cent in the second month following sale and 1 per cent is uncollectible. The uncollectible accounts are expensed at the end of the year. Grainger pays for purchases by the fifth of the month following purchase, to take advantage of the 3 per cent discount allowed. On January 1, Grainger had a cash balance of $88 000 and an accounts receivable balance of $58 000; $35 000 on account will be collected in January with the remaining balance to be collected in February. Grainger had an accounts payable balance of $72 000 on January 1. Invoices are recorded at their gross amount. The monthly expense figures include $5000 in monthly depreciation. The expenses are paid for in the month incurred. What is Grainger's expected cash balance at the end of January?

Budgets that cover a particular period of time, longer than a year, are

Which of the following indicate/s the overall financial results of the organisation's planned operations for the budget period?

Employees are always motivated to work towards the company's goals when budgets are handed down from top management as employees rarely have the time or the inclination to become involved in the budgeting process.

Which of the following encompasses a detailed plan for using the basic factors of production material, labour and overhead to produce a product or provide a service?

A budget that includes sales revenue, cost of goods sold, operating expenses and net profit is a

BeActive Sporting Goods sells tandem bicycles. The following data was taken from the most recent quarterly sales forecast. BeActive's cost for one bicycle is $125. How many units should the company purchase in May?

A problem with participative budgeting is that there will always be a tendency for those participating to build slack into the budget to ensure a better outcome for their performance assessment.

Which of the following statements are true if optimum benefit is to be derived from the budget process?

There should never be inaccuracies when forecasting sales figures as these figures are only affected by internal factors which management can control.

The position where the firm's goals and employees' aims coincide is called

A detailed plan that shows the financial consequences of an organisation's operating activities for a specific future time period is known as a strategic plan.

The cash budget assists management in evaluating their financial needs.

Consider the following statements about budget administration. i. Regardless of size, the budgeting process in all organisations must be a formal process. ii. The budget manual is prepared to communicate budget procedures and deadlines to employees throughout the organisation. iii. Good internal control procedures require that the manager responsible for managing the budget process be an individual other than the chief accountant. Which statement/s is/are true?

Discuss how benchmarks are applied to measure performance in responsibility accounting.

Which of the following items would not be taken into account when preparing a firm's cash budget?

For a manufacturing business, a production budget, including budgets for direct material, direct labour and manufacturing overhead are part of the

A budget that includes indirect materials, indirect labour and other indirect manufacturing costs is