Podcast
Questions and Answers
What is the initial step in an ideal budget process?
What is the initial step in an ideal budget process?
- The final budget is approved by line managers
- Budget participants outside of top management prepare an initial budget draft (correct)
- Budget participants at all levels discuss and revise the budget draft iteratively
- The budget draft is revised based on top management input
Who approves the final budget in an ideal budget process?
Who approves the final budget in an ideal budget process?
- Next management level up
- Budget participants from all levels
- Top management (correct)
- Line managers
What approach does an ideal budget process blend together?
What approach does an ideal budget process blend together?
- Participative and authoritative approaches (correct)
- Bottom-up and lateral approaches
- Democratic and autocratic approaches
- Collaborative and individualistic approaches
What perspective does top management provide in the budget approval process?
What perspective does top management provide in the budget approval process?
Who is involved in revising the initial budget draft in an ideal budget process?
Who is involved in revising the initial budget draft in an ideal budget process?
Why does top management play a crucial role in budget approval?
Why does top management play a crucial role in budget approval?
In the text, why is it mentioned that plans in one area may impact the plans in another area?
In the text, why is it mentioned that plans in one area may impact the plans in another area?
Why does sharing the budget with the entire department not facilitate communication and coordination according to the text?
Why does sharing the budget with the entire department not facilitate communication and coordination according to the text?
What is one key aspect of successful budgeting highlighted in the text?
What is one key aspect of successful budgeting highlighted in the text?
Based on the text, what role do line managers typically have in the budgeting process?
Based on the text, what role do line managers typically have in the budgeting process?
Why is it important for different areas in an organization to coordinate their activities and plans according to the text?
Why is it important for different areas in an organization to coordinate their activities and plans according to the text?
What does the text imply about budgets created by top management?
What does the text imply about budgets created by top management?
What is the reason for the low rate of production during the first 2 hours of work?
What is the reason for the low rate of production during the first 2 hours of work?
Based on the supervisor's points, how long does it take to produce 1 unit of Tool A?
Based on the supervisor's points, how long does it take to produce 1 unit of Tool A?
Why did the management representative set a target of 15 units of Tool A per day per worker?
Why did the management representative set a target of 15 units of Tool A per day per worker?
Why is the target set by the management representative considered unrealistic?
Why is the target set by the management representative considered unrealistic?
How does selecting the lowest cost vendor each time affect costs over the years?
How does selecting the lowest cost vendor each time affect costs over the years?
What impact would decreasing the percentage of cash sales relative to credit sales have on expected cash disbursements in a cash budget?
What impact would decreasing the percentage of cash sales relative to credit sales have on expected cash disbursements in a cash budget?
How do cash sales and credit sales impact expected cash receipts in a cash budget?
How do cash sales and credit sales impact expected cash receipts in a cash budget?
In what way do credit sales impact the cash collections in a business?
In what way do credit sales impact the cash collections in a business?
What percentage of credit sales does Avery Manufacturing collect in the month following the sale?
What percentage of credit sales does Avery Manufacturing collect in the month following the sale?
Which budget provides a summary of budgeted cash inflows and outflows for a specific period?
Which budget provides a summary of budgeted cash inflows and outflows for a specific period?
What sources contribute to the cash collections in December for Avery Manufacturing?
What sources contribute to the cash collections in December for Avery Manufacturing?
What is the planned production of action figures for December?
What is the planned production of action figures for December?
How many bikes should Spartan Bicycles manufacture for the month of June?
How many bikes should Spartan Bicycles manufacture for the month of June?
What does a decrease in desired ending inventory of finished goods inventory do to the units needed to be produced?
What does a decrease in desired ending inventory of finished goods inventory do to the units needed to be produced?
If the beginning inventory for December was 30,000 action figures instead of 36,300, what would be the impact on planned production?
If the beginning inventory for December was 30,000 action figures instead of 36,300, what would be the impact on planned production?
Why is the ending inventory for May equal to the beginning inventory for June?
Why is the ending inventory for May equal to the beginning inventory for June?
What is the impact of an increase in beginning finished goods inventory on the production budget?
What is the impact of an increase in beginning finished goods inventory on the production budget?
Flashcards are hidden until you start studying
Study Notes
Budgeting Process
- An ideal budget process blends elements of both authoritative (top-down) and participative (bottom-up) approaches.
- The initial budget draft is revised in an iterative process based on discussion between participants at different management levels.
- Top management reviews and approves the budget, not line managers.
Role of Top Management
- Top management's role in successful budgeting is to ensure the budget is consistent with the company's strategic direction.
- Top management approving the budget improves it because they have a better perspective.
Cash Budget
- A cash budget provides a summary of budgeted cash inflows and outflows from all sources for a given period of time.
- Cash receipts are mainly from cash sales and the collection of credit sales.
- Decreasing the percentage of cash sales relative to credit sales would decrease expected cash receipts in a cash budget.
Budgeting and Communication
- Budgeting involves setting plans for all areas of the organization.
- The budgeting process facilitates communication and coordination of organizational activities.
- Sharing budgets with other departments helps to coordinate plans and activities.
Successful Budgeting
- If top management understands and supports a finalized budget, it is more likely to be successful.
- Budgets created by top management are likely to be more successful than budgets created by line managers.
Production Budget
- A production budget is prepared based on the sales forecast and desired inventory levels.
- The target production level should be realistic and achievable.
- Unrealistic targets can result in higher negative variance from actual.
Standards in Budgeting
- Examples of standards that can be used in budgeting include the time taken to process an invoice or the time taken to produce a unit.
- These standards help to set realistic targets and prepare budgets.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
