Exam 15: Budgets

A situation where the involvement of lower-level managers in the budget process is merely 'window dressing', that is, they appear to be involved but in fact are not, is referred to as 'pseudoparticipation'.

Which of the following describes responsibility accounting?

A cash budget is one in which:

Southern Mills is a textile manufacturing company in eastern Tennessee. Every year the company prepares a complete set of budgets. The budgeting process begins with information supplied by the Sales and Marketing department. The balance in inventory at the beginning of the year was 500 000 square yards of fabric. The company plans to have inventory at the end of the month equal to 50% of the following month's sales. The marketing department has predicted unit sales (in square yards of fabric) to be as follows: Required:

What is a sales budget, and how is it generated?

For control and planning purposes, an annual budget is normally broken down into quarterly, monthly and weekly periods, which are dependent on the needs of the organisation and the state of the economy.

Which of the following is not a reason for implementing a budget?

All customers took the maximum allowed time to pay. All credit customers paid the amounts owing by the due date. How much cash did RTU receive in September?

A production budget is prepared on the basis of determining the production level needed to satisfy sales demand and ensure that the inventory levels are sufficient for the period. Therefore production is equal to sales plus closing inventory less opening inventory.

Planning and random variances can generally be controlled, but operating variances cannot be controlled.

The best way to achieve more accurate and achievable budgets is to:

Budgets are developed in RKH Corporation by soliciting input from responsible employees once a year. This technique is best described as:

Positive behaviour flows when :

Southern Mills is a textile manufacturing company in eastern Tennessee. Every year the company prepares a complete set of budgets. The budgeting process begins with information supplied by the Sales and Marketing department. Variable manufacturing costs, for which direct labour hours is the cost driver, are expected to be $2 120 800. Fixed manufacturing overhead is expected to be $2 400 000 for the quarter. The fixed expenses include monthly depreciation expense of $100 000. Budgeted direct labour hours are as follows: Required:

'Budgetary slack' can be referred to as dysfunctional behaviour where managers deliberately understate or overstate elements of a budget such as sales or costs in order to achieve budget.

A collection of individual functional budgets is known as a:

Responsibility accounting reports are used:

All credit customers paid the amounts owing by the due date. How much credit sales did RTU Ltd have for July?

Responsibility accounting is where an entity is structured into strategic business units and the performance of these units is measured in terms of accounting results.

How much total cash did RTU receive in August?