Chapter 22
what are the benefits of budgeting? - ANS-planning ahead, coordination of activities, greater
management awareness, motivates personnel, an early warning system for potential problems
when are budgets prepared? - ANS-budget process for the following year starts several months
before the end of the current year
for how long of a period are budgets prepared? - ANS-usually one year
what are the operating budgets? - ANS-sales, production, direct materials, direct labor,
manufacturing overhead, selling/administrative expenses, and budgeted income statement
what are the financial budgets? - ANS-capital expenditure, cash, and budgeted balance sheet
what is managing by exception? - ANS-top management reviews the budget while focusing on
differences between the planned and actual budgets
what is the criteria used for managing by exception? - ANS-materiality and controllability of the
item
what is the most common form of budgeting? - ANS-bottom-up or participative budgeting
what are the benefits of budgeting? - ANS-planning ahead, coordination of activities, greater
management awareness, motivates personnel, an early warning system for potential problems
when are budgets prepared? - ANS-budget process for the following year starts several months
before the end of the current year
for how long of a period are budgets prepared? - ANS-usually one year
what are the operating budgets? - ANS-sales, production, direct materials, direct labor,
manufacturing overhead, selling/administrative expenses, and budgeted income statement
what are the financial budgets? - ANS-capital expenditure, cash, and budgeted balance sheet
what is managing by exception? - ANS-top management reviews the budget while focusing on
differences between the planned and actual budgets
what is the criteria used for managing by exception? - ANS-materiality and controllability of the
item
what is the most common form of budgeting? - ANS-bottom-up or participative budgeting
