WGU D101: Essential Knowledge for Unit 7 in Cost and
Managerial Accounting
What is the first step in preparing a Master Budget in regard to Cost and Managerial? Accounting? -
correct answer ✔✔Creating the Sales Budget is the first step in the Master Budget process.
Who is responsible for creating the Sales Budget? - correct answer ✔✔The sales team, economic
analysts, and strategic planners are responsible for creating the Sales Budget.
What is a Sales Budget in regard to the Master Budget process for Cost and Managerial Accounting? -
correct answer ✔✔Sales Budget is a schedule of projected sales over the budget period, which often
includes a measure of revenue earned and cash collected from customers.
What are some of the difficulties in Projecting Sales in regard to preparing the Sales Budget? - correct
answer ✔✔Internal Variables: Price, sales effort, & advertising
External Variables: Business environment, customer needs & tastes, competition/barriers to entry,
seasonal cycles, & unexpected events.
What makes the accuracy of the Sales Budget so important in the Master Budget process for Cost and
Managerial Accounting? - correct answer ✔✔Because ALL of the other budgets in the Master Budget are
developed from the Sales Budget.
What are the steps included in preparing a Sales Budget (part 1)? - correct answer ✔✔1. Using both
internal & external variables, to estimate the number of finished products/units that will be sold during
the coming year.
2. Divide the projected annual sales of units into quarters to determine the estimated unit sales by
quarters.
What are the steps included in preparing a Sales Budget (part 2)? - correct answer ✔✔3. Multiply the
number of products sold in each quarter by the selling price of the products to arrive at total revenue in
dollars per quarter.
,What are the steps included in preparing a Sales Budget (part 3)? - correct answer ✔✔4. Determine
when the cash for each quarter's sales will be collected and multiply the appropriate percentages times
revenues per quarter.
5. Add the dollar amounts collected from each quarter's sales to arrive at the total cash collected each
month.
What is the Unit Sales Price in regard to the Sales Budget? - correct answer ✔✔The unit sales price is the
expected or average sales price each product is expected to be sold for in the next budget cycle or
budget period of time.
What is the unit sales price based on in regard to the Sales Budget creation process? - correct answer
✔✔Generally, it is based on projections from past experience and the estimated impact of future
competition on the unit sales price for each product.
What budget is prepared after the Sales Budget in regard to creating a Master Budget? - correct answer
✔✔After the sales budget is the Production Budget in the Master Budget planning process.
What are some important factors to be considered when preparing the Production Budget? - correct
answer ✔✔Production Budget Important Factors:
1. Projected sales volume (& timing).
2. Desired ending inventory.
3; Actual beginning inventory.
What is the risk if a manufacturing company runs out of finished goods? - correct answer ✔✔The risk is
that there will be lost sales (now & potentially forever). Also, it has a negative impact on the company's
reputation.
What is the risk if a manufacturing company has too many finished goods? - correct answer ✔✔The risk
that the manufacturing company will have excess resources tied up in inventory. Obsolete inventory
eventually sold at a loss. And where will they store the extra inventory and what is the associated cost.
What is an example of a Production Budget in regard to preparation for a Master Budget? - correct
answer ✔✔Production Budget:
Q1 Q2 Q3 Q4 Total_____
, Sales Volume 20 40 30 10 100 boats
Desired Ending Inventory 20 15 5 15 15 boats
Total Boats Needed 40 55 35 25 115 boats
Minus Beginning Inventory (10) (20) (15) (5) (10) boats
Total boats to Produce 30 35 20 20 105 boats
What is an example of a Sales Budget in regard to preparation for a Master Budget? - correct answer
✔✔Sales Budget:
What budget is created after the Production Budget in regard to preparation for a Master Budget? -
correct answer ✔✔After the Sales & Production Budgets are created, is the Direct Materials Budget.
What two categories is manufacturing overhead (MOH) expenses categorized? - correct answer ✔✔The
two categories of MOH manufacturing overhead are; variable and fixed.
What is VMOH Variable Manufacturing Overhead in regard to Cost and Managerial Accounting? - correct
answer ✔✔VMOH are expenses needed to produce a product that vary with the amount of the levels of
budgeted or actual production, including supervisor costs and maintenance costs.
What is FMOH Fixed Manufacturing Overhead in regard to Cost and Managerial Accounting? - correct
answer ✔✔FMOH are expenses that do not vary with the amount or the level of budgeted or actual
production within the relevant range that are needed to produce a product including factory
depreciation or rent.
Where does the information for Direct Materials Budget come from in regard to the creation of a Master
Budget for a manufacturing company? - correct answer ✔✔The information comes from the historical
practice of the business or industry. The "standard" referenced in this budget is a single unit produced.
What are two things that must be taken into consideration and balanced when creating the Direct
Materials Budget? - correct answer ✔✔A balance of efficiency in regard to the volume of material
needed to produce a single unit. As well as the fair achievability of the staff needed to produce a single
unit of product.
Managerial Accounting
What is the first step in preparing a Master Budget in regard to Cost and Managerial? Accounting? -
correct answer ✔✔Creating the Sales Budget is the first step in the Master Budget process.
Who is responsible for creating the Sales Budget? - correct answer ✔✔The sales team, economic
analysts, and strategic planners are responsible for creating the Sales Budget.
What is a Sales Budget in regard to the Master Budget process for Cost and Managerial Accounting? -
correct answer ✔✔Sales Budget is a schedule of projected sales over the budget period, which often
includes a measure of revenue earned and cash collected from customers.
What are some of the difficulties in Projecting Sales in regard to preparing the Sales Budget? - correct
answer ✔✔Internal Variables: Price, sales effort, & advertising
External Variables: Business environment, customer needs & tastes, competition/barriers to entry,
seasonal cycles, & unexpected events.
What makes the accuracy of the Sales Budget so important in the Master Budget process for Cost and
Managerial Accounting? - correct answer ✔✔Because ALL of the other budgets in the Master Budget are
developed from the Sales Budget.
What are the steps included in preparing a Sales Budget (part 1)? - correct answer ✔✔1. Using both
internal & external variables, to estimate the number of finished products/units that will be sold during
the coming year.
2. Divide the projected annual sales of units into quarters to determine the estimated unit sales by
quarters.
What are the steps included in preparing a Sales Budget (part 2)? - correct answer ✔✔3. Multiply the
number of products sold in each quarter by the selling price of the products to arrive at total revenue in
dollars per quarter.
,What are the steps included in preparing a Sales Budget (part 3)? - correct answer ✔✔4. Determine
when the cash for each quarter's sales will be collected and multiply the appropriate percentages times
revenues per quarter.
5. Add the dollar amounts collected from each quarter's sales to arrive at the total cash collected each
month.
What is the Unit Sales Price in regard to the Sales Budget? - correct answer ✔✔The unit sales price is the
expected or average sales price each product is expected to be sold for in the next budget cycle or
budget period of time.
What is the unit sales price based on in regard to the Sales Budget creation process? - correct answer
✔✔Generally, it is based on projections from past experience and the estimated impact of future
competition on the unit sales price for each product.
What budget is prepared after the Sales Budget in regard to creating a Master Budget? - correct answer
✔✔After the sales budget is the Production Budget in the Master Budget planning process.
What are some important factors to be considered when preparing the Production Budget? - correct
answer ✔✔Production Budget Important Factors:
1. Projected sales volume (& timing).
2. Desired ending inventory.
3; Actual beginning inventory.
What is the risk if a manufacturing company runs out of finished goods? - correct answer ✔✔The risk is
that there will be lost sales (now & potentially forever). Also, it has a negative impact on the company's
reputation.
What is the risk if a manufacturing company has too many finished goods? - correct answer ✔✔The risk
that the manufacturing company will have excess resources tied up in inventory. Obsolete inventory
eventually sold at a loss. And where will they store the extra inventory and what is the associated cost.
What is an example of a Production Budget in regard to preparation for a Master Budget? - correct
answer ✔✔Production Budget:
Q1 Q2 Q3 Q4 Total_____
, Sales Volume 20 40 30 10 100 boats
Desired Ending Inventory 20 15 5 15 15 boats
Total Boats Needed 40 55 35 25 115 boats
Minus Beginning Inventory (10) (20) (15) (5) (10) boats
Total boats to Produce 30 35 20 20 105 boats
What is an example of a Sales Budget in regard to preparation for a Master Budget? - correct answer
✔✔Sales Budget:
What budget is created after the Production Budget in regard to preparation for a Master Budget? -
correct answer ✔✔After the Sales & Production Budgets are created, is the Direct Materials Budget.
What two categories is manufacturing overhead (MOH) expenses categorized? - correct answer ✔✔The
two categories of MOH manufacturing overhead are; variable and fixed.
What is VMOH Variable Manufacturing Overhead in regard to Cost and Managerial Accounting? - correct
answer ✔✔VMOH are expenses needed to produce a product that vary with the amount of the levels of
budgeted or actual production, including supervisor costs and maintenance costs.
What is FMOH Fixed Manufacturing Overhead in regard to Cost and Managerial Accounting? - correct
answer ✔✔FMOH are expenses that do not vary with the amount or the level of budgeted or actual
production within the relevant range that are needed to produce a product including factory
depreciation or rent.
Where does the information for Direct Materials Budget come from in regard to the creation of a Master
Budget for a manufacturing company? - correct answer ✔✔The information comes from the historical
practice of the business or industry. The "standard" referenced in this budget is a single unit produced.
What are two things that must be taken into consideration and balanced when creating the Direct
Materials Budget? - correct answer ✔✔A balance of efficiency in regard to the volume of material
needed to produce a single unit. As well as the fair achievability of the staff needed to produce a single
unit of product.
