ACG 2071 EXAM 3 QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026

ACG 2071 EXAM 3 QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026 Budgets - Answers Plan or forecast regarding acquisition and uses of resources. Master Budget - Answers Comprehensive set of all budgets for operations Sales Budget - Answers Prepare first as base from which other budgets are generated. Order of Budgets - Answers 1) Sales Budget 2) Production Budget 3) Direct materials Budget 4) Direct Labor Budget 5)Manufacturing overhead budget 6) Operating Expenses budget 7) Budgeted income statement 8) Capital Expenditures Budget 9) Cash Budgets 10) Budgeted Balance Sheet Budgets that belong in the operating budget Category - Answers 1) Sales Budget 2) Production Budget 3) Direct Materials 4) Direct labor Budget 5) MOH budget 6) Operating Expenses budget 7) Budgeted income statement Budgets that belong in the financial budget category - Answers 8) Capital Expenditures budget 9) Cash budgets 10) budgeted balance sheet formula for sales budget - Answers number of sales x Sales price per unit= total sales revenue purpose for sales budget - Answers to plan for sales revenues in future periods Production budget is driven by _________ - Answers Sales budget formula for Production Budget - Answers Sales forecast ( in units) + projected ending inventory (want to keep) =total projected production needs - Beginning inventory = projected production in units Safety stock - Answers inventory kept on hand just in case Direct Material Purchases budget formula - Answers Projected material required for production + Projected ending inventory of material - projected beginning inventory of material = Quantity of material to be purchased * purchase price = DM purchases budget in dollars Formula for Direct Labor Budget - Answers Projected Production in units x Direct Labor hours per unit =Direct labor hours for production x Labor rate per hour =projected labor cost Cash Budgets include - Answers Cash collection budget & Cash payments budget (Pay attention to dates and time lags) How do debit cards and credit cards effect cash collections? - Answers reduces it because of transaction fees strategic planning - Answers long term 5-10 years zero-based budgeting - Answers starts at 0. Must justify each dollar included in budget. Budget committee - Answers reviews and approves final budget. Should include cross section of managers Budget Slack - Answers Managers may overestimate expenses and underestimate revenues in budget numbers Participative Budgeting - Answers Middle and lower levels of management are involved in the budget process cash budget formula - Answers Beginning cash balance + Budgeted cash collections = cash available - (budgeted cash Payments)= Ending cash balance before financing Primary purpose of budgets - Answers Planning, Coordination and Communication, Benchmarking title for chapter 9 - Answers Master Budget Decentralization - Answers "pushing" down management decisions to lower management levels responsibility accounting - Answers managers should be measured based on information and activities they have control over the 4 managerial centers - Answers Cost Center, Revenue center, Profit Center, Investment center Cost Center - Answers Manager must control costs revenue center - Answers manager must generate sales profit center - Answers manager must earn profits through generating sales and controlling costs investment center - Answers manager must earn profits and manage division's invested capital what is a variance? - Answers are differences between budget (or standard) amounts and actual amounts Favorable Variances - Answers differences that causes operating income to be higher than budgeted Unfavorable variances - Answers difference that cause operating income to be lower than budgeted control function - Answers evaluates performance of company Variance analysis - Answers compares actual results with flexible budget, eliminates variances due to volume difference Management by exception - Answers involves only taking action only when actual results deviate significantly form planned