Introduction to Managerial Finance

What are some common criticisms of budgeting?

• Uncertainty, operation by people, parochialism, pet projects, fear of failure, empire building

• Inaccurate financial target setting, lack of long-term planning, insufficient budget committee involvement

• Lack of communication in the budgeting process, failure to meet budgeted targets, poor coordination of budgets

• Budgeting as a time-consuming process, ineffective allocation of resources, lack of flexibility

What is a standard cost?

• A predetermined cost used as a benchmark for evaluating actual costs.
• The average cost of a product
• The lowest cost of a product
• The highest cost of a product

What is the purpose of standard costs in budgeting?

• To provide flexibility in budgeting and performance evaluation.
• To increase costs for planning, controlling, and evaluating performance.
• To eliminate the need for budgeting and performance evaluation.
• To control actual performance and analyze variances

Which of the following is not one of the budgets that are prepared during the budgeting process?

• Cash flow budget
• Operating budget
• Sales budget
• Capital budget

What is the master budget?

• The master budget is a comprehensive financial plan that includes all of the budgets and financial forecasts for an entire organization.
• The master budget is a tool used to track employee attendance and payroll.
• The master budget is a document that outlines the marketing strategies for a company.
• The master budget is a report that summarizes the financial performance of a company for a specific period of time.

What is the budgeting process?

• The budgeting process is the process of creating a plan for how to spend and allocate financial resources.
• The budgeting process is the process of investing in stocks and bonds.
• The budgeting process is the process of saving money for future use.
• The budgeting process is the process of tracking expenses and income.

What is not one of the conflicting roles of budgeting?

• Monitoring performance
• Allocating resources
• Budget creation for short-term plans

• Setting financial goals

What is a budget?

• Plans of action for future periods

• A budget is a financial plan that estimates income and expenses for a specific period of time.
• A definition for budgeting

• A financial plan for implementing management decisions

Which of the following is not a stage in the budgeting process?

• Identification of the principal budget factor

• Analysis
• Execution
• Planning

Where does the data about the expected price and usage of resources in the budget come from?

• Coordination and review of budgets

• Standard costing system

• Budgeted total cost

• Budget committee