All of the following are necessary for budgets to be effective except Select one: a. Employees affected by a budget should be consulted when it is prepared. b. All budgeted amounts must be spent to ensure that budgets arent reduced for the next period c Coals should be challenging and attainable O d Managers must be aware of potential negative outcomes of budgeting. such as budgetary slack

All of the following are necessary for budgets to be effective except Select one: a. Employees affected by a budget should be consulted when it is prepared. b. All budgeted amounts must be spent to ensure that budgets arent reduced for the next period c Coals should be challenging and attainable O d Managers must be aware of potential negative outcomes of budgeting. such as budgetary slack

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Should a manager blame his subordinates if a budget target is not achieved? Explain briefly! Give a few lines answer
It is important for institutions to budget and to further have feedback by receiving regular budgetary control reports in order to facilitate budget centres take control action. The report may or may not be detailed but ideally should contain sufficient information in order to motivate individual managers. Reports to top managers can be exceptional in nature. It is also essential for companies to conduct forecasting as they conduct their business. Required: Define the following terms: iii. Feed -back loop. Explain this as it applies in the Control Circle. iv. Identify and explain in detail features of feed- back which add value to the management of an institution.
Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following is not considered a human behavior problem? Allowing employees the opportunity to be a part of the budget process Allowing goals to be so low that employees develop a "spend it or lose it" attitude Setting goals too tightly making it difficult to meet performance expectation Setting goals among managers that conflict with one another
Which of the following is not a benefit of participative budgeting? Multiple Choice It serves as training or development for managers. It provides information that employees know but managers do not. It reduces or eliminates the need for tracking actual cost activity. It enhances employee motivation and acceptance of goals.
Jim Thome has prepared the following list of statements about budgetary control. Identify each statement as true or false. 2. 3. 4. 5. 6. 7. 8. 9. 10. Budget reports compare actual results with planned objectives. All budget reports are prepared on a weekly basis. Management uses budget reports to analyze differences between actual and planned results and determine their causes. As a result of analyzing budget reports, management may either take corrective action or modify future plans. Budgetary control works best when a company has an informal reporting system. The primary recipients of the sales report are the sales manager and the vice-president of production. The primary recipient of the scrap report is the production manager. A static budget is a projection of budget data at one level of activity. Top management's reaction to unfavourable differences is not influenced by the materiality of the difference. A static budget is not appropriate in evaluating a manager's effectiveness…
"Budgetary slack" occurs when: Employees refuse to adhere to budgeted plans and operations. The budget is so difficult to meet that employees slack-off from work. An authoritative, or imposed, budgeting process is used. To "meet" budget objectives, employees ask for resources in excess of what they need. Employees ask for fewer resources than they need, in order to continuously improve.
IS THE STATEMENT CORRECT OR INC
If a manager is not able to meet the budget and it has been ________________ , the manager can alwayssay that the budget was unreasonable or unrealistic to start with, and therefore was impossibleto meet.
Budgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following situations will likely lead to human behavior problems? a. allowing employees the opportunity to be a part of the budget process b. setting goals too loosely, creating a budgetary slack c. setting goals that are consistent across the firm d. setting goals that are reasonable and attainable
Which of the following statements is/are true? Select one: O a. One disadvantage of participative budgeting is employees' tendency to overestimate of revenues. O b. In a production budget, beginning inventory in units plus budgeted units to be produced equals unit sales minus targeted ending inventory in units. O C. All of the given statements are true O d. Production and inventory budgets form the basis for developing the sales budget. O e. When managers intentionally set budgeted costs too high and budgeted revenues too low, they are creating budgetary slack.