Chapter 9, Problem 9.3SE

Understanding key terms and definitions (Learning Objectives 1 & 2)

Listed next are several terms. Complete each of the following statements with one of these terms. You may use a term more than once, and some terms may not be used at all.

Budget committees	Financial budgets	Master budget	Operating budgets
Participative budgeting	Production budget	Rolling budget	Safety stock
Slack	Strategic planning	Variance	Zero-based budgeting

1. a. ______is extra inventory of finished goods that is kept on hand in case demand is higher than predicted or problems in the factory slow production.
2. b. Managers will sometimes build ______into their budgets to protect themselves against unanticipated expenses or lower revenues.
3. c. The sales budget and production budget are examples of ______.
4. d. The ______is used to forecast how many units should be made to meet the sales projections.
5. e. ______is a budgeting process that begins with departmental managers and flows up through middle management to top management.
6. f. ______is a budget that is continuously updated by adding months to the end of the budgeting period.
7. g. The ______is the difference between actual and budgeted figures and is used to evaluate how well the manager controlled operations during the period.
8. h. ______is the comprehensive planning document for the entire organization.
9. i. When an organization builds its budgets from the ground up, it is using ______.
10. j. These budgets, ______, project both the collection and payment of cash and forecast the company’s budgeted balance sheet.
11. k. ______is the process of setting long-term goals that may extend several years into the future.
12. l. ______are often used by companies to review submitted budgets, make revisions as needed, and approve the final budgets.