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Chapter 22: 1TIAT (page 1262)

Match the following statements to the appropriate budgeting objective or benefit: developing strategies, planning, directing, controlling, coordinating and communicating, and benchmarking.

1. Managers are required to think about future business activities.

2. Managers use feedback to identify corrective action.

3. Managers use results to evaluate employees’ performance.

4. Managers work with managers in other divisions.

Short Answer

Expert verified
  1. Planning
  2. Controlling
  3. Benchmarking
  4. Coordinating and communicating

Step by step solution

01

Planning is a budgeting benefit 

Managers are required to think about future business activities in a systematic wayso that the decisions can be taken as per formalized plan and haphazard decision making can be avoided.

02

Controlling is a budgeting objective

Managers use feedback to identify corrective action.The controlling step is not the end but a start to developing strategies step.

03

Benchmarking is a budgeting benefit

Managersuse results to evaluate employees’ performance by comparing them with the benchmarks set by the company.

04

Coordinating and communicating is a budgeting benefit

Managers work with managers in other divisions so thatthey can work together to make a single, unified, comprehensive plan for the business.

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Most popular questions from this chapter

What is budgetary slack? Why might managers try to build slack into their budgets?

Patrick works for McGill’s Computer Repair, owned and operated by Frank McGill. As a computer technician, Patrick has grown accustomed to friends and family members asking for assistance with their personal computers. In an effort to increase his income, Patrick started a personal computer repair business that he operates out of his home on a part-time basis, working evenings and weekends. Because Patrick is doing this “on the side” for friends and family, he does not want to charge as much as McGill’s charges its customers. When Frank McGill assigned Patrick the task of developing the budget for his department, Patrick increased the amount budgeted for computer parts. When the budget was approved, Patrick purchased as many parts as the budget allowed, even when they were not needed. He then took the extra parts home to use in his personal business in an effort to keep his costs down and profits up. So far, no one at McGill’s has asked about the parts expense because Patrick has not allowed the actual amount spent to exceed the budgeted amount.

Requirements

1. Why would Patrick’s actions be considered fraudulent?

2. What can a company do to protect against this kind of business risk?

Preparing a financial budget—schedule of cash payments

Jefferson Company has budgeted purchases of merchandise inventory of \(457,500 in January and \)533,250 in February. Assume Jefferson pays for inventory purchases 70% in the month of purchase and 30% in the month after purchase. The Accounts Payable balance on December 31 is $98,275. Prepare a schedule of cash payments for purchases for January and February.

Question: List the four budgeting objectives.

In a manufacturing company, what are the three types of budgets included in the master budget? Describe each type.
See all solutions

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