I. QUESTIONS 1. "As a practical matter, planning and control mean exactly the same thing." Doyou agree?Explain. 2. Budgets are half-used if they serve only as a planning device?Explain. 3. Whatarethe twomajorfeatures ofabudgetaryprogram?Whichfeature ismore important?why? 4. Explain briefly how a budget can be used in costingproducts. 5. Why must sales and production becoordinated? 6. How can a labor hour budget be translated into a labor costbudget? 7. How are long-range plans for the acquisition of plant assets included incurrent budgets? 8. What is the budget period? Is a budget prepared for a month, fora year, or for some other interval of time?Explain. 9. What is rolling, continuous, or progressive budget? 10. Explain how a comparison of actual results with a budget can be applied inthe control ofoperations. 11. Can a comparison of actual results with a budget lead to better futurebudget? Explain. 12. What is a self-imposed budget? What are the major advantages of self-imposed budgets? What cautions must be exercised in theiruse? 13. "The principal purpose of the cash budget is to see how much cash the company will have in the bank at the end of the year." Do you agree? Explain. 14. How does zero-based budgeting differ from traditionalbudgeting? 15. What is a budget? What is budgetarycontrol? 16. Discuss some of the major benefits to be gained frombudgeting. 17. What is master budget? Briefly describe itscontents.18. Describe the flow of budget? Data in an organization. Who are the participants in the budgeting process, and how do theyparticipate? 19. How can budgeting assist a company in planning its workforce staffing levels? II. MATCHINGTYPE. Match the definitions enumerated on the right column with the terms on the left column. 1. Salesforecast A. A quantitative benchmark for measuring company achievement. 2. Managementbyexception B. A budget reflecting long-rangedecisions of the company. 3. Responsibilityaccounting C. The most important input forbudget preparation. All estimates of activity depend upon this information. 4. Statement offinancialposition D. An integrated plan of action for thefirm as a whole, expressed in financial term. 5. Performancebudget E. A system that relates costs to organizational structure. 6. Objective F. An integrated statement ofresource levels and theirsources. 7. Capitalexpendituresbudget G. A set of statements providingbroad direction for the firm. 8. Profitplan I. The practice of focusing attention on those activities where the actual performance differs significantly from plannedperformance. 9. Masterbudget J. A budget prepared after the fact, showing what cost should have beenat the actual level ofactivity. 10. Goals K. An operating budget for a specific future period oftimeIII. EXERCISES Exercise 1 (Schedule of expected Cash Collection) Peak sales for Mideast Products, Inc., occur in August. The company's sales budget for the third quarter showing these peak sales is given below July August September Total Budgeted sales ...mmmmmm! P600,000 P900,000 P2,000,000 P2,000.000 From past experience, the company has learned that 20%% of a month's sales are collected in the month of sale, that another 70%% is collected in the month following sale, and that the remaining 10% is collected in the second month following sale. Bad debts are negligible and can be ignored. May sales totaled P430,000 and June sales totaled P540,000. Required: 1. Prepare a schedule of expected cash collections from sales, bymonth and in total, for the third quarter. 2. Assume that the company will prepare a budgeted statement of financial position as of September 30. Compute the accounts receivable as ofthat date. Exercise 2 (Production Budget) Rock Telecom has budgeted the sales of its innovative mobile phone over the next four months as follows: Sales in Units July...... 30,000 August . Emm 45,000 September... 60,000 Odober... .. 50.000 The company is now in the process of preparing a production budget for the third\fH H