Managerial Accounting - Chapters 8.9.& 10 Review Sheet Know definitions of terms. 1. What is the first step in budget preparation? 2. What are the benefits of budgeting? 3. What is the format for determining budgeted production needs? What is the format for determining the budget raw materials that should be purchased? 4. If total costs of an account billing activity center is $250,000. Cost behavior analysis indicates that fixed costs are $50,000. Activity analysis indicates that the cost driver for account billing activity is the number of lines printed, and the total lines printed are 1,000,000. What is the variable cost per unit? 5. What are factors that you would consider to estimate sales forecasts. 6. What is the difference in a master budget, static budget and a flexible budget? 7. What is the format for calculating a price variance? What is the format for calculating a quantity variance? What is a favorable versus unfavorable variance? Favorable/unfavorable material quantity variance Favorable/unfavorable material price variance. Which department should be responsible for the different variances? 8. What is a possible reason for a variance between a flexible budget and actual results? 9. When should variances be investigated? 10. What does a variable overhead efficiency variance measure? 11. How does the denominator level used to calculate overhead effect the cost of the product? 12. What is the difference in practical standards and ideal standards? Which is better to use? 13. What does standard quantity mean? 3.2.8 to 14. What is a self-imposed or participative budget? 15. How does an increase in activity effect? Total fixed costs Total variable costs Unit fixed costs Unit variable costs 16. How does a decrease in activity effect? Total fixed costs Total variable costs Unit fixed costs Unit variable costs 17. What is a continuous or perpetual budget? 18. When would budgets generate negative feelings? 19. S Company's sales budget show quarterly sales for the next year as follows: Quarter 1 Quarter 3 6,000 units Quarter 2 Quarter 4 4,000 units 7,000 units The company's policy is to have a finished goods inventory at the end of each quarter equal to 35% of next quarter's sales. How many units would be budgeted sales. How many units would be budgeted for production for the second quarter