Exam 6: Master Budget and Responsibility Accounting

Orange Corporation has budgeted sales of 23,000 units, targeted ending finished goods inventory of 9,000 units, and beginning finished goods inventory of 6,000 units. How many units should be produced next year?

Allscott Company is developing its budgets for 2019 and, for the first time, will use the kaizen approach. The initial 2019 income statement, based on static data from 2018, is as follows: Selling prices for 2019 are expected to increase by 8%, and sales volume in units will decrease by 10%. The cost of goods sold as estimated by the kaizen approach will decline by 10% per unit. Other than depreciation, all other operating costs are expected to decline by 5%. Required: Prepare a kaizen-based budgeted income statement for 2019.

Omitting basic maintenance expenditures out of a budget could be considered unethical if the risks of a breakdown and loss are substantial.

A budget generally includes only the financial aspects of management's plan.

Rolling budgets help management to ________.

Which of the following departments is most likely to be a profit center?

________ include a budgeted statement of cash flows and a budgeted balance sheet.

Three Bears Manufacturing produces an auto-quartz watch movement called OM362. Three Bears expects to sell 20,000 units of OM362 and to have an ending finished inventory of 7,000 units. Currently, it has a beginning finished inventory of 1,200 units. Each unit of OM362 requires two labor operations, three labor hour(s) of assembling and three labor hour(s) of polishing. The direct labor rate for assembling is $14 per assembling hour and the direct labor rate for polishing is $17.50 per polishing hour. The expected cost of direct labor for OM362 is ________.

Kaizen budgeting can be applied to activities such as setups with the goal of reducing setup time and setup costs.

A budget is the quantitative expression of a proposed plan of action by management for a specified period.

Which of the following is the most frequently used budget periods used in business?

Kaizen budgeting is driven by ________.

Rolling budgets help in reducing budgetary slack.

The following information pertains to Monroe Company: -Cash is collected from customers in the following manner: Month of sale30% Month following the sale70%-45% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month. -Labor costs are 20% of sales. Other operating costs are $32,000 per month (including $8,000 of depreciation). Both of these are paid in the month incurred. -The cash balance on March 1 is $8,900. A minimum cash balance of $6,000 is required at the end of the month. Money can be borrowed in multiples of $1,000. What is the ending cash balance for March?

The possibility of exchange rate fluctuations does NOT influence the budgeting procedures in a multinational corporation.

Activity-based budgeting makes it easier to ________.

The following information pertains to Monroe Company: -Cash is collected from customers in the following manner: Month of sale40% Month following the sale60% -45% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month. -Labor costs are 30% of sales. Other operating costs are $38,000 per month (including $10,000 of depreciation). Both of these are paid in the month incurred. -The cash balance on March 1 is $8,000. A minimum cash balance of $6,000 is required at the end of the month. Money can be borrowed in multiples of $1,000. How much cash will be disbursed in total in March?

Violet Sales Corp, reports the year-end information from 2019 as follows: Violet is developing the 2019 budget. In 2019 the company would like to increase selling prices by 3.5%, and as a result expects a decrease in sales volume of 14%. All other operating expenses are expected to remain constant. Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost. What is budgeted cost of goods sold for 2019?

To reduce budgetary slack management may ________.

Kaizen budgeting does NOT make sense for cost centers.