Exam 6: Master Budget and Responsibility Accounting

Operating decisions primarily deal with ________.

Lubriderm Corporation has the following budgeted unit sales for the next six-month period: There were 30,000 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month. Five pounds of materials are required for each unit produced. Each pound of material costs $8. Inventory levels for materials are equal to 30% of the needs for the next month. Materials inventory on June 1 was 15,000 pounds. Required: a.Prepare production budgets in units for July, August, and September. b.Prepare a purchases budget in pounds for July, August, and September, and give total purchases in both pounds and dollars for each month.

Furniture, Inc., estimates the following number of mattress sales for the first four months of 2019: Finished goods inventory at the end of December is 7,100 units. Target ending finished goods inventory is 20% of the next month's sales. How many mattresses should be produced in the first quarter of 2019?

Companies implementing kaizen budgeting believe that employees who actually do the job have the best knowledge of how the job can be done better.

Activity-based budgeting would separately estimate ________.

Most computer-based financial planning models have difficulty incorporating sensitivity (what-if) analysis.

A responsibility center is a part, segment, or subunit of an organization, whose manager is accountable for a specified set of activities that impact revenues, costs, or profits and in the case of an investment center, profits.

A controllable cost is any cost that can be ________ by a responsibility center manager for a period of time.

Which of the following statements is true about responsibility accounting statements?

The cash budget is a schedule of expected cash receipts and disbursements that ________.

The following information pertains to the January operating budget for Murphy Corporation, a retailer: Budgeted sales are $208,000 for January Collections of sales are 60% in the month of sale and 40% the next month Cost of goods sold averages 64% of sales Merchandise purchases total $154,000 in January Marketing costs are $3,600 each month Distribution costs are $5,000 each month Administrative costs are $10,500 each month For January, budgeted gross margin is ________.

In general, which of the following budgets is prepared first?

Estate Corp., has the following information: Purchases are paid for in the following manner: 10% of the purchase amount in the month of purchase 50% of the purchase amount in the month after purchase 40% of the purchase amount in the second month after purchase What is the expected balance in Accounts Payable as of March 31?

The order to follow when preparing the operating budget is ________.

Kaizen refers to incorporating cost reductions ________.

Budgetary slack results because management sets challenging but achievable levels of expected performance.

Advanced Enterprises reports year-end information from 2018 as follows: Advanced is developing the 2019 budget. In 2019 the company would like to increase selling prices by 14.5%, and as a result expects a decrease in sales volume of 9%. 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. Should Advanced increase the selling price in 2019?

Activity-based budgeting ________.

________ is the usual starting point for budgeting.

Which of the following is true of master budgets?