Exam 6: Master Budget and Responsibility Accounting

Answer the following question(s)using the information below.Sherry and John Enterprises are using the Kaizen approach to budgeting for 2019.The budgeted income statement for January 2019 is as follows: Under the Kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month. -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.

Answer the following question(s)using the information below.Sherry and John Enterprises are using the Kaizen approach to budgeting for 2019.The budgeted income statement for January 2019 is as follows: Under the Kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month. -The Regina location of Catch Fish Inc.(CFI), a chain of stores that cater to fishing enthusiasts, is preparing its activity-based budget for 2020.CFI has three product categories: tackle, rods & reels, general merchandise like clothing and accessories.The following table shows the four activities that consume indirect resources at the Regina store, the cost drivers , cost driver rates, and the cost driver quantity budgeted to be consumed in each activity in 2020. Required: 1.For each product category calculate the activity-cost per unit sold for each of the four activities.2.Based on the result in "Required 1." which product category is most out of line with regard to the others in terms of activity cost per unit of sales? Comment on a possible cause for this difference.

Frame Antique manufactures picture frames.Sales for May are expected to be 20,000 units of various sizes.Historically, the average frame requires three metres of framing, one square metre of glass, and two square metres of backing.Beginning inventory includes 3,000 metres of framing, 1,000 square metres of glass, and 1,000 square metres of backing.Current prices are $0.20 per metre of framing, $4.00 per square metre of glass, and $1.50 per square metre of backing.Ending inventory should be 150 percent of beginning inventory.Purchases are paid for in the month acquired.Required: a.Determine the quantity of framing, glass, and backing that is to be purchased during May. b.Determine the total costs of direct materials for May purchases.

Answer the following question(s)using the information below.Sherry and John Enterprises are using the Kaizen approach to budgeting for 2019.The budgeted income statement for January 2019 is as follows: Under the Kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month. -What is budgeted gross margin for March 2019?

Nittany Company sells three products with the following seasonal sales pattern: The annual sales budget shows forecasts for the different products and their expected selling price per unit as follows: Required: Prepare a sales budget, in units and dollars, by quarters for the company for the coming year.

The major types of responsibility centres are

Use the information below to answer the following question(s).Gold Corporation has the following sales budget for the last six months of 2019: Historically, the cash collection of sales has been as follows: -What is the ending balance of accounts receivable at the end of September assuming uncollectible balance is written off in the third month after the sale?

Which of the following statements is TRUE concerning controllability of costs?

Use the information below to answer the following question(s).Samson Inc.expects to sell 10,000 barbells for $18.00 each.Direct materials costs are $5.00, direct manufacturing labour is $6.00, and manufacturing overhead is $2.50 per barbell.Each barbell requires 6 kilograms (kg)of material which is all added at the start of production.The units in work-in-process beginning and ending inventory were half complete as to direct labour and manufacturing overhead costs; the units in beginning inventory are completed before new units are started..Each barbell requires one-quarter hour of direct labour, and manufacturing overhead is allocated based on direct labour hours.Marketing costs are $2.00 per barbell.The following inventory levels are expected to apply to 2019: -On the 2019 budgeted income statement, what amount will be reported for gross margin?

Use the information below to answer the following question(s).Marguerite Inc..expects to sell 20,000 pool cues for $20.00 each.Direct materials costs are $2.00, direct manufacturing labour is $12.00, and manufacturing overhead is $0.80 per pool cue.Each pool cue requires 0.5 kilograms (kg)of material which is all added at the start of production.The units in work-in-process beginning and ending inventory were half complete as to direct labour and manufacturing overhead costs; the units in beginning inventory are completed before new units are started..Each pool cue requires one hour of direct labour, and manufacturing overhead is allocated based on direct labour hours.The following inventory levels are expected to apply to 2019: -How many pool cues need to be produced in 2019?

Use the information below to answer the following question(s).Marguerite Inc..expects to sell 20,000 pool cues for $20.00 each.Direct materials costs are $2.00, direct manufacturing labour is $12.00, and manufacturing overhead is $0.80 per pool cue.Each pool cue requires 0.5 kilograms (kg)of material which is all added at the start of production.The units in work-in-process beginning and ending inventory were half complete as to direct labour and manufacturing overhead costs; the units in beginning inventory are completed before new units are started..Each pool cue requires one hour of direct labour, and manufacturing overhead is allocated based on direct labour hours.The following inventory levels are expected to apply to 2019: -What are the 2019 budgeted costs for direct manufacturing labour?

Beginning with the cash budget, each budget supporting the master budget follows step by step in logical fashion.

Randy Company has budgeted sales of 12,000 units, target ending finished good inventory of 2,000 units, and a beginning finished goods inventory of 600 units.How many units should be produced?

When applied to budgets, responsibility accounting provides feedback to top management about the performance of different responsibility-centre managers relative to the budget.Name and briefly describe the three ways, presented in the textbook, that properly used variances can be helpful.

Barrieland Merchandising Firm is developing its budgets for 2019.The 2018 income statement is as follows: Operating expenses (includes Selling prices will increase by 10 percent and sales volume in units will decrease by 5 percent.The cost of goods sold as a percent of sales will increase to 62 percent.Other than amortization, all operating costs are variable.Required: Prepare a budgeted income statement for 2019.

Favata Company has the following information: In addition, the cost of goods sold rate is 70% and the desired inventory level is 30% of next month's cost of sales.Required: Prepare a purchases budget for July through September.

Kaizen budgeting is a budgetary approach that explicitly incorporates continuous improvement during the budget period into the resultant budget numbers.

Use the information below to answer the following question(s).Marguerite Inc..expects to sell 20,000 pool cues for $20.00 each.Direct materials costs are $2.00, direct manufacturing labour is $12.00, and manufacturing overhead is $0.80 per pool cue.Each pool cue requires 0.5 kilograms (kg)of material which is all added at the start of production.The units in work-in-process beginning and ending inventory were half complete as to direct labour and manufacturing overhead costs; the units in beginning inventory are completed before new units are started..Each pool cue requires one hour of direct labour, and manufacturing overhead is allocated based on direct labour hours.The following inventory levels are expected to apply to 2019: -How many kilograms of material will need to be purchased for 2019 production and inventory requirements?

One of the criticisms of traditional budgeting is not using budgets to evaluate performance until the end of the budget period.Which of the following proposals for change would address this criticism?

The improvements gained through Kaizen budgeting arise from large changes made during the budget period as a result of executive leadership.