Exam 6: Master Budget and Responsibility Accounting

Answer the following question(s)using the information below.Furniture Inc.estimates the following number of mattress sales for the first four months of 2019: Finished goods inventory at the end of December 2018 is 1,500 units.Target ending finished goods inventory is 30% of the next month's sales. -The budgeting process generally concludes with the preparation of the

Explain what is meant by sensitivity analysis in budgeting, and discuss how managers might use sensitivity analysis in practice.

Manufacturing overhead costs for the budget include

Unit sales of Product 1 are currently 20,000, while unit sales of Product 2 are currently double those of Product 1.What will the company's sales forecast be assuming sales of Product 1 increase by 10 percent and those of Product 2 go up by 8,000 units from the current level?

The production budget of a manufacturing company is prepared after the revenue budget.

Rick Christensen is the new division manager of Fastfood Sales.His division is considered a responsibility centre, and he has control over all costs and revenue of the division.His predecessor had been dismissed from the company because he could not keep the revenues and costs with acceptable variances on a quarterly basis.However, the former manager had relatively good annual reports.Christensen is very concerned about the situation because Fastfood has a somewhat seasonal business and it is very difficult to keep sales up during the winter months.He is considering changing jobs after only a few months but wants some advice as to the likelihood that he will be able to keep revenue and costs under control throughout the year.Required: Distinguish between controllable and uncontrollable aspects of revenue and costs.Can a manager totally control all revenue and costs? Why or why not?

Answer the following question(s)using the information below.The following information pertains to Hepburn Company: Cash is collected from customers in the following manner: 40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.Labour costs are 20% of sales.Other operating costs are $30,000 per month (including $8,000 of depreciation).Both of these are paid in the month incurred.The cash balance on March 1 is $8,000.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?

Use the information below to answer the following question(s).Fair Score Company manufactures scoreboards for athletic events.It expects to sell 20,000 scoreboards in 2018.The company has enough beginning inventory of direct materials to produce 8,000 units.Beginning work-in-process inventory totals 2,000 units and is 100 percent complete as to material and 50 percent complete as to labour and overhead.Beginning finished units total 4,000 with a target ending finished inventory of 3,000 units.The scoreboards sell for $800.There is no ending work-in-process inventory.Direct materials costs for each scoreboard total $200 while direct labour is $80.Manufacturing overhead is $60 per scoreboard. -What will be Fair Score Company's budgeted total sales for 2018?

Use the information below to answer the following question(s).Country Heather manufactures flowerpots.It expects to sell 40,000 flowerpots in 2019.The company had enough beginning inventory of direct materials to produce 48,000 units.Beginning inventory of finished units totalled 4,000 with a target ending inventory of 5,000 units.The flowerpots sell for $6.00 and the company keeps no work-in-process inventory.Direct materials costs for each flowerpot total $2.00 while direct labour is $1.00.Factory overhead is $0.40 per flowerpot. -What will be Country Heather's total costs incurred for direct materials, direct manufacturing labour, and manufacturing overhead, respectively, for 2019?

The cash cycle describes the movement of cash from producing inventories to receivables from sales and back to cash from collections.

Management at all levels should understand and support the budget and all aspects of the management control system.

Describe some of the drawbacks of using the operating budget as a control device.

Kaizen budgeting, adapted from the Japanese, provides that

Edwards Company has the following projected account balances for June 30, 2018: Required: a.Prepare a budgeted income statement for June 2018. b.Prepare a budgeted balance sheet as of June 30, 2018.

Use the information below to answer the following question(s).Copper Corporation has the following sales budget for the last six months of 2019: Historically, the cash collection of sales has been as follows: -Cash collections for October are

A budget is a quantitative expression for a set time period of a proposed future plan of action by management.

Stretch goals in budgeting tend to

Gerdie Company has the following information: In addition, the gross profit rate is 40% and the desired ending inventory level is 30% of next month's cost of sales.Required: Prepare a purchases budget for April through June.

It is best to compare this year's performance with last year's actual performance rather than this year's budget.

Discuss the importance of the sales forecast and items that influence its accuracy.