Exam 6: Master Budget and Responsibility Accounting

Budgets can play both planning and control roles for management.

Use the information below to answer the following question(s).Daniel Inc.expects to sell 6,000 ceramic vases for $20 each in 2018.Direct materials costs are $2, direct manufacturing labour is $10, and manufacturing overhead is $3 per vase.Each vase 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 vase 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 2018: -On the 2018 budgeted income statement, what amount will be reported for gross margin?

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 the Fair Score Company budgeted amount of cost of goods sold?

The budgeted balance sheet must be prepared prior to the cash budget so that the required cash balance can be determined.

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: -Cash collections for September are

The reason for tracing a cost in responsibility accounting is to determine which of the following?

A limitation of comparing a company's performance against actual results of last year is that

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. -What is the ending cash balance for March after borrowing, if required?

Budgetary slack is automatically included in the revenue budget.

Christy Enterprises reports the year-end information from 2018 as follows: Christy is developing the 2019 budget.In 2019 the company would like to increase selling prices by 10%, and as a result expects a decrease in sales volume of 5%.Cost of goods sold as a percentage of sales is expected to increase to 62%.Other than depreciation, all operating costs are variable.Required: Prepare a budgeted income statement for 2019.

The process of getting a company's objectives understood and accepted by all departments and functions is known as

Use the information below to answer the following question(s).Konrade Inc.expects to sell 30,000 athletic uniforms for $80 each in 2019.Direct materials costs are $20, direct manufacturing labour is $8, and manufacturing overhead is $6 for each uniform.Each uniform requires 2.0 square metres (sq.m.)of material which is all added at the start of production.The following inventory levels are expected to apply to 2019: -What is the amount budgeted for cost of goods sold in 2019?

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: -Shamokin Manufacturing produces two products, Big and Bigger.Shamokin expects to sell 10,000 units of product Bigger and to have an inventory of 2,000 units of Bigger on hand at the end of the period.Currently, Shamokin has 800 units of Bigger on hand.Bigger requires two labour operations, molding and polishing.Each unit of Bigger requires one hour of molding and two hours of polishing.The direct labour rate for molding is $20 per molding hour and the direct labour rate for polishing is $25 per polishing hour.The expected number of hours of direct labour for Bigger is

Duffy Corporation has prepared the following sales budget: Collections are 40% in the month of sale, 45% in the month following the sale, and 10% two months following the sale.The remaining 5% is expected to be uncollectible.Required: Prepare a schedule of cash collections for July through September.

The objective of activity-based budgeting is to refine the budgeting process by partitioning indirect costs into different homogeneous activity cost pools.

How is budgeting for a multinational corporation different than budgeting for a corporation that is strictly domestic?

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. -Gimble Corporation 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: Under the Kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 9%.Required: Prepare a Kaizen-based budgeted income statement for March of 2019.

Picture Pretty manufactures picture frames.Sales for August are expected to be 10,000 units of various sizes.Historically, the average frame requires four metres of framing, one square metre of glass, and two square metres of backing.Beginning inventory includes 1,500 metre of framing, 500 square metres of glass, and 500 square metres of backing.Current prices are $0.30 per metre of framing, $6.00 per square metre of glass, and $2.25 per square metre of backing.Ending inventory should be 150% 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 August. b.Determine the total costs of direct materials for August purchases.

Tripp 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 revenue budget in dollars for each quarter.Present each quarter in a separate column and add a column to show total year sales.

The priority approach to budgeting is an incremental approach.