Exam 6: Master Budget and Responsibility Accounting

Budgeted financial statements are also referred to as pro forma statements.

The actual data resulting from a strategy should be compared to budgeted results.

Planning the performance of the organization, providing a frame of reference, and investigating variances are part of the

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

Brad Corporation is developing its budgets for 2013 and for the first time will use the Kaizen approach. The initial 2013 income statement, based on static data from 2012, is as follows: Under the Kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 12%. Required: Prepare a Kaizen-based budgeted income statement for March of 2013.

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.

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.

The financial budget is that part of the master budget that comprises

Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget. 1. Capital expenditures budget 2. Cost of goods sold budget 3. Revenues budget 4. Budgeted statement of cash flows 5. Distribution costs budget 6. Marketing costs budget 7. Cash budget 8. Direct materials cost budget 9. Budgeted balance sheet 10. Budgeted income statement

Stark Company is developing its budgets for 2013 and for the first time will use the Kaizen approach. The initial 2013 income statement, based on static data from 2012 is as follows: Operating expenses (includes Selling prices for 2013 are expected to increase by 6 percent, and sales volume in units will decrease by 10 percent. The cost of goods sold as estimated by the Kaizen approach will decline by 10 percent per unit. Other than amortization, all other operating costs are expected to decline by 5 percent. Required: Prepare a Kaizen-based budgeted income statement for 2013.