Exam 6: Master Budget and Responsibility Accounting

Use the information below to answer the following question(s). Copper Corporation has the following sales budget for the last six months of 2016: Historically,the cash collection of sales has been as follows: 65 percent of sales collected in month of sale, 25 percent of sales collected in month following sale, 8 percent of sales collected in second month following sale,and 2 percent of sales is uncollectable. -Cash collections for October are

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

Use the information below to answer the following question(s). Berry's Boxes manufactures boxes.It expects to sell 20,000 boxes in 2015.The company had enough beginning inventory of direct materials to produce 24,000 units.Beginning inventory of finished units totalled 2,000 with a target ending inventory of 2,500 units.The boxes sell for $3.00 and the company keeps no work-in-process inventory.Direct materials costs for each box total $1.00 while direct labour is $0.50.Factory overhead is $0.20 per box. -What will be Berry's Boxes cost of goods sold in 2015?

Christy Enterprises reports the year-end information from 2015 as follows: Christy is developing the 2016 budget.In 2016 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 2016.

In a profit centre the manager is responsible for investments,revenues and expenses.

Responsibility accounting is a budgeting system that measures the plans and objectives of managers.

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

A rolling budget encourages management to be thinking about the next 12 months.

Sensitivity analysis helps to evaluate outcomes from changes in data or assumptions.

Direct material purchases equal

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). Fair Score Company manufactures scoreboards for athletic events.It expects to sell 20,000 scoreboards in 2015.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 cost of direct materials used in 2015?

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 2016: -On the 2016 budgeted income statement,what amount will be reported for gross margin?

The financial budget is that part of the master budget that comprises the capital budget,cash budget,operating budget,and budgeted balance sheet.

Use the information below to answer the following question(s). Grinnell Manufacturing Company has the following information for 2015: Budget Expenses per Month Note: All cash expenses are paid as incurred;Collections from sales are 50% in the month of sale and 50% in the month following the sale;December 2014 sales were $110,000. -What are the expected total cash receipts for February?

Budgets are advantageous because they

Use the information below to answer the following question(s). Contempo Futon manufactures futons.The estimated number of sales for the last quarter of 2015 is as follows: Beginning finished goods inventory should be equal to 30 percent of that month's budgeted sales plus 10 percent of the following month's budgeted sales.January and February 2015 sales are anticipated to be 15,000 futons in each month.The cost to produce a futon is $125. -How many futons will Contempo Futon budget to be produced in the three months?

The usual starting point in budgeting is to forecast net income.

Use the information below to answer the following question(s). Berry's Boxes manufactures boxes.It expects to sell 20,000 boxes in 2015.The company had enough beginning inventory of direct materials to produce 24,000 units.Beginning inventory of finished units totalled 2,000 with a target ending inventory of 2,500 units.The boxes sell for $3.00 and the company keeps no work-in-process inventory.Direct materials costs for each box total $1.00 while direct labour is $0.50.Factory overhead is $0.20 per box. -What will be Berry's Boxes production costs incurred for direct materials,direct manufacturing labour,and manufacturing overhead,respectively,for 2015?

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?