Exam 6: Master Budget and Responsibility Accounting

For next year Flexsteel Company has budgeted sales of 40,000 units,target ending finished goods inventory of 2,000 units,and a beginning finished goods inventory of 1,200 units.All other inventories are zero.How many units should be produced?

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

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. -How many scoreboards should Fair Score Company produce in 2015?

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?

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.

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. -What will be Contempo Futon's cost of goods manufactured for December?

Brad Corporation is developing its budgets for 2016 and for the first time will use the Kaizen approach.The initial 2016 income statement,based on static data from 2015,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 2016.

Budgeting is done in place of "strategic analysis."

The master budget embraces the impact of both operating decisions and financing decisions as related to acquisitions and uses of scarce resources.

Stretch goals in budgeting tend to

A criticism of traditional budgeting is "Excessive reliance on extrapolating past trends." Which of the following is a proposal for change to address this criticism?

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: -How many kilograms of material will need to be purchased for 2016 production and inventory requirements?

Cooper Company has a production schedule of 18,000 units and a budgeted sales volume of 20,000 units for the current year.In addition,4,000 units are in beginning finished goods inventory.How many units are targeted for ending finished goods inventory?

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: - Month of sale 30% - Month following the sale 70% 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 paid to suppliers in March?

Stark Company is developing its budgets for 2016 and for the first time will use the Kaizen approach.The initial 2016 income statement,based on static data from 2015 is as follows: Selling prices for 2016 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 2016.

The cash budget helps avoid unnecessary idle cash and at the same time maintain minimum cash balances.

Describe operating and financial budgets and give at least two examples of each discussed in the textbook.

Responsibility accounting is a system that

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

The operating budget includes the