Exam 6: Master Budget and Responsibility Accounting

Answer the following questions using the information below: Wallace Company provides the following data for next year: Month Budgeted Sales January \ 120,000 February 108,000 March 132,000 April 144,000 The gross profit rate is 35% of sales. Inventory at the end of December is $21,600 and target ending inventory levels are 20% of next month's sales, stated at cost. -What is the amount of purchases budgeted for February?

The regional sales office manager of a national firm is most likely responsible for a(n)________.

Performance reports for responsibility centers are sometimes designed to change managers' behavior in the direction top managers desire,even if the reports decrease controllability.

Which of the following is generally expressed through a short-run budget?

The ________ is required to prepare the cash budget of an organization.

________ include a budgeted statement of cash flows and a budgeted balance sheet.

Answer the following questions using the information below: Sherry and John Enterprises are using the kaizen approach to budgeting for 2015. The budgeted income statement for January 2015 is as follows: Sales ( 168,000 units) \ 1,000,000 Less: Cost of goods sold 600,000 Gross margin 400,000 Operating expenses 300,000 (includes \ 50,000 of fixed costs) Operating income \ 100,000 Under the kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month. -What is budgeted cost of goods sold for March 2015?

Which of the following is a factor while choosing the period of a budget?

Which of the following is true of a budget?

Which of the following is true of responsibility accounting?

The sales department in any organization is usually a profit center.

The Japanese use kaizen to mean financing alternatives.

Bob and Dale have just purchased a small honey manufacturing company that was having financial difficulties.After a brief operating period,they decided that the company's main problem was an improper budgeting function.The company made a good product and market potential was great. Required: Describe the usual budgeting cycle that well-managed companies adopt?

Answer the following questions using the information below: Violet Sales Corp, reports the year-end information from 2016 as follows: Sales (35,000 units) \ 280,000 Cost of goods sold 105,000 Gross margin 175,000 Operating expenses 150,000 Operating income \ 25,000 Violet is developing the 2016 budget. In 2016 the company would like to increase selling prices by 3.5%, and as a result expects a decrease in sales volume of 15%. All other operating expenses are expected to remain constant. Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost. -What is budgeted cost of goods sold for 2016?

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

The following information pertains to Amigo Corporation: Month Sales Purchases July \ 30,000 \ 10,000 August 34,000 12,000 September 38,000 14,000 October 42,000 16,000 November 48,000 18,000 December 60,000 20,000 - Cash is collected from customers in the following mantner: Month of sale ( 2\% cash discount) 30\% Month following sale 50\% Two months following sale 15\% Amount uncollectible 5\% - $40 \%$ of purchases are paid for in cash in the month of purchase, and the balance is paid the following month. Required: a.Prepare a summary of cash collections for the 4th quarter. b.Prepare a summary of cash disbursements for the 4th quarter.

The operating budget process generally concludes with the preparation of the ________.

Which of the following statements is true about activity-based budgeting?

Answer the following questions using the information below: The following information pertains to the January operating budget for Casey Corporation. • Budgeted sales for January $200,000 and February $100,000. • Collections for sales are 60% in the month of sale and 40% the next month. • Gross margin is 30% of sales. • Administrative costs are $10,000 each month. • Beginning accounts receivable is $20,000. • Beginning inventory is $14,000. • Beginning accounts payable is $65,000. (All from inventory purchases.) • Purchases are paid in full the following month. • Desired ending inventory is 20% of next month's cost of goods sold (COGS). -For January,budgeted net income is ________.

Which of the following is a limitation of using past performance as a basis for judging actual results?