Exam 6: Master Budget and Responsibility Accounting

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. -Should Violet increase the selling price in 2016?

Budgeting based on cost for specific activities is a key building block of the master budget for companies that use the Kaizen approach.

A controllable cost is any cost that can be ________ by a responsibility center manager for a period of time.

A rolling budget is the same as a continuous budget.

Operating plans are generally expressed through long-run budgets.

A limitation of using past performance as a basis for judging actual results is that ________.

A company usually prepares a budget for nonmanufacturing costs after preparing all operating budgets.

For next year,Roberto,Inc.,has budgeted sales of 15,000 units,targeted ending finished goods inventory of 750 units,and beginning finished goods inventory of 450 units.All other inventories are zero.How many units should be produced next year?

When direct material and direct labor is the limiting factor,revenue budgets are usually based on ________.

A master budget ________.

A budget is an end product of negotiations among senior and subordinate mangers because ________.

Picture Pretty manufactures picture frames.Sales for August are expected to be 10,000 units of various sizes.Historically,the average frame requires four feet of framing,one square foot of glass,and two square feet of backing.Beginning inventory includes 1,500 feet of framing,500 square feet of glass,and 500 square feet of backing.Current prices are $0.90 per foot of framing,$8.00 per square foot of glass,and $4 per square foot of backing.Ending inventory of materials 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.

Answer the following questions using the information below: Estate Corp., has the following information: Month Budgeted Purchases January \ 26,800 February 29,000 March 28,500 April 29,480 May 26,680 Purchases are paid for in the following manner: 10% of the purchase amount in the month of purchase 50% of the purchase amount in the month after purchase 40% of the purchase amount in the second month after purchase -What is the expected Accounts Payable balance as of May 31?

Answer the following questions using the information below: Kramer Enterprises reports year-end information from 2015 as follows: Sales (160,000 units) \ 960,000 Cost of goods sold 640,000 Gross margin 320,000 Operating expenses 260,000 Operating income \6 0,000 Kramer is developing the 2016 budget. In 2016 the company would like to increase selling prices by 12.5%, and as a result expects a decrease in sales volume of 9%. 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. -Should Kramer increase the selling price in 2016?

Computer-based systems,such as ERP systems,cannot perform calculations for financial planning models.

Answer the following questions using the information below: Elton, Inc., expects to sell 6,000 ceramic vases for $20 each. Direct materials costs are $2, direct manufacturing labor is $10, and manufacturing overhead is $3 per vase. The following inventory levels apply to 2016: Beginning inventory Ending inventory Direct materials 1,000 units 1,000 units Work-in-process inventory 0 units 0 units Finished goods inventory 400 units 500 units -On the 2016 budgeted income statement,what amount will be reported for cost of goods sold?

Favata Company has the following information: Month Budgeted Sales June \ 60,000 July 51,000 August 40,000 September 70,000 October 72,000 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.

The revenues budget identifies ________.

A budget aids to coordinate what needs to be done to implement the proposed plan.

Answer the following questions using the information below: Shamokin Manufacturing produces a Tourbillon watch movement called OM362. Shamokin expects to sell 10,000 units of OM362 and to have an ending finished inventory of 2,000 units. Currently, it has a beginning finished inventory of 800 units. Each unit of OM362 requires two labor operations, one labor hour of assembling and two labor hours of polishing. The direct labor rate for assembling is $10 per assembling hour and the direct labor rate for polishing is $12.50 per polishing hour. -The expected cost of direct labor for OM362 is ________.