Exam 6: Master Budget and Responsibility Accounting

Lubriderm Corporation has the following budgeted unit sales for the next six-month period: Month Unit Sales June 90,000 July 120,000 August 210,000 September 150,000 October 180,000 November 120,000 There were 30,000 units of finished goods in inventory at the beginning of June.Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month. Five pounds of materials are required for each unit produced.Each pound of material costs $8.Inventory levels for materials are equal to 30% of the needs for the next month.Materials inventory on June 1 was 15,000 pounds. Required: a.Prepare production budgets in units for July,August,and September. b.Prepare a purchases budget in pounds for July,August,and September,and give total purchases in both pounds and dollars for each month.

Answer the following questions using the information below: The following information pertains to Hepburn Company: Month Sales Purchases January \ 60,000 \ 32,000 February \ 80,000 \ 40,000 March \ 100,000 \ 56,000 - Cash is collected from customers in the following manner: Month of sale $\quad 30 \%$ 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. - Labor 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 disbursed in total in March?

Financing decisions primarily deal with ________.

What is budgetary slack? What are the pros and cons of building slack into the budget from the point of view of (a)an employee and (b)a senior manager?

Operating decisions primarily deal with ________.

A manager of a revenue center is responsible ________.

Budgeted financial statements are called pro forma statements.

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. -What is budgeted sales for 2016?

Financial planning models are non-mathematical,abstract representations of the relationships among operating activities,financing activities,and other factors that affect the master budget.

Juan Sugita Manufacturing expects to produce and sell 12,000 units of Big,its only product,for $20 each.Direct material cost is $3 per unit,direct labor cost is $10 per unit,and variable manufacturing overhead is $6 per unit.Fixed manufacturing overhead is $24,000 in total.Variable selling and administrative expenses are $1 per unit,and fixed selling and administrative costs are $3,000 in total.According to generally accepted accounting principles,inventoriable cost per unit of Big would be ________.

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). -At the end of January,budgeted ending inventory is ________.

The use of activity-based cost drivers gives rise to zero-based budgeting.

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 gross margin for March 2015?

Cost of goods sold budget takes inputs from both,ending inventories budget and nonmanufacturing costs budget.

Which of the following is a financial budget?

Describe the benefits of preparing an operating budget to an organization.

Budgeting helps managers gather information for improving only the budgeted period's performance.

A primary consideration in assigning a cost to a responsibility center is ________.

The cash flow statement includes ________.

A responsibility center is a part,segment,or subunit of an organization,whose manager is accountable for a specified set of activities.