Exam 6: Master Budget and Responsibility Accounting

ERP systems store vast quantities of information about the materials,machines and equipment,labor,power,maintenance,and setups needed to manufacture different products.This helps simplify the budgeting process as ERP systems ________.

Duffy Corporation has prepared the following sales budget: Month Cash Sales Credit Sales May \ 16,000 \ 68,000 June 20,000 80,000 July 18,000 74,000 August 24,000 92,000 September 22,000 76,000 Collections are 40% in the month of sale,45% in the month following the sale,and 10% two months following the sale.The remaining 5% is expected to be uncollectible. Required: Prepare a schedule of cash collections for July through September.

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 cost of goods sold for 2016?

Variances between actual and budgeted amounts inform management about performance relative to the budget.

Budgets are not remedies for weak management talent,faulty organization,or a poor accounting system.

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

Budgetary slack provides management with a hedge against planned adverse circumstances.

Answer the following questions using the information below: Kason, Inc., expects to sell 20,000 pool cues for $12.00 each. Direct materials costs are $2.00, direct manufacturing labor is $4.00, and manufacturing overhead is $0.80 per pool cue. The following inventory levels apply to 2016: Beginning inventory Ending inventory Direct materials 24,000 units 24,000 units Work-in-process inventory 0 units 0 units Finished goods inventory 2,000 units 2,500 units -On the 2016 budgeted income statement,what amount will be reported for sales?

Christy Enterprises reports the year-end information from 2015 as follows: Sales (100,000 units) \ 500,000 Less: Cost of goods sold 300,000 Gross profit 200,000 Operating expenses (includes \ 20,000 of Depreciation) 120,000 Net income \8 0,000 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.

A company using responsibility accounting system decides to exclude all uncontrollable costs from a manager's performance report.Jenson is the machine supervisor.Which of the following costs will impact Jenson's performance report?

Which of the following is a benefit of keeping inventory levels low?

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 $\$ 1,000$ . -What is the ending cash balance for March?

In a cost center,a manager is responsible for investments,revenues,and costs.

The ________ is a component of financial budgets.

Answer the following questions using the information below: Kason, Inc., expects to sell 20,000 pool cues for $12.00 each. Direct materials costs are $2.00, direct manufacturing labor is $4.00, and manufacturing overhead is $0.80 per pool cue. The following inventory levels apply to 2016: Beginning inventory Ending inventory Direct materials 24,000 units 24,000 units Work-in-process inventory 0 units 0 units Finished goods inventory 2,000 units 2,500 units -How many pool cues need to be produced in 2016?

Describe some of the drawbacks of using the operating budget as a control device.

________ is the usual starting point for budgeting.

Which of the following is the fundamental purpose of responsibility accounting?

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

Rolling budgets help in reducing budgetary slack.