Exam 6: Master Budget and Responsibility Accounting

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 collected from customers in March?

When administered wisely,budgets promote communication and coordination among the various subunits of the organization.

The use of activity-based budgeting is growing because of ________.

Most computer-based financial planning models have difficulty incorporating sensitivity (what-if)analysis.

Kaizen budgeting encourages dramatic improvements and substantial reduction in costs.

The cash budget is a schedule of expected cash receipts and disbursements.

Answer the following questions using the information below: Furniture, Inc., estimates the following number of mattress sales for the first four months of 2016: Month Sales January 22,000 February 30,800 March 28,600 April 35,200 Finished goods inventory at the end of December is 6,600 units. Target ending finished goods inventory is 20% of the next month's sales. -How many mattresses need to be produced in January 2016?

Esther Baskets Company expects to manufacture and sell 20,000 baskets in 2016 for $5 each.There are 4,000 baskets in beginning finished goods inventory with target ending inventory of 5,000 baskets.The company keeps no work-in-process inventory.What amount of sales revenue will be reported on the 2016 budgeted income statement?

Which of the following statements is true about responsibility accounting statements?

The possibility of exchange rate fluctuations does NOT influence the budgeting procedures in a multinational corporation.

The production cost budget identifies how each product is manufactured.

How is budgeting for a multinational corporation different than budgeting for a corporation that is strictly domestic?

Cash budgets help avoid unnecessary idle cash and unexpected cash deficiencies.

Steve Corporation is using the kaizen approach to budgeting for 2015.The budgeted income statement for January 2015 is as follows: Sales ( 240,000 units) \ 360,000 Less: Cost of goods sold 240,000 Gross margin 120,000 Operating expenses (includes \ 32,000 of fixed costs) 96,000 Net income \2 4,000 Under the kaizen approach,cost of goods sold and variable operating expenses are budgeted to decline by 1% per month. Required: Prepare a kaizen-based budgeted income statement for March of 2015.

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 -What are the 2016 budgeted costs for direct materials,direct manufacturing labor,and manufacturing overhead,respectively?

Which of the following departments is most likely to be a profit center?

Which of the following is a component of operating budgets?

Which of the following information is required by a company's manager while preparing a manufacturing overhead costs budget?

A budget is the quantitative expression of a proposed plan of action by management for a specified period.

Management will most likely behave the same way if a department is structured as a cost center or if the same department is structured as a profit center.