Exam 6: Master Budget and Responsibility Accounting

Answer the following questions using the information below: Finmin Company has the following sales budget for the last six months of 2015: July \ 200,000 October \ 180,000 August 160,000 November 200,000 September 200,000 December 180,000 Sales are immediately due, however the cash collection of sales, historically, has been as follows: 65% of sales collected in the month of sale, 25% of sales collected in the month following the sale, 8% of sales collected in the second month following the sale, and 2% of sales are uncollectible. -Cash collections for September are ________.

Budgetary slack is the practice of underestimating costs so as to project an optimistic future outlook.

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 -How many ceramic vases should be produced in 2016?

Budgeting for a multinational company is made more complex due to the possibility of exchange rate fluctuations.

Computer-based systems,like ERP,help managers budget for all manufacturing costs but lack the ability to help managers budget for non-manufacturing costs.

Each manager,regardless of level,is in charge of a responsibility center.

Perry Company has provided the following information: Month Budgeted Sales March \ 200,000 April 212,000 May 204,000 June 218,000 July 210,000 In addition,the gross profit rate is 40% and the desired inventory level is 30% of next month's cost of sales. Required: Prepare a purchases budget for April through June.

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 balance in Accounts Payable as of April 30?

Answer the following questions using the information below: Meridian Industries manufactures and sells two models of watches, Prime and Luxuria. It expects to sell 3,000 units of Prime and 1,000 units of Luxuria in 2016.The following estimates are given for 2016: Prime Luxuria Selling price \ 200 \ 500 Direct materials 20 50 Direct labor 40 150 Manufacturing overhead 40 100 Meridian had an inventory of 200 units of Prime and 75 units of Luxuria at the end of 2015. It has decided that as a measure to counter stock outages it will maintain ending inventory of 350 units of Prime and 200 units of Luxuria. Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $10. There were 100 units of Crimpson in stock at the end of 2015.The management does not want to have any stock of Crimpson at the end of 2016. -What is the amount budgeted for purchase of Crimpson in 2016?

When the operating budget is used as a control device,managers are less likely to be motivated to budget higher sales than actually anticipated.

Budgeting is a mechanical tool because the budgeting techniques are free of emotions.

Which of the following is referred to as the bottom-up aspect of the budgeting process?

Activity-based budgeting makes it easier to ________.

Which of the following is true of master budgets?

The budgeting process is most strongly influenced by ________.

Answer the following questions using the information below: Meridian Industries manufactures and sells two models of watches, Prime and Luxuria. It expects to sell 3,000 units of Prime and 1,000 units of Luxuria in 2016.The following estimates are given for 2016: Prime Luxuria Selling price \ 200 \ 500 Direct materials 20 50 Direct labor 40 150 Manufacturing overhead 40 100 Meridian had an inventory of 200 units of Prime and 75 units of Luxuria at the end of 2015. It has decided that as a measure to counter stock outages it will maintain ending inventory of 350 units of Prime and 200 units of Luxuria. Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $10. There were 100 units of Crimpson in stock at the end of 2015.The management does not want to have any stock of Crimpson at the end of 2016. -How many units of Prime watches must be produced in 2016?

A regional manager of a restaurant chain in charge of finding additional locations for expansion is most likely responsible for a(n)________.

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

Russell Company has the following projected account balances for June 30,2015: Accounts payable \ 80,000 Sales \ 1,600,000 Accounts receivable 200,000 Capital stock 800,000 Depreciation, factory 48,000 Retained earnings ? Inventories (5/31\&6/30) 360,000 Cash 112,000 Direct materials used 400,000 Equipment, net 480,000 Office salaries 160,000 Buildings, net 800,000 Insurance, factory 8,000 Utilities, factory 32,000 Plant wages 280,000 Selling expenses 120,000 Bonds payable 320,000 Maintenance, factory 56,000 Required: a.Prepare a budgeted income statement for June 2015 b.Prepare a budgeted balance sheet as of June 30,2015.

Cost-based budgeting is a budgeting method that focuses on the budgeted cost of the activities necessary to produce and sell products and services.