Chapter_22_Solutions_7e

Chapter_22_Solutions_7e - Chapter 22 The Master Budget and...

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Unformatted text preview: Chapter 22 The Master Budget and Responsibility Accounting √ Quick Check Answers: 1. d 3. b 5. b 7. d 9. a 2. d 4. b 6. c 8. c 10. c Explanations: 4. d. Total budgeted sales revenue ($210 million) = [(1 million hardback books × $30) × 7 days per week 5. b. Purchases ($180 million) = Cost of goods sold (60% × $210 sales) + Desired ending inventory ($54 million) − Beginning inventory ($0); Desired ending inventory = $30 million / day × 60% × 3 days = $54 million 6. c. Sales (from #4) $210 million − Cost of goods sold (60% × $210) (126 ) million Gross profit 84 million − Operating expenses ($1 / day × 7 days) (7 ) million Operating income $ 77 million Chapter 22 The Master Budget and Responsibility Accounting 159 √ Short Exercises (5 min.) S 22-1 Summary Performance Report Variance Actual Budget (Actual – Budget) Revenue earned $4,200 $3,000 $1,200 Expenses 3,200 2,700 $ 500 Income $1,000 $ 300 $ 700 No, she does not need to be concerned that she spent too much money. She was more successful working at the restaurant than planned and she did exceed her budgeted income of $300. Accounting 7/e Solutions Manual 160 (5-10 min.) S 22-2 4 a. Budgeted income statement 3 b. Operating expenses budget 1 c. Sales budget 2 d. Inventory, purchases, and cost of goods sold budget (5 min.) S 22-3 6 a. Budgeted balance sheet 1 b. Sales budget 4 d. Capital expenditures budget 3 e. Budgeted income statement 5 f. Cash budget 2 g. Inventory, purchases, and cost of goods sold budget Chapter 22 The Master Budget and Responsibility Accounting 161 (5 min.) S 22-4 Eagle Outfitters Sales Budget – Water Bottles January February Water bottles in units 5,000 6,000 Selling price per bottle $ 10 $ 10 Total sales $50,000 $60,000 (10 min.) S 22-5 Eagle Outfitters Inventory, Purchases, and Cost of Goods Sold Budget – Hiking Socks June July Cost of goods sold $ 800 a $ 600 b + Desired ending inventory 300 c 360 d = Total inventory required 1,100 960 Beginning inventory − (100 ) e (300 ) = Purchases $1,000 $ 660 __________ a 0.40 × $2,000 b 0.40 × $1,500 c 0.50 × 0.40 × $1,500 d 0.50 × 0.40 × $1,800 e $100 given in exercise Accounting 7/e Solutions Manual 162 (10-15 min.) S 22-6 Eagle Outfitters – Butte Store Sales Budget January February March April January – April Total Cash sales, 60% $30,000 $48,000 $24,000 $30,000 Credit sales, 40% 20,000 32,000 16,000 20,000 Total sales, 100% $50,000 $80,000 $40,000 $50,000 $220,000 (5-10 min.) S 22-7 Eagle Outfitters – Butte Store Inventory, Purchases, and Cost of Goods Sold Budget January February Cost of goods sold (0.75 × sales from S22-6) $ 37,500 $ 60,000 + Desired ending inventory ($20,000 + 0.80 × cost of goods sold for the next month) 68,000 a 44,000 b = Total inventory required 105,500 104,000 − Beginning inventory (48,000 ) c (68,000 ) = Purchases $ 57,500 $ 36,000 __________ a $20,000 + (0.80 × $60,000) b $20,000 + [0.80 × (0.75 × $40,000)] c Balance at March 31 given in exercise Chapter 22 The Master Budget and Responsibility Accounting 163 (5-10 min.) (5-10 min....
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Chapter_22_Solutions_7e - Chapter 22 The Master Budget and...

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