Managerial Accounting

Managerial Accounting - BE 7.1 1.Motivation is generally...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: BE 7.1 1.Motivation is generally higher when an individual participates in setting his or her own goals than when the goals are imposed from above. 2. If a manager is not able to meet the budget and it has been imposed from above , the manager can always say that the budget was unreasonable or unrealistic to start with, and therefore was impossible to meet. 3. A budget is a detailed plan for acquiring and using financial and other resources over a specified time period. 4. Planning involves developing objectives and preparing various budgets to achieve those objectives. 5. The budgeting process can uncover potential bottlenecks before they occur. 6. Control involves the steps taken by management to increase the likelihood that the objectives set down at the planning stage are attained. 7. Budgets define goals and objectives that can serve as benchmarks for evaluating subsequent performance. 8. In responsibility accounting , a manager is held accountable for those items, and only those items, over which he or she has significant control. 9. A self-imposed budget is one that is prepared with the full cooperation and participation of managers at all levels of the organization. 10. A budget committee is usually responsible for overall policy matters relating to the budget program and for coordinating the preparation of the budget itself. BE 7.2 1. April May June Total February sales: $230,000 10%.. $ 23,000 $ 23,000 March sales: $260,000 70%, 10%........................................... 182,000 $ 26,000 208,000 April sales: $300,000 20%, 70%, 10%........................................... 60,000 210,000 $ 30,000 300,000 May sales: $500,000 20%, 70% 100,000 350,000 450,000 June sales: $200,000 20%......... 40,000 40,000 Total cash collections.................... $265,000 $336,000 $420,000 $1,021,000 Observe that even though sales peak in May, cash collections peak in June. This occurs because the bulk of the companys customers pay in the month following sale. The lag in collections that this creates is even more pronounced in some companies. Indeed, it is not unusual for a company to have the least cash available in the months when sales are greatest. 2. Accounts receivable at June 30: From May sales: $500,000 10%.......................................................... $ 50,000 From June sales: $200,000 (70% + 10%)............................................ 160,000 Total accounts receivable at June 30...................................................... $210,000 BE 7.3 April May June Quarter Budgeted sales in units................................. 50,000 75,000 90,000 215,000 Add desired ending inventory*...................... 7,500 9,000 8,000 8,000 Total needs................................................... 57,500 84,000 98,000 223,000 Less beginning inventory.............................. 5,000 7,500 9,000 5,000 Required production...................................... 52,500 76,500 89,000 218,000 *10% of the following months sales in units BE 7.4BE 7....
View Full Document

Page1 / 13

Managerial Accounting - BE 7.1 1.Motivation is generally...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online