work_at_home_soultions_ch14[1]

work_at_home_soultions_ch14[1] - Chapter 14 Planning for...

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Unformatted text preview: Chapter 14 Planning for Profit and Cost Control Exercise 14-1 Ms. Hargrove appears to be a person with an attitude problem. She does not understand how to involve her colleagues in the budgeting process. She degrades their input and uses the budget as a tool for criticism. In so doing, Ms. Hargrove has failed to gain the support of upper-level management. The attitudes of upper-level management will have a significant impact on the effectiveness of the budget. Subordinates develop a keen awareness of management's expectations. If upper-level managers degrade, make fun of, or ignore the budget, subordinates will rapidly follow suit. If budgets are used to humiliate or embarrass subordinates, they will resent the treatment and the budgeting process that enables it. To be effective, upper-level management must accept and portray the budget as a sincere effort to express realistic goals that employees will be expected to accomplish. The proper atmosphere is essential to budgeting success. Once a negative pattern has been established, it is difficult to change. Perhaps the most effective solution in this case is to replace Ms. Hargrove. 14-1 Exercise 14-2 a. Sales Budget January February March Cash sales $ 50,000 $ 55,000 $ 60,500 Sales on account 80,000 88,000 96,800 Total budgeted sales $130,000 $143,000 $157,300 b. The amount of sales revenue appearing on the 1 st quarter income statement is the sum of the monthly amounts ($130,000 + $143,000 + $157,300 = $430,300). Exercise 14-3 a. Schedule of Cash Receipts July August September Current cash sales $ 60,000 $ 72,000 $ 86,400 Plus collections from accounts receivable 210,000 90,000 108,000 Total budgeted collections $270,000 $162,000 $194,400 b. The current months sales on account will be collected in the following month. Accordingly, the amount of accounts receivable at the end of September is equal to Septembers sales on account ($129,600). Exercise 14-4 a. 1 st Quarter 2 nd Quarter 3 rd Quarter 4 th Quarter East Div. $ 200,000 $ 208,000 $ 216,320 $ 224,973 West Div. 500,000 510,000 520,200 530,604 South Div. 300,000 318,000 337,080 357,305 Total $1,000,000 $1,036,000 $1,073,600 $1,112,882 b. 1 st Quarter 2 nd Quarter 3 rd Quarter 4 th Quarter Total $1,000,000 $1,036,000 $1,073,600 $1,112,882 Exercise 14-5 a. Sales for January are expected to be $427,000 ( $610,000 x 0.70) 14-2 Beginning accounts receivable balance $ 96,400 January sales on account 427,000 Available for collection 523,400 Less: Ending accounts receivable balance...
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work_at_home_soultions_ch14[1] - Chapter 14 Planning for...

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