MASTER BUDGET AND RESPONSIBILITY ACCOUNTING

MASTER BUDGET AND RESPONSIBILITY ACCOUNTING - CHAPTER 6...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 6 MASTER BUDGET AND RESPONSIBILITY ACCOUNTING Do multiple choice 1 and 2. Assign Problem 6-31. Do multiple choice 11 and 12. Assign Exercise 6-27 and Problem 6-35. CHAPTER QUIZ SOLUTIONS : 1. d 2. a 3. b 4. d 5. c 6. b 7. c 8. a 9. d 10. b 11. c 12. b CHAPTER QUIZ Budgeting is the common accounting tool companies use for planning and controlling. Budgets provide a measure of planned financial results. focus managers’ energies on exploiting opportu nities. help managers anticipate potential problems. enable managers to control through a set of specific activities with defined corrective actions. [AICPA Adapted] Dewitt Co. budgeted its activity for October 2002 from the following information: Sales are budgeted at $750,000. All sales are credit sales and a provision for doubtful accounts is made monthly at the rate of 2% of sales. Merchandise inventory was $120,000 at September 30, 2002, and an increase of $10,000 is planned for the month. All merch andise is marked up to sell at invoice cost plus 50%. Estimated cash disbursements for selling and administrative expenses for the month are $105,000. Depreciation for the month is projected at $25,000. Dewitt is projecting operating income for October 2002 in the amount of a. $105,000. b. $119,000. c. $129,000. d. $230,000. Which of the following is not a major benefit of budgets? compels planning c. provides performance criteria eliminates innovation d. promotes coordination an d communication The following data apply to questions 4 and 5. Hester Company budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for the fiscal year of July 1, 2001, through June 30, 2002. July 1, 2001 June 30, 2002 Raw material 1 40,000 10,000 Work in process 8,000 8,000 Finished goods 30,000 5,000 1
Background image of page 1

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

View Full DocumentRight Arrow Icon
1 Three (3) units of raw material are needed to produce each unit of finished product. 4. [CMA Adapted] If Hester Company plans to sell 500,000 units during the 2001-2002 fiscal year, the number of units it would have to manufacture during the year would be a. 505,000 units. b. 500,000 units. c. 480,000 units. d. 475,000 units. 5. [CMA Adapted] If 450,000 finished units were to be manufactured during the 2001-2002 fiscal year by Hester Company, the units of raw material needed to be purchased would be a. 1,350,000 units. b. 1,360,000 units. c. 1,320,000 units. d. 1,330,000 units. 6. Which of the following does not pertain to financial planning models in software form? Reduces computational burden and time required to prepare budgets Eliminates need to update budgets as uncertainty resolved Assists managers with sensitivity ana lysis Performs calculations that are mathematical representations of relationships in master budget The major cost management concept used in kaizen budgeting is that of eliminating inventories of every type but materials. refinements in the indirect-cos
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/11/2011 for the course ACCT 208 taught by Professor All during the Spring '11 term at American University of Beirut.

Page1 / 14

MASTER BUDGET AND RESPONSIBILITY ACCOUNTING - CHAPTER 6...

This preview shows document pages 1 - 3. Sign up to view the full document.

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