ACCT 241 Week 8 Assignment Help 1

ACCT 241 Week 8 Assignment Help 1 | American University 

1.

Required information

We understand the basic framework of budgeting and how it is important for profit planning. We learn about responsibility accounting, which dictates that managers should be held responsible for only those costs for which they are responsible. A self-imposed budget is prepared with full cooperation and participation of managers at all levels. We discuss the human factors in budgeting and also learned about the master budget and its different interdependent budgets

Knowledge Check 01

Which of the following is not a benefit of budgeting?

·         The budgeting process enables managers to uncover bottlenecks as they occur.

·         Budgets communicate management’s plans throughout the organization.

·         Budgets define goals and objectives that can serve as benchmarks for evaluating subsequent performance.

2.

Required information

We understand the basic framework of budgeting and how it is important for profit planning. We learn about responsibility accounting, which dictates that managers should be held responsible for only those costs for which they are responsible. A self-imposed budget is prepared with full cooperation and participation of managers at all levels. We discuss the human factors in budgeting and also learned about the master budget and its different interdependent budgets.

Knowledge Check 02

The system of accountability in which managers are held responsible for those items of revenue and costs—and only those items—over which they can exert significant control is referred to as ________.

·         budgeting

·         control

·         responsibility accounting

·         self-imposed accounting

3.

Required information

We understand the basic framework of budgeting and how it is important for profit planning. We learn about responsibility accounting, which dictates that managers should be held responsible for only those costs for which they are responsible. A self-imposed budget is prepared with full cooperation and participation of managers at all levels. We discuss the human factors in budgeting and also learned about the master budget and its different interdependent budgets.

Knowledge Check 01

Which of the following explains why operating budgets generally span a period of one year?

•           Accounting regulations mandate that all operating budgets be prepared for one year.

•           Operating budgets, by definition, are prepared for one-year periods.

•           Companies choose a span of one year to correspond to their fiscal years.

•           Operating budgets need to correspond with the calendar year.

4.

Required information

We understand the basic framework of budgeting and how it is important for profit planning. We learn about responsibility accounting, which dictates that managers should be held responsible for only those costs for which they are responsible. A self-imposed budget is prepared with full cooperation and participation of managers at all levels. We discuss the human factors in budgeting and also learned about the master budget and its different interdependent budgets.

Knowledge Check 01

Which of the following is not a benefit of self-imposed budgets?

•                     A manager who is not able to meet a budget that has been imposed from above can always say that the budget was unrealistic and impossible to meet.

•                     Budget estimates prepared by front-line managers are often more accurate and reliable.

•                     Lower-level managers are encouraged to create budgetary slack since they are more knowledgeable of day-to-day operations.

•                     Motivation is generally higher.

5.

Required information

We understand the basic framework of budgeting and how it is important for profit planning. We learn about responsibility accounting, which dictates that managers should be held responsible for only those costs for which they are responsible. A self-imposed budget is prepared with full cooperation and participation of managers at all levels. We discuss the human factors in budgeting and also learned about the master budget and its different interdependent budgets.

Knowledge Check 01

Which of the following is true of self-imposed (participative) budgets?

•        Self-imposed budgets give managers at all levels of an organization an opportunity to provide input into the budgeting process.

•        Self-imposed budgets are prepared without consulting lower-level managers.

•        The estimates used in self-imposed budgets rely primarily on the inputs and insights of top managers.

•        Managers who create self-imposed budgets do not have an opportunity to embed budgetary slack within their estimates.

6.

Required information

We understand the basic framework of budgeting and how it is important for profit planning. We learn about responsibility accounting, which dictates that managers should be held responsible for only those costs for which they are responsible. A self-imposed budget is prepared with full cooperation and participation of managers at all levels. We discuss the human factors in budgeting and also learned about the master budget and its different interdependent budgets.

Knowledge Check 01

The budgeting process begins with the preparation of the ______ budget.

·         cash

·         direct materials

·         production

·         sales

7.

Required information

We learn to prepare a sales budget. The sales budget is the starting point in preparing the master budget. We also learn to prepare the schedule of expected cash collections, which is used in the preparation of the cash budget.

The following is a schedule of the projected unit sales of Western Company, which manufactures casual wear. Each unit sells for $25. The company began the period with a beginning accounts receivable balance of $10,000. Choose the correct answer from the options provided.

Knowledge Check 01

What is the amount of budgeted sales revenue for the fourth quarter?

•        $32,500

•        $33,750

•        $35,000

•        $37,500

Knowledge Check 02

What is the amount of cash that is expected to be collected during the second quarter as a result of sales made during the first quarter?

•        $8,125

•        $8,750

•        $9,375

•        $28,125

Knowledge Check 03

What is the total amount of expected cash collections for the third quarter?

•        $33,125

•        $33,750

•        $34,375

•        $38,125

8.

Required information

We learn to prepare a production budget. The production budget lists the number of units that must be produced to satisfy sales needs and to provide for the desired ending inventory.

Knowledge Check 01

For a production budget, the ______ is the beginning inventory for the year.

·         beginning inventory for the first quarter

·         beginning inventory for the last quarter

·         ending inventory for the last quarter

·         sum of beginning inventories for the four quarters

Knowledge Check 02

Which of the following is a major factor that should be taken into consideration while planning the desired level of inventories?

·         Costs of carrying inventory.

·         General administrative policy of the company.

·         Selling price of the finished product.

·         Statutory requirements.

Knowledge Check 03

Vineyard Corporation, a manufacturer of fine wines, began the year with 20,000 bottles in inventory. The company estimated the budgeted sales for the four quarters of the current year to be 200,000 bottles, 150,000 bottles, 250,000 bottles, and 400,000 bottles, respectively. The management feels that an ending inventory of 10% of the subsequent quarter's sales is appropriate. What are the production needs for the first quarter?

·         160,000 bottles

·         175,000 bottles

·         195,000 bottles

·         215,000 bottles

Knowledge Check 04

Vineyard Corporation, a manufacturer of fine wines, began the year with 20,000 bottles in inventory. The company estimated the budgeted sales for the four quarters of the current year to be 200,000 bottles, 150,000 bottles, 250,000 bottles, and 400,000 bottles, respectively. The management feels that an ending inventory of 10% of the subsequent quarter's sales is appropriate. What is the desired ending inventory for the second quarter?

·         15,000 bottles

·         20,000 bottles

·         25,000 bottles

·         40,000 bottles

9.

Required information

We learn to prepare the direct materials budget. The direct materials budget helps determine the quantity of raw materials to be purchased in a period and the cost of those materials. With the cost of raw materials to be purchased, we also prepared a schedule of expected cash disbursements for materials which will later be used to complete the cash budget.

Knowledge Check 01

The purpose of preparing a direct materials budget is to ________.

·         allocate the cost of raw materials to production departments

·         estimate the manufacturing overhead

·         estimate the quantity of raw materials to be purchased

·         estimate the unit cost of direct materials to be purchased

Knowledge Check 02

In a direct materials budget, the desired ending raw materials inventory for the year is equal to the ________.

·         beginning balance of accounts payable

·         desired ending raw materials inventory for the last period

·         total merchandise purchased during the year

·         value of raw material used during the year

10.

Required information

We learn to prepare the direct materials budget. The direct materials budget helps determine the quantity of raw materials to be purchased in a period and the cost of those materials. With the cost of raw materials to be purchased, we also prepared a schedule of expected cash disbursements for materials which will later be used to complete the cash budget.

Knowledge Check 01

Selected information from the direct materials budget of Perry Inc. is provided here:

Selected information from the direct materials budget of Perry Inc. is provided here:

Perry, Inc. desires to maintain the ending inventory of raw materials at 40 percent of the next quarter's raw material needs. What is the cost of raw materials to be purchased in the first quarter?

·         $300,000

·         $320,000

·         $380,000

·         $400,000

11.

Required information

We understand why companies prepare a direct labor budget. Companies that neglect to budget risk facing labor shortages or having to hire and lay off workers at awkward times. Erratic labor policies lead to insecurity, low morale, and inefficiency. We also learn how to prepare a direct labor budget.

Knowledge Check 01

Companies prepare direct labor budgets to ________.

·         avoid labor shortages

·         determine the direct labor-hours per unit

·         ensure timely supply of raw materials

·         reduce inventories

Knowledge Check 02

Pro Clean Company, a manufacturer of hand sanitizers, intends to produce 40,000 units in the third quarter and 35,000 units in the fourth quarter. Each unit requires 0.50 direct labor-hours (DLHs) and the cost of direct labor per hour is $18. What would be the total direct labor cost for the fourth quarter?

·         $355,000

·         $360,000

·         $300,000

·         $315,000

Knowledge Check 03

William Corporation has a contract with the labor union which guarantees its workers pay for at least 40,000 hours every quarter. Based on its direct labor budget for the current year, the company estimated it will need 39,000 direct labor-hours during the fourth quarter to produce 13,000 units of finished goods. Each unit requires 3 direct labor-hours (DLHs) and the cost of direct labor per hour is $12 per hour. What is the total direct labor cost for the fourth quarter?

·         $432,000

·         $468,000

·         $480,000

·         $540,000

12.

Required information

We learn why companies prepare a manufacturing overhead budget. We see how variable manufacturing overhead is computed based on the expected activity level. Non-cash expenses are deducted from the total manufacturing overhead to calculate the cash disbursements. We also learn about the ending finished goods inventory budget, which is used to compute the value of the ending inventory.

Precision Company estimates its machine-hour requirements for the four quarters to be 35,000 hours, 20,000 hours, 15,000 hours, and 30,000 hours respectively. The variable manufacturing overhead rate is $4 per machine-hour. The fixed manufacturing overhead is $50,000 per quarter, which includes $20,000 of depreciation expense.

Knowledge Check 01

What is the budgeted variable manufacturing overhead for the year?

·         $200,000

·         $260,000

·         $280,000

·         $400,000

Knowledge Check 02

What is the predetermined overhead rate for the year?

·         $2 per machine hour

·         $4 per machine hour

·         $5 per machine hour

·         $6 per machine hour

13.

Required information

We learn why companies prepare a manufacturing overhead budget. We see how variable manufacturing overhead is computed based on the expected activity level. Non-cash expenses are deducted from the total manufacturing overhead to calculate the cash disbursements. We also learn about the ending finished goods inventory budget, which is used to compute the value of the ending inventory.

Knowledge Check 01

The value of the ending inventory is calculated by multiplying the number of units in ending inventory by the ________.

·         unit product cost

·         variable overhead cost per unit

·         total overhead cost per unit

·         the sum of the direct materials and direct labor cost per unit

14.

Required information

We learn how to prepare the selling and administrative expense budget. In large organizations, this budget is derived from many smaller, individual budgets prepared by department heads and other persons responsible for selling and administrative expense budget.

Knowledge Check 01

Which of the following is deducted from the total selling and administrative expense budget to determine the cash disbursements for selling and administrative expense budget?

·         Advertising expense

·         Depreciation expense

·         Selling commissions

·         Utilities expense

Knowledge Check 02

A company determines that the number of units sold is the cost driver for its variable selling and administrative expense budget. The product of its variable selling and administrative rate and budgeted unit sales will be ________.

·         budgeted sales revenue

·         total budgeted cash disbursements for selling and administrative expenses

·         total budgeted fixed selling and administrative expenses

·         total budgeted variable selling and administrative expenses

15.

Required information

We see how a cash budget is prepared. The cash budget combines much of the data developed in many previous budgets. The cash budget comprises four major sections: the receipts section, the disbursements section, the cash excess or deficiency section, and the financing section.

Striker Company estimates its expected cash receipts for the period to be $80,000 and its expected cash disbursements to be $70,000. The beginning cash balance for the period was $5,000. The management wants to maintain a minimum cash balance of $40,000.

Knowledge Check 01

How much cash will the company need to borrow?

·         $15,000

·         $25,000

·         $30,000

·         $40,000

16.

Required information

We learn to prepare the budgeted income statement. We also understand how it can serve as a benchmark to measure a company's performance.

Knowledge Check 01

In a budgeted income statement, _________ is subtracted from sales to arrive at gross margin.

·         cost of goods sold

·         interest expense

·         selling and administrative expense

·         depreciation expense

Knowledge Check 02

Smarton Company is in the process of preparing its budgeted income statement. It has determined its estimated gross margin to be $90,000. The company also expects to incur selling and administrative expenses of $30,000 and interest expense of $12,000. What is Smarton's budgeted net income?

•        $18,000

•        $30,000

•        $48,000

•        $60,000

17.

Required information

We learn to prepare a budgeted balance sheet. The budgeted balance sheet is derived from various other budgets and also the balance sheet from the beginning of the period.

Knowledge Check 01

For the budget period ending December 31 of the current year, Aaron Corporation estimates its ending balances for cash as $4,000, accounts receivable as $16,000, finished goods inventory as $12,000, and raw materials inventory as $8,000. Invoices relating to raw materials in the amount of $14,000 are expected to be unpaid as of December 31. What is the amount of total current assets that will be reported on the budgeted balance sheet?

•        $20,000

•        $26,000

•        $32,000

•        $40,000

Knowledge Check 02

Film Studio, Inc. has beginning retained earnings of $80,000 and expects to earn net income of $70,000 during the budget period. What would be the budgeted ending balance in retained earnings if the company pays dividends of $50,000?

•        $80,000

•        $100,000

•        $150,000

•        $200,000