ManagerialAccounting-OP_x3x7rSO-83

Prévia do material em texto

PB9. 7.3 Amusement tickets estimated sales are:
What are the balances in accounts receivable for April, May, and June if 60% of sales are collected in the month
of sale, 30% are collected the month after the sale, and 10% are collected the second month after the sale?
PB10. 7.3 All Temps has a policy of always paying within the discount period, and each of its suppliers
provides a discount of 2% if paid within 10 days of purchase. Because of the purchase policy, 80% of its
payments are made in the month of purchase and 20% are made the following month. The direct materials
budget provides for purchases of $23,812 in February, $23,127 in March, $21,836 in April, and $28,173 in May.
What is the balance in accounts payable for April 30, and May 31?
PB11. 7.4 Prepare a flexible budgeted income statement for 47,000 units using the following information
from a static budget for 45,000 units:
PB12. 7.4 Before the year began, the following static budget was developed for the estimated sales of
50,000. Sales are higher than expected and management needs to revise its budget. Prepare a flexible budget
for 100,000 and 110,000 units of sales.
Chapter 7 Budgeting 401
PB13. 7.4 Artic Camping Gear’s currently sells 35,000 units at $73 per unit. Its expenses are as follows:
Management believes it can increase sales by 2,000 units for every $5 decrease in sales price. It also believes
the additional sales will allow a decrease in direct material of $1 for each additional 2,000 units. Prepare a
flexible budgeted income statement for 35,000-, 37,000-, and 39,000-unit sales.
PB14. 7.4 Fruit Tea’s data show the following information:
New machinery will be added in October. This machine will reduce the labor required per unit and increase the
labor rate for those employees qualified to operate the machinery. Finished goods inventory is required to be
20% of the next month’s requirements. Direct material requires 2.5 pounds per unit at a cost of $5 per pound.
The ending inventory required for direct materials is 20% of the next month’s needs. In August, the beginning
inventory is 3,750 units of finished goods and 13,125 pounds of materials. Prepare a production budget, direct
materials budget, and direct labor budget for the first quarter of the year.
402 Chapter 7 Budgeting
This OpenStax book is available for free at http://cnx.org/content/col25479/1.11
PB15. 7.4 Identify the document that contains the information listed in these lines from the budgeted
balance sheet shown.
A. Accounts receivable
B. Finished goods inventory
C. Machinery
D. Accumulated depreciation
E. Notes payable
F. Common stock
PB16. 7.5 Replenish sells shampoo that removes chlorine from hair. It prepared a static budget for the
sales of 10,000 units. These variances were observed:
Determine the static budget and use the information to prepare a flexible budget and analysis for the 8,000
units actually sold.
Thought Provokers
TP1. 7.1 Why is a clear understanding of management’s goals and objectives necessary for effective
budgets?
Chapter 7 Budgeting 403
TP2. 7.1 It is proper budgeting procedure to begin with estimated revenues, but why might some nonprofit
entities begin planning their expenditures instead of their revenues?
TP3. 7.2 How would a human resources department use information in the operating budgets?
TP4. 7.2 How would maintenance departments use information in the budget?
TP5. 7.2 How might service industries predict revenue?
TP6. 7.4 The management of Hess, Inc., is developing a flexible budget for the upcoming year. It was not
pleased with the small amount of net income the budget showed at all sales levels and is contemplating using
a less expensive material. This action reduces direct material cost by $1 per unit. What would be the effects on
financial statements and a flexible budget if management takes this approach? Are there other factors that
need to be considered?
TP7. 7.4 When would a static budget be effective in evaluating a manager’s performance?
TP8. 7.5 If management is being evaluated on their ability to manage a budget, what can they do to
increase cash flow?
TP9. 7.5 If management is being evaluated on their ability to manage a budget, what can they do to
decrease cash outflow?
404 Chapter 7 Budgeting
This OpenStax book is available for free at http://cnx.org/content/col25479/1.11
Chapter Outline
8.1 Explain How and Why a Standard Cost Is Developed
8.2 Compute and Evaluate Materials Variances
8.3 Compute and Evaluate Labor Variances
8.4 Compute and Evaluate Overhead Variances
8.5 Describe How Companies Use Variance Analysis
Why It Matters
Sam saw how much coffee his fellow students were drinking and decided to open a student-run coffee shop
on campus. Sam knew that developing a plan for the coffee shop would help make the shop successful. He
researched what types of coffee to offer, the hours the shop would be open, and the number of employees
needed, by researching other coffee shops near campus. He brewed coffee to determine the cost of the coffee
and the time it took to brew. He also served several friends to determine how long it would take to serve
customers. He observed, in other coffee shops, how much cream and other additives are used by customers.
He talked to several coffee suppliers for prices of his various materials. He looked at empty stores near
campus to determine what his rent would be. Now that he has this information, he is not sure how to make it
useful to him. How could he use this information to plan and control the operations of the shop? One
calculation he can do is determine his standard costs.
What is the difference between a budget and a standard? A budget usually refers to a company’s projections
for costs, revenues, and cash flows associated with the overall operations of the organization, or a subsection
of the corporation such as a division. A standard usually refers to a company’s projected costs for a single unit
Figure 8.1 Coffee Shop. How do they know what each cup of coffee, muffin, or bagel costs so they can
determine what price to charge? (credit: modification of “Bakery Coffee” by “veerasantinithi”/Pixabay, CC0)
8
Standard Costs and Variances
	Chapter 7. Budgeting
	Thought Provokers
	Chapter 8. Standard Costs and Variances
	Table of Contents
	Why It Matters*