978-0078025761 Chapter 20 Solution Manual Part 1

subject Type Homework Help
subject Pages 9
subject Words 1822
subject Authors Barbara Chiappetta, John Wild, Ken Shaw

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Chapter 20
Planning
QUESTIONS
1. A budget helps managers control and monitor a business by 1) communicating
plans to employees, 2) coordinating the activities of different parts of the
2. Two common benchmarks used by managers to evaluate performance are: past
3. Continuous budgeting provides managers a full set of updated budgets each time a
4. Three common short-term horizons for planning and budgeting purposes are:
5. Budgeting can be a strong positive motivating force if employees are involved or
consulted in the process. This participation promotes their commitment to reaching
6. Budgeting helps management coordinate and plan business activities by providing
7. The sales budget reflects the expected sales to be made over a period of time, stated
8. A selling expense budget is a plan of the expenses to be incurred to produce the
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9. Budgeting promotes good decision making by requiring managers to conduct
10. A cash budget shows the planned cash receipts and cash disbursements for each
budget period, including any loans to be received or repaid. Since the operating
11. A production budget shows the number of units to be produced each budget period.
12. A manager of an Apple store would have responsibility for and decision control over
13. With the exception of the decision to operate, the manager of a Samsung
distribution center is not likely to engage in a substantial amount of long-term
14.
Budget Participant
Description
Sales manager ....................
Information on estimated sales (units and dollars).
Production manager ...........
Number of units to produce based on estimated sales.
Manufacturing manager .....
Amount of direct materials, direct labor, and
manufacturing overhead to produce the estimated level
of production.
Sales manager ....................
Cost of selling the estimated sales level.
General & admini-
strative managers ...............
Cost to support operations; most often are fixed costs.
Capital expenditures
committee ...........................
Prepare plans to have available plant assets necessary
to carry on business activities.
Cash managers ...................
Working with the above budgets, this team will prepare
cash flow analysis.
Accounting and finance
staff .....................................
Financial budgets prepared from above information.
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Quick Study 20-1 (10 minutes)
1. Employees affected by a budget should be consulted when it is prepared.
2. Goals reflected in a budget should be attainable.
3. Evaluations of performance should be made carefully with opportunities
Quick Study 20-2 (10 minutes)
1. The bottom-up approach to budgeting is considered more successful
because without active employee involvement in preparing budget
Quick Study 20-3 (5 minutes)
1. No 3. No
2. No 4. Yes
Quick Study 20-4 (10 minutes)
Grace
Sales Budget
For Month Ended June 30
1,000
40
1,040
x $250
$260,000
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Quick Study 20-5 (10 minutes)
Zilly Co.
Selling Expense Budget
For Month Ended June 30
$400,000
x 8%
32,000
6,000
$ 38,000
Quick Study 20-6 (10 minutes)
Liza’s
Budgeted Cash Receipts
For Month Ended June 30
$52,000
20,800
31,200
16,000
$47,200
*$40,000 x 40% = $16,000.
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Quick Study 20-7 (10 minutes)
ZORTEK CORP.
Direct Materials Budget
For Month Ended January 31
400
x 5 lbs.
2,000
400
2,400
(130)
2,270
$ 2
$4,540
*February’s budgeted production.
Quick Study 20-8 (5 minutes)
TORA CO.
Direct Labor Budget
For Month Ended July 31
1,020
x 2
2,040
$ 20
$40,800
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Quick Study 20-9 (10 minutes)
SCORA INC.
Sales Budget
For January, February, and March
Budgeted
Unit Sales
Budgeted
Unit Price
Budgeted
Total Sales
January .........................................................
1,200
$50
$ 60,000
February ........................................................
2,000
50
100,000
March ............................................................
1,600
50
80,000
Totals for the quarter ................................
4,800
$50
$240,000
Quick Study 20-10 (10 minutes)
X-TEL
Cash Receipts Budget
For April, May, and June
April
May
June
Sales ..............................................................
$60,000
$100,000
$80,000
Less ending accts. receivable (60%) .........
36,000
60,000
48,000
Cash receipts from
Cash sales (40% of sales) ..........................
24,000
40,000
32,000
Collections of prior month’s receivables ......
15,000
36,000
60,000
Total cash receipts .....................................
$39,000
$76,000
$92,000
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Quick Study 20-11 (10 minutes)
X-TEL
Selling Expense Budget
For April, May, and June
April
May
June
Budgeted sales ............................................
$60,000
$100,000
$80,000
Sales commission percent..........................
x 10%
x 10%
x 10%
Sales commissions .....................................
6,000
10,000
8,000
Sales manager monthly salary ...................
6,000
6,000
6,000
Total selling expenses ................................
$12,000
$ 16,000
$14,000
Quick Study 20-12 (10 minutes)
CHAMP, INC.
Production Budget
For Month Ended May 31
200
x 60%
120
180
300
(108)
192
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Quick Study 20-13 (10 minutes)
MIAMI SOLAR
Direct Materials Budget
For Month Ended July 31
5,000
x 3 lbs.
15,000
4,770
19,770
(4,500)
15,270
$ 6
$91,620
Quick Study 20-14 (10 minutes)
MIAMI SOLAR
Direct Labor Budget
For Month Ended July 31
5,000
x 4
20,000
$ 16
$320,000
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Quick Study 20-15 (10 minutes)
MIAMI SOLAR
Factory Overhead Budget
For Month Ended August 31
Total budgeted direct labor* ...................................................
$339,200
Variable overhead rate (% of DL cost) ................................
x 70%
Budgeted variable overhead ...................................................
$237,440
Budgeted fixed overhead ........................................................
180,000
Budgeted total overhead .........................................................
$417,440
* 5,300 x 4 x $16 = $339,200
Quick Study 20-16 (15 minutes)
ATLANTIC SURF
Production Budget
July and August
July
August
Budgeted ending inventories
July (40% x 6,500) ................................................................
2,600
August (40% x 3,500) .............................................................
1,400
Add budgeted sales ................................................................
4,000
6,500
Required units of available production ................................
6,600
7,900
Less actual or budgeted beginning inventories ...................
(1,600)
(2,600)
Units to be produced ...............................................................
5,000
5,300
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Quick Study 20-17 (15 minutes)
Forrest Company
Production Budget
For Month Ended November 30
350,000
x 10%
35,000
400,000
435,000
40,000
395,000
Quick Study 20-18 (15 minutes)
Hockey Pro
Factory Overhead Budget
For Month Ended May 31
3,900
x $1.50
$ 5,850
46,000
$51,850

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