You are working as a management accountant in Rawal Constructions limited who have been entered new in this business as the provider of building materials. In order to facilitate from your skills of budgeting, they provide you the actual and budgeted results about the business as can be seen below. The CEO asks you to present the true picture of the business as the business are in its initial phase and if any issues exist, these can be taken care immediately. Budget (РKR) September Actual (РKR) Budget per ton September Revenue 6.5 78000 75900 Units sold 12000 11500 Less: Direct costs Direct labor Equipment hire Other 2.83 33960 33000 0.47 5640 6300 variable 0.78 9360 9300 costs Total 4.08 48960 48600 Contribution 2.42 29040 27300 Required: 2. Conduct variance analysis both in terms of amount and per unit data. 3. Provide suggestions to the CEO regarding the usage of budgeting and its role in

You are working as a management accountant in Rawal Constructions limited who have been entered new in this business as the provider of building materials. In order to facilitate from your skills of budgeting, they provide you the actual and budgeted results about the business as can be seen below. The CEO asks you to present the true picture of the business as the business are in its initial phase and if any issues exist, these can be taken care immediately. Budget (РKR) September Actual (РKR) Budget per ton September Revenue 6.5 78000 75900 Units sold 12000 11500 Less: Direct costs Direct labor Equipment hire Other 2.83 33960 33000 0.47 5640 6300 variable 0.78 9360 9300 costs Total 4.08 48960 48600 Contribution 2.42 29040 27300 Required: 2. Conduct variance analysis both in terms of amount and per unit data. 3. Provide suggestions to the CEO regarding the usage of budgeting and its role in

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter1: Introduction To Cost Management

Section: Chapter Questions

Problem 1E: Classify each of the following actions as either being associated with the financial accounting...

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Friendly Bank is attempting to determine the cost behavior of its small business lending operations. One of the major activities is the application activity. Two possible activity drivers have been mentioned: application hours (number of hours to complete the application) and number of applications. The bank controller has accumulated the following data for the setup activity: Required: 1. Estimate a regression equation with application hours as the activity driver and the only independent variable. If the bank forecasts 2,600 application hours for the next month, what will be the budgeted application cost? 2. Estimate a regression equation with number of applications as the activity driver and the only independent variable. If the bank forecasts 80 applications for the next month, what will be the budgeted application cost? 3. Which of the two regression equations do you think does a better job of predicting application costs? Explain. 4. Run a multiple regression to determine the cost equation using both activity drivers. What are the budgeted application costs for 2,600 application hours and 80 applications?
A company has prepared the operating budget and the cash budget. It is now preparing the budgeted balance sheet. Identify the document that contains each of these balances. A. cash B. accounts receivable C. finished goods inventory D. accounts payable E. equipment purchases
Suppose that the controller of your companys largest factory is a particularly optimistic individual. If you were in charge of developing the master budget, how, if at all, would you be influenced by this knowledge?
Which of the following is true in a bottom-up budgeting approach? Every expense needs to be justified. Supervisors tell departments their budget amount and the departments are free to work within those amounts. Departments budget their needs however they see fit. Departments determine their needs and relate them to the overall goals.
Classify each of the following actions as either being associated with the financial accounting information system (FS) or the cost management information system (CMS): a. Determining the total compensation of the CEO of a public company b. Issuing a quarterly earnings report c. Determining the unit product cost using TDABC d. Calculating the number of units that must be sold to break even e. Preparing a required report for the SEC f. Preparing a sales budget g. Using cost and revenue information to decide whether to keep, or drop, a product line h. Preparing an annual statement of financial position that conforms to generally accepted accounting principles (GAAP) i. Using cost and revenue information to decide whether to invest in a new production system or not j. Reducing costs by improving the overall quality of a product k. Using a debt-equity ratio and liquidity ratios from a balance sheet to assess the likelihood of bankruptcy l. Using a public companys financial statements to decide whether or not to buy its stock
Frank Flynn is the payroll manager for Powlus Supply Company. During the budgeting process, Sam Kinder, director of finance, asked Flynn to arrive at a set percentage that could be applied to each budgeted salary figure to cover the additional cost that will be incurred by Powlus Supply for each employee. After some discussion, it was determined that the best way to compute this percentage would be to base these additional costs of payroll on the average salary paid by the company. Kinder wants this additional payroll cost percentage to cover payroll taxes (FICA, FUTA, and SUTA) and other payroll costs covered by the company (workers compensation expense, health insurance costs, and vacation pay). Flynn gathers the following information in order to complete the analysis: Compute the percentage that can be used in the budget.
Which of the following is a benefit of using budget-management software? (check all that apply). Allows companies to determine the exact amount of sales that will be achieved in the upcoming fiscal period. Allows companis with multiple business segments to comine financial data from each of its segments to prepare company-wide budgeted financial Allows managers to access the budget from several locations through the internet. Allows managers to perform sensitivity analysis on each individual business segment.
For this assignment you are to assume that you are involved in the preparation of your company's master budget. The company's sales team provides information concerning expected unit sales and pricing for use in preparation of the sales budget. Further, you are aware that a portion of the sale team's compensation is based on their ability to meet the sales budget. What would the memorandum be to the vice president of finance outlining your concerns about this practice. Include any concerns that you have about potential bias in the information provided by the sales team.
1. You are the senior accountant at Cannon Manufacturing and have been asked by the budget director to prepare the production budget for the upcoming quarter. The budget director stated that they chose you to prepare this budget because it is an important part of the overall operating budget and financial budget. Explain what the production budget calculates and how the production budget would affect other operating budgets and the financial budget. 2. Which budget is the first one that must be completed in the master budgeting process and why?
Sigma PLC are a Certified Chartered Management Accountant firm. The firm has a number of clients who regularly require support concerning monthly and quarterly management accounting issues. The key issue that has been raised by a major client, Barry Prior PLC is around the scope, purpose and procedures involved in the annual budgeting process. To assist with the client’s query, the Accounting firm has been asked by the Senior Partner to prepare a report to highlight the key characteristics of budgeting. Prepare a report that: Describes the SIX main purposes of budgeting. Explains the difference between fixed and flexible budgets. Briefly outlines the functional budgets that may be prepared as part of the budgeting process. Describes TWO behavioural issues that may arise from the budgeting process.
Another team member who is preparing the Budgeted Balance Sheet for the business forthe same quarter and has asked you to furnish him with the figures for the expected tradereceivables and payables to be included in the statement. Is that a reasonable request? Ifyes, what should these amounts be?
I have 2 follow-up questions: 1)another team member who is preparing the Budgeted Balance Sheet for the business for the same quarter and has asked you to furnish him with the figures for the expected trade receivables and payables to be included in the statement. Is that a reasonable request? If yes, what should these amounts be? 2) Upon receipt of the budget, the team manager, Hilux James, has now informed you that, in keeping with industry players, the management of Toyota & Sons have indicated an industry requirement to maintain a minimum cash balance of $155,000 each month. He has also noted that management is very keen on keeping the gearing ratio of the business as low as possible and would therefore prefer to cushion any gaps internally using equity financing. Based on the budget prepared, will the business be achieving this desired target? Suggest three (3) internal strategies that may be employed by management to improve the organization’s monthly cash flow and militate…