Managerial Accounting: Tools for Business Decision Making
7th Edition
ISBN: 9781118334331
Author: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Publisher: WILEY
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 10, Problem 10.1E
Connie Rice has prepared the following list of statements about budgetary control.
1. Budget reports compare actual results with planned objectives.
2. All budget reports are prepared on a weekly basis.
3. Management uses budget reports to analyze differences between actual and planned results and determine their causes.
4. As a result of analyzing budget reports, management may either take corrective action or modify future plans.
5. Budgetary control works best when a company has an informal reporting system.
6. The primary recipients of the sales report are the sales manager and the production supervisor.
7. The primary recipient of the scrap report is the production manager.
8. A static budget is a projection of budget data at one level of activity.
9. Top managements reaction to unfavorable differences is not influenced by the materiality of the difference.
10. A static budget is not appropriate in evaluating a manager's effectiveness in controlling costs unless the actual activity level approximates the static budget activity level or the behavior of the costs is fixed.
Instructions
Identify each statement as true or false. If false, indicate how to correct the statement.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Which of the following statements is True?
a. Budget data are generally prepared by top management and distributed downward in anorganization
b. The budget committee is responsible for preparing detailed budget figures in anorganization
c. The primary purpose of the cash budget is to show the expected cash balance at the endof the budget period.
d. Under zero-based budgeting, a manager is required to start at zero budget levels each period, as if the programs involved were being initiated for the first time
Which of the following statements is incorrect concerning budget preparation?
A.
The rolling budget approach is not often used in practice because it requires that management be in perpetual budgeting mode.
B.
If a zero-based budgeting approach is used, the annual budgeting process begins with a review of the results of the prior operating period.
C.
If a participative approach is used to prepare budgets, all levels of management are involved in the budgeting process.
D.
The preparation of the sales budget is the starting point in the budgeting process for all companies.
E.
Participative budgeting increases the risk that employees will create budgetary slack.
The budget process and budgets themselves can impact management actions, both positively and negatively. For instance, a common practice among not-for-profit organizations and government agencies is for management to spend any amounts remaining in a budget at the end of the budget period, a practice often called “use it or lose it.” The view is that if a department manager does not spend the budgeted amount, top management will reduce next year’s budget by the amount not spent. To avoid losing budget dollars, department managers often spend all budgeted amounts regardless of the value added to products or services. All of us pay for the costs associated with this budget system. Required Write a half-page report to a local not-for-profit organization or government agency offering a solution to the “use it or lose it” budgeting problem.
Chapter 10 Solutions
Managerial Accounting: Tools for Business Decision Making
Ch. 10 - Prob. 1QCh. 10 - The following purposes are part of a budgetary...Ch. 10 - How may a budget report for the second quarter...Ch. 10 - Ken Bay questions the usefulness of a master sales...Ch. 10 - Under what circumstances may a static budget be an...Ch. 10 - A flexible budget is really a series of static...Ch. 10 - The static manufacturing overhead budget based on...Ch. 10 - A static overhead budget based on 40,000 direct...Ch. 10 - Megan Pedigo is confused about how a flexible...Ch. 10 - Call Company has prepared a graph of flexible...
Ch. 10 - The flexible budget formula is fixed costs 50,000...Ch. 10 - What is management by exception? What criteria may...Ch. 10 - What is responsibility accounting? Explain the...Ch. 10 - Prob. 14QCh. 10 - Distinguish between controllable and...Ch. 10 - How do responsibility reports differ from budget...Ch. 10 - Prob. 17QCh. 10 - Distinguish among the three types of...Ch. 10 - Prob. 19QCh. 10 - Prob. 20QCh. 10 - Prob. 21QCh. 10 - Prob. 22QCh. 10 - Prob. 23QCh. 10 - Prob. 24QCh. 10 - Prob. 25QCh. 10 - Prob. 26QCh. 10 - For the quarter ended March 31, 2017, Croix...Ch. 10 - Data for Croix Company are given in BE10-1. In the...Ch. 10 - In Rooney Company, direct labor is 20 per hour....Ch. 10 - Gundy Company expects to produce 1,200,000 units...Ch. 10 - Data for Gundy Company are given in BE10-4. In...Ch. 10 - In the Assembly Department of Hannon Company,...Ch. 10 - Torres Company accumulates the following summary...Ch. 10 - For the year ending December 31, 2017, Cobb...Ch. 10 - Prob. 10.9BECh. 10 - Prob. 10.10BECh. 10 - Prob. 10.11BECh. 10 - Prob. 10.12BECh. 10 - Wade Company estimates that it will produce 6,000...Ch. 10 - In Pargo Company's flexible budget graph, the...Ch. 10 - Prob. 10.3DICh. 10 - Prob. 10.4DICh. 10 - Connie Rice has prepared the following list of...Ch. 10 - Crede Company budgeted selling expenses of 30,000...Ch. 10 - Myers Company uses a flexible budget for...Ch. 10 - Using the information in E10-3. assume that in...Ch. 10 - Fallon Company uses flexible budgets to control...Ch. 10 - The actual selling expenses incurred in March 2017...Ch. 10 - Appliance Possible Inc. (AP) is a manufacturer of...Ch. 10 - Rensing Groomers is in the dog-grooming business....Ch. 10 - As sales manager, Joe Batista was given the...Ch. 10 - Chubbs Inc.'s manufacturing overhead budget for...Ch. 10 - UrLink Company is a newly formed company...Ch. 10 - Venetian Company has two production departments....Ch. 10 - Fey Company's Organization chart includes the...Ch. 10 - The Mixing Department manager of Malone Company is...Ch. 10 - Horatio Inc. has three divisions which are...Ch. 10 - The Sports Equipment Division of Harrington...Ch. 10 - The South Division of Wiig Company reported the...Ch. 10 - The Dinkle and Frizell Denial Clinic provides both...Ch. 10 - The Ferrell Transportation Company uses a...Ch. 10 - Presented below is selected information for three...Ch. 10 - Presenled below is selected financial information...Ch. 10 - Bumblebee Company estimates that 300,000 direct...Ch. 10 - Zelmer Company manufactures tablecloths. Sales...Ch. 10 - Ratchet Company uses budgets in controlling costs....Ch. 10 - Clarke Inc. operates the Patio Furniture Division...Ch. 10 - Optimus Company manufactures a variety of tools...Ch. 10 - Durham Company uses a responsibility reporting...Ch. 10 - Sentinel Industries has manufactured prefabricated...Ch. 10 - CURRENT DESIGNS The Current Designs staff has...Ch. 10 - Green Pastures is a 400-acre farm on the outskirts...Ch. 10 - Prob. 10.2BYPCh. 10 - Prob. 10.3BYPCh. 10 - The manufacturing overhead budget for Fleming...Ch. 10 - Ethics Case American Products Corporation...Ch. 10 - Considering Your Costs and Benefits Preparing a...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Suppose that the vice president of sales is a particularly pessimistic individual. If you were in charge of developing the master budget, how, if at all, would you be influenced by this knowledge?arrow_forwardThe 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?arrow_forwardThe budget committee a. reviews the budget. b. resolves differences that arise as the budget is prepared. c. approves the final budget. d. is directed (typically) by the controller. e. All of these.arrow_forward
- If management is being evaluated on their ability to manage a budget, what can they do to decrease cash outflow?arrow_forwardSuppose 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?arrow_forwardWhich approach is most likely to result in employee buy-in to the budget? A. top-down approach B. bottom-up approach C. total participation approach D. basing the budget on the prior yeararrow_forward
- Which of the following statements is not correct? A. The sales budget is computed by multiplying estimated sales by the sales price. B. The production budget begins with the sales estimated for each period. C. The direct materials budget begins with the sales estimated for each period. D. The sales budget is typically the first budget prepared.arrow_forwardA 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 purchasesarrow_forwardBoth the budget process and budgets themselves can impact management actions, both positively and negatively. For instance, a common practice among not-for-profit organizations and government agencies is for management to spend any amounts remaining in a budget at the end of the budget period, a practice often called "use it or lose it." The view is that if a department manager does not spend the budgeted amount, top management will reduce next year's budget by the amount not spent. To avoid losing budget dollars, department managers often spend all budgeted amounts regardless of the value added to products or services. All of us pay for the costs associated with this budget system. Required Please respond by offering a solution to a not-for-profit that utilizes the "use it or lose it" budgeting problem.arrow_forward
- Which one of the following is not considered to be a benefit of participative budgeting? When managers set the final targets for the budget, top management need not be concerned with the overall profitability of current operations. Managers are more motivated to reach the budget goals because they participated in setting them. Individuals at all organizational levels are recognized as being part of the team; this results in greater support of the organization. The budget estimates are prepared by those in direct contact with various activities.arrow_forwardWhich of the following is NOT an objective of the budgeting process? Group of answer choices a - To communicate management's plans throughout the entire organization b - To ensure that the company continues to grow. c - To uncover potential bottlenecks before they occur d - To provide a means of allocating resources to those parts of the organization where they can be used most effectively.arrow_forward: The chief executive of your company has asked you to recommend an approach to be used in preparing budgets and to draft guidelines for senior managers on managing performance using budgets. As the management accountant prepare a report to the chief executive describing your selected approach and your recommended guidelines For senior managers. In preparing your report you should consider the behavioral consequences of using budgets in planning and controlarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
What is Cost Allocation? Definition & Process; Author: FloQast;https://www.youtube.com/watch?v=hLhvvHvZ3JM;License: Standard Youtube License