FINANCIAL & MANAG ACCT (CH. 1 - 24 EBOOK
9th Edition
ISBN: 9781264511068
Author: Wild
Publisher: MCG
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Textbook Question
Chapter 20, Problem 2QS
Budgeting benefits C1
For each of the following items 1 through 6, indicate yes if it describes a potential benefit of budgeting or no if it describes a potential negative outcome of budgeting.
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_____1. Budgets help coordinate activities across departments.
_____2. Budgets are useful in assigning blame for unexpected results.
_____3. A budget forces managers to spend time planning for the future.
_____4. Some employees might overstate expenses in budgets.
_____5. Budget can lead to excessive pressure to meet budgeted results.
_____6. Budget can provide incentives for good performance.
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Outdoor Outfitters has created a flexible budget for the 70,000-unit and the 80,000-unit levels of activity shown as follows. Complete
Outdoor Outfitters's flexible budget at the 107,000-unit level of activity. Assume that the cost of goods sold and variable operating
expenses vary directly with sales and that income taxes remain at 30 percent of operating income.
70,000 Units
80,000 Units
107,000 Units
$ 1,400,000 $ 1,600,000
960,000
Sales
Ask
Cost of goods sold
840,000
Gross profit on sales
2$
560,000 $
640,000
Operating expenses ($90,000 fixed)
370,000
190,000 $
410,000
Operating income
Income taxes (30% of operating income)
230,000
57,000
69,000
Net income
133,000 $
161,000
Mc
Graw
Hill
Which of the following is NOT true of the budgeting process?
Question 8 options:
Budgeting provides feedback to management to aid in assessing how well it's reaching its goals.
Budgets force managers to plan for the future.
Budgets force managers to consider relations among operations across the entire value chain.
The performance report is prepared as part of the master budget.
1. Which of the following is an advantage of the budgeting process?
a. It forces management to focus on the past and not be distracted by the day-to-day operations of the business.
b. It can communicate to employees specific information about their past performance to determine their promotion prospects.
c. It can communicate to employees specific information about their past performance to determine their promotion prospects.
d. It can communicate to employees information about their performance expectations in the period ahead.
2. Which one of the following statements regarding changing inventory costing methods is true?
a. A change in inventory methods can be justified if the change is made to better match profits with revenue
b. Changing inventory costing methods violates comparability
c. One place that the reader of an annual report would be able to identify that a company changed inventory costing methods is the statement of shareholders' equity
d. Changing inventory costing…
Chapter 20 Solutions
FINANCIAL & MANAG ACCT (CH. 1 - 24 EBOOK
Ch. 20 - Budget motivation C1 For each of the following...Ch. 20 - Budgeting benefits C1 For each of the following...Ch. 20 - Prob. 9QSCh. 20 - Prob. 10QSCh. 20 - Prob. 11QSCh. 20 - Prob. 19QSCh. 20 - Cash receipts, with uncollectible accounts P2 The...Ch. 20 - Cash receipts, with uncollectible accounts P2 Well...Ch. 20 - Prob. 22QSCh. 20 - Budgeted loan activity P2 Santos Co. is preparing...
Ch. 20 - Prob. 25QSCh. 20 - Prob. 26QSCh. 20 - Prob. 27QSCh. 20 - Prob. 28QSCh. 20 - Prob. 29QSCh. 20 - Prob. 30QSCh. 20 - Prob. 3ECh. 20 - Prob. 10ECh. 20 - Prob. 12ECh. 20 - Prob. 18ECh. 20 - Prob. 19ECh. 20 - Prob. 20ECh. 20 - Prob. 21ECh. 20 - Prob. 32ECh. 20 - Prob. 1PSACh. 20 - Prob. 2PSACh. 20 - Prob. 3PSACh. 20 - Prob. 1PSBCh. 20 - Prob. 2PSBCh. 20 - Prob. 3PSBCh. 20 - Prob. 4PSBCh. 20 - Prob. 5PSBCh. 20 - Identify at least three benefits of budgeting in...Ch. 20 - Prob. 2DQCh. 20 - What is the benefit of continuous budgeting?Ch. 20 - Identify three usual time horizons for short-term...Ch. 20 - Why should each department participate in...Ch. 20 - How does budgeting help management coordinate and...Ch. 20 - Why is the sales budget so important to the...Ch. 20 - What is the selling expense budget? What is the...Ch. 20 - Prob. 9DQCh. 20 - GOOGLE Google prepares a cash budget. What is a...Ch. 20 - Prob. 11DQCh. 20 - ETHICS CHALLENGE C1 BTN 20-3 Both the budget...Ch. 20 - Prob. 2BTNCh. 20 - Prob. 3BTN
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- A) Enter True or False 1. ________ An important part of the planning process is the creation of a budget. 2. ________ Operating budgets focus on the financial resources needed to support operations including cash receipts and disbursements, capital expenditures and financing. 3. ________ Budgets can also create a “use-it-or-lose-it” mentality that encourages managers to spend their entire budgets to avoid a reduction in resources in the next budget period. 4. ________ The starting point of the planning process is management’s strategic plan or vision of what they want the organization to achieve over the long term. 5. ________ A short-term objective is a specific goal that managers want to achieve in more than a year to reach their long-term goals. 6. ________ Planning is the forward-looking phase of the planning and control process that involves setting long-term objectives and defining short-term…arrow_forward1. Budgeting involves ________. establishing specific goals executing plans to achieve the goals periodically comparing actual results with the goals All of these choices are correct. 2. Budgeting affects all of the following managerial functions except ________. planning directing controlling None of these choices are correct.arrow_forwardQ.How does preparing the budget help Hazlett’s management team better manage the company?arrow_forward
- 1.Explain the advantages of encouraging employee participation in budget setting. 2.Explain why zero based budgeting might be a useful tool to employ to ensure that budgetary requirements are kept up to datearrow_forwardindicate yes if it describes a potential benefit of budgeting orno if it describes a potential negative outcome of budgeting. Budgets help coordinate activities across departments.arrow_forwardA company can expect to receive which of the following benefits when it starts its budgeting process? a. The budget provides managers with a benchmark against which to compare actual results for performance evaluation. b. The planning required to develop the budget helps managers foresee and avoid potential problems before they occur. c. The budget helps motivate employees to achieve sales growth and cost-reduction goals. d. All of the abovearrow_forward
- Statement 1: Budget makes coordination of activities easier. Statement 2: Budget provides an early warning for potential problems. O Only Statement 2 is correct. O Both Statements are correct. O Only Statement 1 is correct. O Both Statements are incorrect.arrow_forwardA budget is a financial plan for an organization, prepared in advance. * True false 2 One of the advantages of budgeting is that it allows to communicate ideas and plans * True falsearrow_forwardBudgets need to be fair and attainable for employees to consider the budget important in their normal daily activities. Which of the following situations will likely lead to human behavior problems? a. allowing employees the opportunity to be a part of the budget process b. setting goals too loosely, creating a budgetary slack c. setting goals that are consistent across the firm d. setting goals that are reasonable and attainablearrow_forward
- 5) Budgets can be used to motivate employees because budgeted performance levels can provide goals for employees to attain or exceed. I true O falsearrow_forwardRegarding Budgets, which of the following statements is true? a. A budget is a business plan for the short term. O b. A periodic budget is prepared for a particular period of time. O c. Budgets are based on forecasts. However, the performance of a manager should be compared to a target that reflects the actual environment. O d. All the answers are true.arrow_forwardExplain the advantages of encouraging employee participation in budget setting. 2.Explain why zero based budgeting might be a useful tool to employ to ensure that budgetary requirements are kept up to datearrow_forward
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