Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Chapter 8, Problem 11DQ
To determine
Describe the reason for preparing
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Why would a company use zero-based budgeting,given that it requires more time and effort from managersthroughout the company?
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The revenue budget is the starting point in preparing the master budget.
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The production budget is not based on the revenue budget.
The cash budget is used to determine whether the firm will have enough cash on hand.
Chapter 8 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 8 - Define budget. How are budgets used in planning?Ch. 8 - Prob. 2DQCh. 8 - Prob. 3DQCh. 8 - What is the master budget? An operating budget? A...Ch. 8 - Explain the role of a sales forecast in budgeting....Ch. 8 - All budgets depend on the sales budget. Is this...Ch. 8 - What is an accounts receivable aging schedule? Why...Ch. 8 - Suppose that the vice president of sales is a...Ch. 8 - Suppose that the controller of your companys...Ch. 8 - Prob. 10DQ
Ch. 8 - Prob. 11DQCh. 8 - Discuss the shortcomings of the traditional master...Ch. 8 - Define static budget. Give an example that shows...Ch. 8 - What are the two meanings of a flexible budget?...Ch. 8 - What are the steps involved in building an...Ch. 8 - FlashKick Company manufactures and sells soccer...Ch. 8 - Refer to Cornerstone Exercise 8.1, through...Ch. 8 - Refer to Cornerstone Exercise 8.2 for the...Ch. 8 - Prob. 4CECh. 8 - Johnston Company cleans and applies powder coat...Ch. 8 - Play-Disc makes Frisbee-type plastic discs. Each...Ch. 8 - Refer to Cornerstone Exercise 8.6. Required: 1....Ch. 8 - Timothy Donaghy has developed a unique formula for...Ch. 8 - Green Earth Landscaping Company provides monthly...Ch. 8 - Coral Seas Jewelry Company makes and sells costume...Ch. 8 - Shalimar Company manufactures and sells industrial...Ch. 8 - Khloe Company imports gift items from overseas and...Ch. 8 - Nashler Company has the following budgeted...Ch. 8 - Refer to Cornerstone Exercise 8.13. In March,...Ch. 8 - Palmgren Company produces consumer products. The...Ch. 8 - Prob. 16ECh. 8 - Crescent Company produces stuffed toy animals; one...Ch. 8 - Audio-2-Go, Inc., manufactures MP3 players. Models...Ch. 8 - Tiger Drug Store carries a variety of health and...Ch. 8 - Rosita Flores owns Rositas Mexican Restaurant in...Ch. 8 - Prob. 21ECh. 8 - Janet Wooster owns a retail store that sells new...Ch. 8 - Historically, Ragman Company has had no...Ch. 8 - Del Spencer is the owner and founder of Del...Ch. 8 - Refer to Exercise 8.24. Del Spencers purchases...Ch. 8 - Ingles Corporation is a manufacturer of tables...Ch. 8 - In an attempt to improve budgeting, the controller...Ch. 8 - Refer to Exercise 8.27. At the end of the year,...Ch. 8 - Olympus, Inc., manufactures three models of...Ch. 8 - Refer to Exercise 8.29. Suppose Gene determines...Ch. 8 - Trumbull Co. plans to produce 100,000 toy cars...Ch. 8 - Which of the following describes the order in...Ch. 8 - A companys controller is adjusting next years...Ch. 8 - A companys sales for the coming months are as...Ch. 8 - The budget that adjusts unit sales for beginning...Ch. 8 - Ponderosa, Inc., produces wiring harness...Ch. 8 - Bernard Creighton is the controller for Creighton...Ch. 8 - Greiner Company makes and sells high-quality glare...Ch. 8 - Prob. 39PCh. 8 - The controller for Muir Companys Salem plant is...Ch. 8 - Refer to Problem 8.40 for data. Required: 1. Run a...Ch. 8 - Norton Company, a manufacturer of infant furniture...
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- 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?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_forwardWhy would managers use a flexible budget? What information does it provide that a regular budget does not?arrow_forward
- Which of the following statements is/are true? Select one: O a. One disadvantage of participative budgeting is employees' tendency to overestimate of revenues. O b. In a production budget, beginning inventory in units plus budgeted units to be produced equals unit sales minus targeted ending inventory in units. O C. All of the given statements are true O d. Production and inventory budgets form the basis for developing the sales budget. O e. When managers intentionally set budgeted costs too high and budgeted revenues too low, they are creating budgetary slack.arrow_forwardWhy does preparing the master budget require a committee? Can't a medium-large company get by with directives from the CEO/CFO? What are some of the pitfalls under this scenario? When are sales and cost variances favorable?arrow_forwardVarious types of budgets facilitate understanding about the big picture of a business. There are budgets that are set and unchangeable, as well as budgets that allow for variability. •What are two different types of budgets? And how do they compliment each other? •What is the difference between a flexible budget?and a static budget? •Which budget works best for a business?arrow_forward
- What is a cash budget, and how can this statement be used to help reduce the amount ofcash that a firm needs to carry? What are the advantages and disadvantages of daily overmonthly cash budgets, and how might a cash budget be used when a firm is negotiating aloan from its bank?arrow_forwardWhat are standard costs and why do companies use standard costs? Discuss the difference between ideal and practical standards. Which is most useful to a company and why? In your opinion, what are the two most significant advantages and disadvantages of using standard costs? Support your opinion. What is a static planning budget? Is it useful? Why or why not? What is a flexible budget? How does it differ from a static planning budget? Explain why the flexible budget more useful than the static planning budget.arrow_forwardWhich of the following statements about top down budgeting is true? Multiple Choice It is an appropriate method to use in times of financial stress. Eliminates a manager's excuse who tries to claim that his budget is unrealistic The budget process is often more efficient. It allows senior management to better prioritize resources to propelling the growth of the companyarrow_forward
- since flexible budget is more accurate in measuring performance, can company just develop flexible budget without the static budget? Why or why not?arrow_forwardPlease assist to construct a cash budget in detail. * Please take note that there is variable manufacturing overhead cost and do we need to include this in the cash budget?arrow_forwardDefine breakeven point for a business and how it is calculated. Why is so much emphasis placed on budgets in today's corporate america? Do you think that budgets are a good financial projection, or do you think that most businesses create underestimated budgets in order to be able to meet financial goals? Discuss and give examples.arrow_forward
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