Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Textbook Question
Chapter 8, Problem 8DQ
Suppose that the vice president of sales is a particularly pessimistic individual. If you were in charge of developing the
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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.
Why 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?
Briefly describe human behavior problems that might arise if budget goals are set too tightly. What behavioral problems are associated with setting a budget too loosely?
When would a company use zero-based budgeting?
Why should the production requirements outlined in the production budget be carefully coordinated with the sales budget?
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_forwardWhich 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.arrow_forwardIf management is being evaluated on their ability to manage a budget, what can they do to decrease cash outflow?arrow_forward
- Discuss the factors that are likely to cause managers to submit budget estimates of sales and costs that do not represent their best estimate or expectations of what will actually occur and Suggest, as a budget accountant, what procedures you would advise in order to minimize the likelihood of such biased estimate arising.arrow_forwardIf a manager is not able to meet the budget and it has been ________________ , the manager can alwayssay that the budget was unreasonable or unrealistic to start with, and therefore was impossibleto meet.arrow_forward1 i. Discuss the factors that are likely to cause managers to submit budget estimates of sales and costs that do not represent their best estimate or expectations of what will actually occur. ii. Suggest, as a budget accountant, what procedures you would advise in order to minimize the likelihood of such biased estimate arising.arrow_forward
- What are the major objectives of budgeting? Briefly describe the type of human behavior problems that might arise if budget goals are set too tightly. What behavioral problems are associated with setting a budget too loosely? Why should the production requirements set forth in the production budget be carefully coordinated with the sales budget?arrow_forwardThe budgeting process is an essential component of management control systems, as it provides a system of planning, coordination and control for management. It is often an arduous process, however, and often strikes dread in the hearts of those involved in budget preparation.In the public sector, the budgeting process can be even more difficult, since the objectives of the organization are more difficult to define in a quantifiable way than the objectives of a private company. For example, a private company's objectives may be to maximize profit. The meeting of this objective can then be set out in the budget by aiming for a percentage increase in sales and perhaps the cutting of various costs. If, on the other hand, you are budgeting for a public sector organization such as a hospital, then the objectives may be largely qualitative, such as ensuring that all outpatients are given an appointment within eight weeks of being referred to the hospital. This is difficult to define in a…arrow_forwardWhy do chief executives include intems in their budget that they do not fully support?arrow_forward
- Which of the following best describes the role of top management in the budgeting process? Should be involved only in the approval Should not necessarily have detailed knowledge of the daily operations and should limit their involvement Should be enthusiastic and committed to the budget process Separates the budgeting process and the business planning process please answer immediately :)arrow_forwardWhich of the following statements is not correct? The revenue budget is the starting point in preparing the master budget. The revenue budget is constructed by multiplying the expected sales in units by the sales price. 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.arrow_forward“Budgeting is the same across different organisations and industries, so organisational strategy, industry and the broader goals and objectives of a business are not of much importance in the budgeting process”. Do you agree with this statement? Explain why or why not So far this questioned was answered before with: The statement cannot be agreed, as budget preparations vary from company to company as per the company's goals and strategies. Budgeting is estimated standards set which acts like an yardstick for respective departments (purchase, sales, production etc.) to perform. These budgets serve as a guidelines or target for the department to achieve effective and efficient output. These budgets are prepared analysing the past performance and other factors such as capacity and procedures and policies of the organisation I feel this needs to be explained more - could you please write another 100 words explaining this question please :))arrow_forward
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