Concept explainers
Trusler Company has always done some planning for the nature, but the company has never prepared a formal budget. Now that the company is growing larger, it is considering preparing a budget.
Instructions
Write a memo to Jim Dixon, the president of Trusler Company, in which you define budgeting, identify the budgets that comprise the
Trending nowThis is a popular solution!
Chapter 9 Solutions
Managerial Accounting: Tools for Business Decision Making
Additional Business Textbook Solutions
Financial Accounting, Student Value Edition (5th Edition)
Managerial Accounting (5th Edition)
Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)
Horngren's Accounting (11th Edition)
Financial Accounting: Tools for Business Decision Making, 8th Edition
Managerial Accounting (4th Edition)
- Which of the following is the cornerstone (or most critical element) of the master budget? The operating expenses budget The budgeted balance sheet The sales budget The inventory, purchases, and cost of goods sold budget а. b. с. d. 3. The budgeted statement of cash flows is part of which element of Amazon.com's master budget? The financial budget The operating budget The capital expenditures budget None of the above а. b. с. d. Use the following information to answer questions 4 through 7 Suppose Mallcentral sells 1,000,000 hardcover books a day at an average price of $30. Assume that Mallcentral's purchase price for the books is 75% of the selling price it charges retail customers. Mallcentral has no beginning inventory, but it wants to have a three-day supply of ending inventory. Assume that operating expenses are $1,000,000 per day. 4. Compute Mallcentral's budgeted sales for the next (seven-day) week. $157,500,000 $217,000,000 $435,000,000 $210,000,000 а. b. с. d. 2.arrow_forwardA company can expect to receive which of the following benefits when it starts its budgeting process? The budget provides managers with a benchmark against which to compare actual results for performance evaluation. The planning required to develop the budget helps managers foresee and avoid potential problems before they occur. The budget helps motivate employees to achieve sales growth and cost-reduction goals. All of the abovearrow_forwardJim Thome has prepared the following list of statements about budgetary control. Identify each statement as true or false. 2. 3. 4. 5. 6. 7. 8. 9. 10. Budget reports compare actual results with planned objectives. All budget reports are prepared on a weekly basis. Management uses budget reports to analyze differences between actual and planned results and determine their causes. As a result of analyzing budget reports, management may either take corrective action or modify future plans. Budgetary control works best when a company has an informal reporting system. The primary recipients of the sales report are the sales manager and the vice-president of production. The primary recipient of the scrap report is the production manager. A static budget is a projection of budget data at one level of activity. Top management's reaction to unfavourable differences is not influenced by the materiality of the difference. A static budget is not appropriate in evaluating a manager's effectiveness…arrow_forward
- Which of the following is the cornerstone (or most critical element) of the master budget? a. The operating expenses budgetb. The budgeted balance sheetc. The sales budget d. The inventory, purchases, and cost of goods sold budget The budgeted statement of cash flows is part of which element of Amazon.com’s master budget? The financial budget The operating budget The capital expenditures budget None of the abovearrow_forwardSelect each of the terms with the best description of its purpose. 1. Helps determine financing needs. Definitions 2. The usual starting point in the master budget process. 3. A report that shows predicted revenues and expenses for a budgeting period. 4. A budgetary cushion used to meet performance targets. 5. A comprehensive plan that consists of several budgets that are linked. 6. Employees affected by a budget help in preparing it. Termsarrow_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_forward
- A manufacturing company has prepared the operating budget and the cash budget and is now preparing the budgeted balance sheet. While doing so, the Cash balance can be taken from the OA budgeted income statement OB operational budget OC. sales budget OD. cash budgetarrow_forwardI 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…arrow_forwardUse the guiding questions below to develop recommendations based on the June budget to help the manager of the marketing department • How does the budget help the marketing department coordinate their needs with other departments? • How can the budget be used to evaluate the marketing department’s performance?arrow_forward
- Behavioral Aspects of Budgeting; Ethics and the Manager Norton Company, a manufacturer of infant furniture and carriages, is in the initial stages of preparing the annual budget for next year. Scott Ford has recently joined Norton’s accounting staff and wants to learn as much as possible about the company’s budgeting process. During a recent lunch with Marge Atkins, sales manager, and Pete Granger, production manager, Ford initiated the following conversation. Ford: Since I’m new around here and am going to be involved with the preparation of the annual budget, I’d be interested to learn how the two of you estimate sales and production numbers. Atkins: We start out very methodically by looking at recent history, discussing what we know about current accounts, potential customers, and the general state of consumer spending. Then, we add that usual dose of intuition to come up with the best forecast we can. Granger: I usually rake the sales projections as the basis for my projections. Of…arrow_forwardWhich 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.arrow_forwardDiscuss the following:a. Are these budget standards challenging for the department that produces lip gloss? (Use the numbers provided to support your argument) b. Why do you suppose Chante picked these standards? (Critical thinking) c. What steps can Nicki Fenty Corporation’s top management take to ensure Chante’s standards really meet the goals of the firm? Discuss this briefly, with reference to the current scenario as well as to other approaches to budget preparation.arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College