This website uses cookies to ensure you have the best experience. Learn more

Cost Accounting Ch. 6 Solution Essay

3856 words - 16 pages

6-1​The budgeting cycle includes the following elements:
a.​Planning the performance of the company as a whole as well as planning the performance of its subunits. Management agrees on what is expected.
b.​Providing a frame of reference, a set of specific expectations against which actual results can be compared.
c.​Investigating variations from plans. If necessary, corrective action follows investigation.
d.​Planning again, in light of feedback and changed conditions.

6-2​The master budget expresses management’s operating and financial plans for a specified period (usually a fiscal year) and includes a set of budgeted financial ...view middle of the document...

• Coordination. Production could ensure that output is sufficient to meet, for example, high seasonal demand in the summer.

6-6​In many organizations, budgets impel managers to plan. Without budgets, managers drift from crisis to crisis. Research also shows that budgets can motivate managers to meet targets and improve their performance. Thus, many top managers believe that budgets meet the cost-benefit test.

6-7​A rolling budget, also called a continuous budget, is a budget or plan that is always available for a specified future period, by continually adding a period (month, quarter, or year) to the period that just ended. A four-quarter rolling budget for 2007 is superseded by a four-quarter rolling budget for April 2007 to March 2008, and so on.

6-8 The steps in preparing an operating budget are as follows:
1. Prepare the revenues budget
2. Prepare the production budget (in units)
3. Prepare the direct material usage budget and direct material purchases budget
4. Prepare the direct manufacturing labor budget
5. Prepare the manufacturing overhead budget
6. Prepare the ending inventories budget
7. Prepare the cost of goods sold budget
8. Prepare the nonmanufacturing costs budget
9. Prepare the budgeted income statement

6-9​The sales forecast is typically the cornerstone for budgeting, because production (and, hence, costs) and inventory levels generally depend on the forecasted level of sales.

6-10​Sensitivity analysis adds an extra dimension to budgeting. It enables managers to examine how budgeted amounts change with changes in the underlying assumptions. This assists managers in monitoring those assumptions that are most critical to a company in attaining its budget and allows them to make timely adjustments to plans when appropriate.

6-11 Kaizen budgeting explicitly incorporates continuous improvement anticipated during the budget period into the budget numbers.

6-12 Nonoutput-based cost drivers can be incorporated into budgeting by the use of activity-based budgeting (ABB). ABB focuses on the budgeted cost of activities necessary to produce and sell products and services. Nonoutput-based cost drivers, such as the number of part numbers, number of batches, and number of new products can be used with ABB.

6-13​The choice of the type of responsibility center determines what the manager is accountable for and thereby affects the manager’s behavior. For example, if a revenue center is chosen, the manager will focus on revenues, not on costs or investments. The choice of a responsibility center type guides the variables to be included in the budgeting exercise.

6-14​Budgeting in multinational companies may involve budgeting in several different foreign currencies. Further, management accountants must translate operating performance into a single currency for reporting to shareholders, by budgeting for exchange rates. Managers and accountants must understand the factors that impact exchange rates,...

Other Papers Like Cost Accounting Ch. 6 Solution

Accounting Essay

1163 words - 5 pages ] | | | |No accounting because the decline in fair value is temporary | | | | ( ch 1, pg 11

Chpt 4 Study Guide Cost Accounting

2786 words - 12 pages .   6.            Ex 30, p. 132. Proration of overhead. Solution   7.            Pr 34, p. 134. Proration of overhead. Solution   8.            The Precision Widget Company had the following balances in their accounts at the end of the accounting period: Work-in-Process: $5,000 Finished Goods: $20,000 Cost of Goods Sold: $200,000   If their manufacturing overhead was overallocated by $8,000 and Precision Widget adjusts their accounts

Acc 363 Week 4 Dq 1

322 words - 2 pages Ch. 4 of Managerial Accounting: Tools for Business Decision Making : · Exercises E4-10 and E4-11 · Questions 13 and 14 Learning Team Problems – Ch. 4 Prepare written responses to the following problems from Ch. 4 of Managerial Accounting: Tools for Business Decision Making : · Problems P4-3A and P4-4A Learning Team Case Study – Ch. 4 Prepare written responses to the

Math Is Hard Bro

1329 words - 6 pages 75 (Room Prices) o Chapter 4 Test, problem 19 (IRS Collections) o Section 9.1, Exercises, problem 47 (Finding Costs) o Section 9.1, Exercises, problem 57 (Investment Mixture) o Ch. 6, Review Exercises, problem 98 (Revenue) o Ch. 6, Review Exercises, problem 99 (Airline Passengers) o Ch. 7, Review Exercises, problem 107 (Transportation Costs) o Ch. 7, Review Exercises, problem 108 (Cost of Carpet

Probability Worksheet

1572 words - 7 pages budgets and performance reports in the management decision-making process. 1.2 Evaluate the role of ethics in accounting decision making. 1.3 Evaluate relevant accounting information for business decision making. Read Ch. 1, 5, & 6 of Introduction to Management Accounting. Participate in class discussion. Respond to weekly discussion questions. Resource: Guillermo Furniture Store Scenario Read the Guillermo Furniture Store Scenario. Write a paper in

International Accounting

1204 words - 5 pages A (P.58 Ch. 2 #9) According to Nobes, what are the two most important factors influencing differences in accounting systems across countries? (P. 158 Ch. 4 #17-18) What is the current IAS 23 treatment with respect to borrowing costs? How does this differ from the treatment allowed previously? (P.164 Ch.4 #21) Jefferson Company acquired equipment on January 2, Year 1, at a cost of $10 million. The asset has a five-year life, no residual

Accounting 561 Syllabus

2176 words - 9 pages . | | | | |Evaluate relevant accounting information for business decision making. | | | |Readings |Read Ch. 1, 5, & 6 of Introduction to Management Accounting. | | | |Participation |Participate in class discussion. |Weekly – 2

State Budget

654 words - 3 pages Government Expenditures Economical Criterion Functional Criterion Includes eight chapters 4 State Budget “ Is a financial plan that includes the expected G Revenue and expected G Expenditure for the next fiscal year, used to achieve society's targets, economic growth, social Equity, … etc. ” G Expenditure Ch.1 Wages & salaries Ch.2 Purchases of good service Ch.3 Interests Ch.4 Subsidies & Social benefits Ch.5 Others Spending Ch.6


1776 words - 8 pages . | | | |Course Preparation |Read the course description and objectives. | | | | |Read the instructor’s biography and post your own. | | | |Reading |Read Ch. 8 of Financial Accounting

Welcome To Bsa/310

2548 words - 11 pages | Objectives | 2 3.6 Examine accounting information systems. 3.7 Analyze accounting information systems and business processes. | | | Reading | Read Ch. 1, “An Introduction to the Role of Accounting in the Business World,” of Core Concepts of Accounting. | 01/03 | | Reading | Read Ch. 2, “Concepts and Elements Underlying Accounting,” of Core Concepts of Accounting. | 01/03 | | Reading | Read Ch. 9, “The

Accounting Principles

1063 words - 5 pages techniques as well as differences between the nonprofit versus profit organizations. Reasons being managers need to know the costs of their budget by having a cost analysis and budgeting report prepared. Accrual accounting is measured by the performance as well as the position of a company in acknowledging the economic events of how cash transactions occur, and depreciation has to be estimated while inventory can be determined simply by

Related Essays

Cost Accounting Homework Solution Essay

3051 words - 13 pages manufacturing labor costs Depreciation––plant and equipment Miscellaneous manufacturing overhead costs Manufacturing costs incurred during 2011 Add beginning work-in-process inventory, Jan. 1, 2011 Total manufacturing costs to account for Deduct ending work-in-process inventory, Dec. 31, 2011 Cost of goods manufactured (to income statement) $ 32 84 116 8 $108 42 4 2 9 27 6 15 63 213 18 231 3 $228 2-37 1. Terminology, interpretation of

Intermediate Financial Accounting Kieso Solution Manual Chapter 6

5707 words - 23 pages CHAPTER 6 Accounting and the Time Value of Money ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) | | |Brief Exercises | | | |Topics |Questions | |Exercises |Problems | | 1. |Present value

Harley Davidson Case Study

2286 words - 10 pages comprehensive source for studying Ch 6 -39 13 Grand Strategy Matrix Quadrant II Evaluate present approach How to improve competitiveness Rapid market growth requires intensive strategy Please note this is not a comprehensive source for studying Ch 6 -40 Grand Strategy Matrix Quadrant III Compete in slow-growth industries Weak competitive position Drastic changes quickly Cost & asset reduction (retrenchment) Copyright

Introduction To Accounting Essay

943 words - 4 pages , which are directed toward specific rules that indicate how economic events should be reported in the accounting process. Constraints, which means a process that allow for a relaxation of the principles under certain circumstances. The four financial statements include an income statement, a retained earnings statement, a balance sheet and a statement of cash flows. Running Head: Introduction to Accounting 6 References: - Weygandt, Jerry J., Financial Accounting 6e, (Ch.1, 3 & 7), copyright © 2008 John Wiley & Sons, Inc - History of Accounting; University of Texas A&M -History of Accounting; Vanderbilt University