Do you consider this behavior to be ethical? If not, what steps might you, as budget director, take to cut down on this “padding”?
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During lunch, the director of the Streets and Parkways Department of the city Torrance made the following comment: “For the past 10 years, I have deliberately overstated my labor and equipment needs by 20 percent when preparing my budget request. I figure that the city council will cut it by 10 percent, and I can use the other 10 percent as slack. If there is money left over, I can always find a way to spend it.”
Do you consider this behavior to be ethical?
If not, what steps might you, as budget director, take to cut down on this “padding”?
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- As a consultant to President James Davis at Red Lake State University, you are assigned to assist in performing a 5% across–the-board cut to reduce the budget deficit. He asks you to write a paragraph narrative as to why a budget cut should be implemented. Please prepare your narrative with a clear justification that is supported with examples.Design Products is committed to its quality program. It works with all areas of the company to establish sound quality programs within reasonable budget guidelines. For 20X5, it has budgeted $1,000,000 for prevention costs and $800,000 for appraisal costs. Internal failure has a budget of $100 per failed item, while external failure has a total budget of $600,000.Product Testing has proposed to management a change in the 20X5 budget for a new method of testing products. If management decides to implement the new method, $2 per unit of appraisal costs will be saved, up to a level of 200,000 tests. No additional savings are expected past the 200,000 level. The new method involves $110,000 in training costs and $60,000 in yearly testing supplies.Traditionally, 3% of all completed items have to be reworked. External failure costs average $120 per failed unit. The company's average external failures are 1% of units sold. The company carries no ending inventories.a. What is the adjusted…The CEO of XYZ company has $1 million to spend to improve the company's operations. Although the money could be used to create another division, a new budget system is needed to track expenses and create responsibility budget reports. Even when the company earns profit, there are no reports to explain the reasons. Make a recommendation for the way the funds should be used. Defend your position.
- You recently began a job as an accounting intern at Regis Adventures. Your first task was to help prepare the cash budget for February and March. Unfortunately, the computer with the budget ile crashed, and you did not have a backup or even a hard copy. You ran a program to salvage bits of data from the budget file. After entering the following data in the budget, you may have just enough information to reconstruct the budget. (Click the icon to view information on borrowing cash.) Requirements Complete the following cash budget. (For amounts with a $0 balance, make sure to enter "0" in the appropriate input field. Enter cash deficiencies with a minus sign or parentheses. Enter the net total effects of financing with a minus sign when the amount is a net outflow. Round interest expense to the nearest whole dollar.) Regis Adventures eliminates any cash deficiency by borrowing the exact amount needed from State Street Bank, where the current interest rate is 6%. Regis Adventures pays…After you prepared the operating budget for the first quarter, Lockden learned that one of the two molding machines used by the company needs a major overhaul soon. Since the company is considering cost reduction strategies in response to the economic uncertainty, this news was unfavorable. But Lockden realized that the overhaul is important and has decided to do the overhaul during the first quarter of 2020. The overhaul will cost US$100,000,7 and the machine will not be operational during the overhaul (i.e., the entire duration of the first quarter). The company is exploring the viability of the following options to handle this operational challenge: Option 1: Lockitt, Inc. will run the functional molding machine two shifts per day, instead of one. Since LB075 labor is paid hourly, this proposal will not change the labor hours required. But the company must pay a higher wage rate to the employees in the second shift, causing the average LB075 rate to increase to $45 per hour.…Due to the high crime rate in the city center, the state council in partnership with the police has installed CCTV in several “hotspot” areas. The installation of the CCTV cost USD1000000. The cost of CCTV maintenance in the first year is USD500,000, USD700000 in the second year, USD950000 in the third year, USD990000 in the fourth year and costs are realized at the end of each year. On the other hand, the installation of CCTV will help to reduce crime in that area and is predicted to bring about a benefit of USD2000000 for the first and second year and a benefit of USD 3000000 for the third and fourth year. At the end of the fourth year, the CCTV will be replaced by a new one and it can be resold as second hand for USD200000. Assume the discount rate of 3% is used. Calculate the present value of net benefits assuming the benefits are realized at the end of each of the four years. Also, draw the timeline of benefits and costs. * Do we need included 'CCTV will be replaced by a new one'…
- You are a Maintenance Manager at a new facility without any prior records. How would you go about developing a budget for the coming year?In the previous week, we have discussed planning budgets that are based on standards. How are standards developed and are they only useful for companies that manufacture products or do service type industries utilize standards? Please explain and give examples!Hackshaw Co. was formed three years ago by Glenn Holding. It started as a very small company but began to expand rapidly. With the growth in the company, the owner decided to implement a formal budgetary control process. Glenn Holding provided some data and projections to the company’s Accountant which the Accountant used to prepare the master budget for the company. The master budget was then broken down into departmental budgets. These departmental budgets were distributed to the department managers with a cover letter explaining the new budgeting system and requesting the support of everyone in achieving the targets. Most of the department managers were displeased with the budget. They felt that the targets were not realistically attainable. a. What type of budgeting approach was used? Explain. What are the advantages and the disadvantages of the approach used, Discuss. What approach would you recommend? Why? Using practical illustration from your organization.
- You are hosting an important event on campus; the RSVP’s are in and there will be 100 guests (not fellow students) attending. You forgot to ask for help and the event is only 4 days away; it is now up to your group members to make this a successful event. Over the next week your group needs to identify tasks, set priorities and come up with a plan to make this happen. You cannot ask any other people to help You have a budget of $4000.00 You must post your plan and your reasoning behind the decisions and why your plan will make the event a success. what elements can i use as variable to resolve the problem with Excel Solver?Lamberton Manufacturing Company has just completed its masterbudget. The budget indicates that the company’s operating cycleneeds to be shortened. Thus, the company will likely attempt:a. Stocking larger inventories.b. Reducing cash discounts for prompt payment.c. Tightening credit policies.d. None of the above selections is correct.Leslie Company operates a cafeteria for the benefit of its employees. The company subsidizes the cafeteria heavily by allowing employees to purchase meals at greatly reduced prices. Budgeted and actual costs in the cafeteria for the year just ended are as follows: Variable costs* Fixed costs Budgeted Actual $933,165 $777,240 $366,000 $391,000 "Unrecovered cost after deducting amounts received from employees. Costs of the cafeteria are charged to producing departments on the basis of the number of employees in these departments. Fixed costs are charged on the basis of the percentage of peak-period requirements. Data concerning the company's producing departments follows: Budgeted number of employees Actual number of employees Percentage of peak-period requirements Machining 465 270 Amounts to be charged Machining Variable cost Fixed cost 40% Complete this question by entering your answers in the tabs below. Required A Required: a. Compute the dollar amount of variable and fixed costs…