Is ABC Manufacturing is properly using the budget process to plan for next year's expenses? You have just been hired at ABC Manufacturing, and your supervisor has invited you to sit in on today's budget meeting. You are given a copy of the following proposed budget for next year to review. The budget is being used by ABC to plan for next year. Your supervisor tells you right before the meeting, "We always overestimate because the president always makes us cut the budget by 20%, and besides, I really want to go to that conference in Las Vegas next year." He continued," I have really worked hard this year and put in a lot of overtime so I deserve it." ABC MANUFACTURING Budgeted Income Statement // For the Year Ended Dec. 31, 20XX REVENUE: Sales COST OF GOODS SOLD: Cost of Goods Sold GROSS PROFIT EXPENSES: Advertising Cleaning Insurance 9,500 1,800 28,000 700,000 420,000 280,000 % INCREASE OVER LAST YEAR 15% 20% 20% 20% 20%

Is ABC Manufacturing is properly using the budget process to plan for next year's expenses? You have just been hired at ABC Manufacturing, and your supervisor has invited you to sit in on today's budget meeting. You are given a copy of the following proposed budget for next year to review. The budget is being used by ABC to plan for next year. Your supervisor tells you right before the meeting, "We always overestimate because the president always makes us cut the budget by 20%, and besides, I really want to go to that conference in Las Vegas next year." He continued," I have really worked hard this year and put in a lot of overtime so I deserve it." ABC MANUFACTURING Budgeted Income Statement // For the Year Ended Dec. 31, 20XX REVENUE: Sales COST OF GOODS SOLD: Cost of Goods Sold GROSS PROFIT EXPENSES: Advertising Cleaning Insurance 9,500 1,800 28,000 700,000 420,000 280,000 % INCREASE OVER LAST YEAR 15% 20% 20% 20% 20%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Silly Serrano Inc. has decided to purchase new capital equipment costing $450,000 cash in the next…

A: Capital budget is one of useful form of budget being prepared in business. It shows estimated amount…

Q: Tracy is preparing her budget for next year and needs your assistance. Now that she has a better…

A: Total Sales = Number of units * Selling price per unit Cash sales = 80% of total sales Credit sales…

Q: Legal Corporation offers a wide range of legal services to its customers. Each of the firm's…

A: Variance analysis is defined as the procedure followed by the management to study the deviations…

Q: The director of marketing for Starr Computer Co., Megan Hewitt, had the following discussion with…

A: Budgeting: Budgeting is a process of preparing the financial statement to estimate the…

Q: The company's balance sheet as of March 31 is given below: Assets Cash Accounts receivable ($43,520…

A: Budgeted Sales = Budgeted sales units * selling price per unitBudgeted merchandise purchase units =…

Q: Adams Company is a retail company that specializes in selling outdoor camping equipment. The company…

A: Statement of Cash Flow -A statement of Cash Flow is a financial statement that includes the inflow…

Q: Prior midnight March 11, post at least once about this week's Wiley assignment. You may post asking…

A: A budget is a financial plan that outlines an organization's or individual's expected income and…

Q: You have just been hired at ABC Manufacturing, and your supervisor has invited you to sit in on…

A: Budgetary slack is a built-in pillow in a budget that seeks to increase the probability that actual…

Q: Information for Budgeting, Ethics Norton Company, a manufacturer of infant furniture and carriages,…

A: The act of developing a plan for how you will use your money is known as budgeting. Making this…

Q: How should Deon Johnson respond to Sandeep Sauda's request to expense the advanced payments for…

A: The answer for the practical question is discussed hereunder : Like Accrual Concept, the Matching…

Q: Jeffrey Vaughn, president of Frame-It Company, was just concluding a budget meeting with his senior…

A: Step by step solution - 1. Cash Receipts:total sales:1st Quarter: Revenue Collected in…

Q: Debra is a true accountant: she not only likes knowing where every dollar is going, she is obsessed…

A: The objective of the question is to prepare a cash budget for the fourth quarter of the year. This…

Q: Beefing Inc's CFO is creating its cash budget for this month. Each month, the company manufactures…

A: Data given: Sales= $30,000 Expenses =$ 23,000 Target cash balance=$8000 Required: Company's cash…

Q: Ethics in ActionThe director of marketing for Starr Computer Co., Megan Hewitt, hadthe following…

A: As we know that managers can utilize budgeting to decide the company's prospective plan of…

Q: her sales reports and records for the months of January through August of the current year.

A: 1. sales calculation Jan = 60000+10%=60000+60000=66000 Feb =50000+10%=50000+5000=55000…

Q: Zinc Corporation is developing its cash budget for this month. Each month, the firm manufactures and…

A: Cash budget is that which consider all the cash transaction which is done during that period for…

Q: Assume that The AM Bakery is preparing a budget for the month ending October 31. Management prepares…

A: Budget is a predetermined estimation of revenue and expenses for a period.In other words budget is a…

Q: You have just been hired at ABC Manufacturing, and your supervisor has invited you to sit in on…

A: The budgeting process is the process of developing a budget. This process comprises implementing,…

Q: The directors of Royal Ltd have asked you, as a recently employed assistant management accountant,…

A: Cash budget is budget which shows expected cash collections and expected cash payments of the…

Q: You recently began a job as an accounting intern at Reilly Adventures. Your first task was to help…

A: Step 1: Total Cash available = Beginning Cash + Cash collections + Cash from sales of plant…

Q: a. Prepare a flexible budget and compute the sales and variable cost volume variances based on a…

A: A flexible budget is a budget which can change upon the change in the quantity or activity changes.…

Q: PROBLEM Irina needs to put together the cash budget for quarter two, but she can't find the bank…

A: Cash budget is one of the important kind of budget being prepared in business. It shows all expected…

Q: Jay Rexford, president of Photo Artistry Company, was just concluding a budget meeting with his…

A: The process of creating and managing a financial plan that forecasts income and expenses for a time…

Q: You recently began a job as an accounting intern at Raymond Adventures. Your first task was to help…

A: Cash Budget is that budget which helps in every organisation to maintain a cash balance for day to…

Q: The director of marketing for Starr Computer Co., Megan Hewitt, had the following discussion with…

A: Budgeting: Budgeting is a process to prepare the financial statement by the manager to estimate the…

Q: Masonry Ltd. The CEO has come to Jason with some questions about cash budgeting and whether the…

A: The concept of cash budget is associated with the cash management of inflow and out flow on an…

Q: 1. Explain why a company needs these budgets used in #2 of your homework and how will they help the…

A: Computation of Gross Profit for 2 Alternative Budgets : S. noParticulars2019Budget for…

Q: Is ABC Manufacturing is properly using the budget process to plan for next year's expenses? You have…

A: The budget can be defined as the process of estimating revenues, expenses, and income. The budget is…

Q: Budgeting for a Service Firm Refer to the AccuTax Inc. example in the chapter. One of thepartners is…

Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

Is ABC Manufacturing is properly using the budget process to plan for next year's expenses?
You have just been hired at ABC Manufacturing, and your supervisor has invited you to sit in on today's budget meeting. You are given a copy of
the following proposed budget for next year to review. The budget is being used by ABC to plan for next year. Your supervisor tells you right before
the meeting, "We always overestimate because the president always makes us cut the budget by 20%, and besides, I really want to go to that
conference in Las Vegas next year." He continued," I have really worked hard this year and put in a lot of overtime so I deserve it."
ABC MANUFACTURING
Budgeted Income Statement // For the Year Ended Dec. 31, 20XX
REVENUE: Sales
COST OF GOODS SOLD: Cost of Goods Sold
GROSS PROFIT
EXPENSES:
Advertising
Cleaning
Insurance
Phone
Rent
Supplies
Taxes
Training/Education
Utilities
Wages
Total Expenses
NET INCOME
9,500
1,800
28,000
3,600
24,000
6,500
10,000
9,800
8,500
150,000
700,000
420,000
280,000
251,700
28,300
% INCREASE
OVER LAST YEAR
15%
20%
20%
20%
20%
20%
20%
20%
20%
100%
35%

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Introduction

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

arrow_forward Question .(iii) To help achieve the budgeted sales for the year, Sampson is about to introduce bonuses for itssales staff. The bonuses will be an increasing percentage of the gross sales made, by eachsalesperson, above certain monthly targets.(iv) The company is using a new general ledger software package. The financial controller is impressedwith the new system, because management accounts are easily produced and allow detailedcomparisons with budgets and prior-period figures across product lines and geographical areas.The conversion to the new system occurred with a minimum of fuss. As it is a popular computerpackage, it required only minor modifications.(v) As part of the conversion, the position of systems administrator was created. This position isresponsible for all systems maintenance, including data backups and modifications. These taskswere the responsibility of the accountant.Required:For each of the scenarios above, explain how the components of…
You recently began a job as an accounting intern at Rockwall Adventures. Your first task was to help prepare the cash budget for February and March. Unfortunately, the computer with the budget file 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. Rockwall Adventures eliminates any cash deficiency by borrowing the exact amount needed from State Street Bank, where the current interest rate is 6%. Rockwall Adventures pays interest on its outstanding debt at the end of each month. The company also repays all borrowed amounts at the end of the month as cash becomes available. Requirement: Complete the following cash budget:
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”?
Prepare a 12-month Master Budget for a company of your choosing. It can be a company that you are closely connect too or one randomly selected. COMPLETED IN EXCEL. As you are preparing the Master Budget, some information is NOT provided. You are required to decide or predict or forecast this information. Provide an introduction for the company you have chosen. The introduction should include the following: Name of company Location of company Name of owner Nature of the business. Type of product Fiscal period For the company that you have selected - Prepare a 12-month Master Budget. Your submission must show each month’s activities. Here are some considerations to include in preparing the budget: You must forecast your sales, purchases, direct labour and manufacturing overhead for each month and any other information as required All sales are on accounts Expected collections are to be 50% in the month of the sale, 30 % in the first month following the sale, and 20% in the second…
Bank Assistant Printers, Inc., produces luxury checkbooks with three checks and stubs per page. Each checkbook is designed for an individual customer and is ordered through the customer's bank. The company's operating budget for September 2020 included these data: LOADING... (Click the icon to view the operating budget and actual results.) The executive vice president of the company observed that the operating income for September was much lower than anticipated, despite a higher-than-budgeted selling price and a lower-than-budgeted variable cost per unit. As the company's management accountant, you have been asked to provide explanations for the disappointing September results. Bank Assistant develops its flexible budget on the basis of budgeted per-output-unit revenue and per-output-unit variable costs without detailed analysis of budgeted inputs. The budgeted amounts for September 2020 were: Number of checkbooks 20,000 Selling price per book $25…
You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. To this end, you have worked with accounting and other areas to gather the information assembled below. The company sells many styles of earrings, but all are sold for the same price—$16 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings): January (actual) 21,200 June (budget) 51,200 February (actual) 27,200 July (budget) 31,200 March (actual) 41,200 August (budget) 29,200 April (budget) 66,200 September (budget) 26,200 May (budget)…
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.
Happy Habanero Inc. has decided to purchase new capital equipment costing $540,000 cash in the next fiscal year. They also intend on selling their old equipment for $31,000 cash. Prepare the capital budget for Happy Habanero Inc. for their upcoming year-end (June 30, 2019). Do not enter dollar signs or commas in the input boxes. Use the negative sign for values that must be subtracted. Happy Habanero Inc. Capital Budget for year-ending June 30, 2019 Capital Expenditures $Answer Sale of Capital Assets $Answer Total Capital Expenditures $Answer
You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a master budget for the upcoming second quarter. To this end, you have worked with accounting and other areas to gather the information assembled below. The company sells many styles of earrings, but all are sold for the same price—$17 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings): January (actual) 22,600 June (budget) 52,600 February (actual) 28,600 July (budget) 32,600 March (actual) 42,600 August (budget) 30,600 April (budget) 67,600 September (budget) 27,600 May (budget) 102,600 The concentration…
At the beginning of the school year, Katherine Malloy decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget: \table[[Cash balance, September 1 (from a summer job), $8, 430 At the beginning of the school year, Katherine Malloy decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget: \table[[Cash balance, September 1 (from a summer job), $8,430
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…
Please do not give solution in image format ?