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 ofthe 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 beforethe meeting, "We always overestimate because the president always makes us cut the budget by 20%, and besides, I really want to go to thatconference 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 MANUFACTURINGBudgeted Income Statement // For the Year Ended Dec. 31, 20XXREVENUE: SalesCOST OF GOODS SOLD: Cost of Goods SoldGROSS PROFITEXPENSES:AdvertisingCleaningInsurancePhoneRentSuppliesTaxesTraining/EducationUtilitiesWagesTotal ExpensesNET INCOME9,5001,80028,0003,60024,0006,50010,0009,8008,500150,000700,000420,000280,000251,70028,300% INCREASEOVER LAST YEAR15%20%20%20%20%20%20%20%20%100%35%

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

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 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 ri the meeting, "We always overestimate because the president always makes us cut the budget by 20%, and besides, I really want to go t 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 9,500 700,000 420,000 280,000 % INCREASE OVER LAST YEAR 15% 20% 20% 000

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 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 ri the meeting, "We always overestimate because the president always makes us cut the budget by 20%, and besides, I really want to go t 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 9,500 700,000 420,000 280,000 % INCREASE OVER LAST YEAR 15% 20% 20% 000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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

100%

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%

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