Solution manual cost management HMCost3e SM ch08
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Solution manual cost management HMCost3e SM ch08
CHAPTER 8 BUDGETING FOR PLANNING AND CONTROLDISCUSSION QUESTIONS1Budgets are the quantitative expressions of plans. Budgets are used to translate the Solution manual cost management HMCost3e SM ch08 goals and strategies of an organization into operational terms.2Control is the process of setting standards, receiving feedback on actual performance, and taking corrective action whenever actual performance deviates from planned performance. Budgets are the standards, and they are compared with ac Solution manual cost management HMCost3e SM ch08 tual costs and revenues to provide feedback.3Budgeting forces managers to plan, provides resource information for decision making, sets benchmarks forSolution manual cost management HMCost3e SM ch08
control and evaluation, and improves the functions of communication and coordination4The master budget IS the collection of all individual area and aCHAPTER 8 BUDGETING FOR PLANNING AND CONTROLDISCUSSION QUESTIONS1Budgets are the quantitative expressions of plans. Budgets are used to translate the Solution manual cost management HMCost3e SM ch08 outflows of cash and with planned capital expenditures.5The sales forecast is a critical input for building the sales budget. It, however. IS not necessarily equivalent to the sales budget. Upon receiving the sales forecast, management may decide that the firm can do better or needs to do better th Solution manual cost management HMCost3e SM ch08 an the forecast is indicating. Consequently, actions may be taken to increase the sales potential for the coming year (eg., increasing advertising). TSolution manual cost management HMCost3e SM ch08
his adjustment then becomes the sales budget.6Yes. All budgets essentially are founded on the sales budget. The production budget depends on the levelCHAPTER 8 BUDGETING FOR PLANNING AND CONTROLDISCUSSION QUESTIONS1Budgets are the quantitative expressions of plans. Budgets are used to translate the Solution manual cost management HMCost3e SM ch08 itical input for budgets in that category7An accounts receivable aging schedule gives the proportion of accounts receivable that are. on average, collected in the months following sale. It is important in creating the cash budget, since the sales on account for past months can be multipliedby the ap Solution manual cost management HMCost3e SM ch08 propriate percentage to yield the amount of cash expected.8If the vice president of sales IS a pessimistic individual, one might expect that she or heSolution manual cost management HMCost3e SM ch08
would underestimate sales for the coming year. In your role as head of the budget process, you might increase the budgeted sales figure to take out tCHAPTER 8 BUDGETING FOR PLANNING AND CONTROLDISCUSSION QUESTIONS1Budgets are the quantitative expressions of plans. Budgets are used to translate the Solution manual cost management HMCost3e SM ch08 r, and overhead could be underestimated. For example, an optimistic person might assume that everything will go well (e.g., that there will be no problems in obtaining an adequate supply of materials at the lowest possible price). As head of the budget process, you might allow for somewhat higher co Solution manual cost management HMCost3e SM ch08 sts to more accurately reflect reality.10The learning curve Is the relationship between unit costs of production and increasing number of units. As tiSolution manual cost management HMCost3e SM ch08
me goes on. the number of units produced in a time period will increase and the cost per unit will decrease. The budgets affected will be the direct mCHAPTER 8 BUDGETING FOR PLANNING AND CONTROLDISCUSSION QUESTIONS1Budgets are the quantitative expressions of plans. Budgets are used to translate the Solution manual cost management HMCost3e SM ch08 ess. (Personally, we believe that IS a mistake. The budgeting process helps management more fully understand the business and helps them to plan for the coming year.) Even small businesses create cash budgets, however, because cash flow is critically important. For example, it is possible to have po Solution manual cost management HMCost3e SM ch08 sitive operating income, but negative cash flow (e.g., if sales on account are high, but customers are slow to pay). Negative cash flow could put a coSolution manual cost management HMCost3e SM ch08
mpany out of business in short order.12The master budget has been criticized for the following reasons: it does not recognize the interdependencies amCHAPTER 8 BUDGETING FOR PLANNING AND CONTROLDISCUSSION QUESTIONS1Budgets are the quantitative expressions of plans. Budgets are used to translate the Solution manual cost management HMCost3e SM ch08 in whole or in pairIt IS static, and it IS results rather than process oriented. These criticisms are especially apparent when companies are in a competitive, dynamic environment. When the environment changes slowly, if at all. the master budget would do a good job of both planning and control.13A Solution manual cost management HMCost3e SM ch08 static budget IS one that IS not adjusted for changes in activity. Using a static budget for control can be a real problem. For example, suppose thatSolution manual cost management HMCost3e SM ch08
die master (static) budget is based on the production and sale of 100.000 units, but that only 90.000 units are actually produced and sold. Further suCHAPTER 8 BUDGETING FOR PLANNING AND CONTROLDISCUSSION QUESTIONS1Budgets are the quantitative expressions of plans. Budgets are used to translate the Solution manual cost management HMCost3e SM ch08 company spent less than expected for variable manufacturing costs. However, the budgeted variable cost was $20 per unit ($2,000,000/100.000). and the actual variable cost per unit is $21 per unit ($1,890,000/90.000) Not adjusting thebudget for changes in activity level can mislead managers about eff Solution manual cost management HMCost3e SM ch08 iciency.14A flexible budget IS (1) a budget for various levels of activity or (2) a budget for the actual level of activity. The first type of flexiblSolution manual cost management HMCost3e SM ch08
e budget is used for planning and sensitivity analysis. The second type of budget is used for conơol. since the actual costs of the actual level of acCHAPTER 8 BUDGETING FOR PLANNING AND CONTROLDISCUSSION QUESTIONS1Budgets are the quantitative expressions of plans. Budgets are used to translate the Solution manual cost management HMCost3e SM ch08 es necessary to create that output, and then determines the resources necessary to support the activities. This differs from the traditional master budgeting process in that the master budget leaps directly from output to resources. Some of the resource levels are assumed to be fixed. This makes the Solution manual cost management HMCost3e SM ch08 m independent of volume changes and hides the drivers that actually do affect the fixed resources. As a result, the budget format does not support theSolution manual cost management HMCost3e SM ch08
creation of value and the thinking that would go into determining the sources of waste455062 2015 Cengage teaming. All Rights Reserved. May not be scCHAPTER 8 BUDGETING FOR PLANNING AND CONTROLDISCUSSION QUESTIONS1Budgets are the quantitative expressions of plans. Budgets are used to translate the Solution manual cost management HMCost3e SM ch08 mpanySales BudgetFor the First QuarterJanuaryFebruaryMarchQuarterPractice ball:Units505800080000188000Unit priceX S8.75X $8.75X8.75X $8.75Sales437500507500s700000§1,645,000 Solution manual cost management HMCost3e SM ch08 CHAPTER 8 BUDGETING FOR PLANNING AND CONTROLDISCUSSION QUESTIONS1Budgets are the quantitative expressions of plans. Budgets are used to translate theGọi ngay
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