12 questions in accounting due today. Questions are not related and should be answered separately with the correlating question number on top. 5 references are required!
Cost Acct
Q1
Why is budgeting important? Describe how you use budgeting in your personal life or in your company.
Q2
I was just thinking about this….would separation of duties be just as important in budgeting as it is in financial accounting reporting?? I mean, should the budgeting folks be the same as the folks that prepare “after the fact” financial statements?? I am wondering if there is any possibility of collusion here….your thoughts, anyone?
Q3
B&B is a retailer of consumer goods. The company generates a gross margin of 25% of sales. Sales are 30% for cash and 70% on credit. Credit sales are collected in the month following sale, and accounts receivable on December 31, 2014 are the result of December credit sales. Actual and budgeted sales for the period were as follows:
| December 2014(actual) | $150,000 |
| January 2015 | $160,000 |
| February 2015 | $152,000 |
| March 2015 | $162,000 |
| April 2015 | $140,000 |
The company plans for each month’s ending inventory to be 30% of the following month’s budgeted cost of goods sold. Half of a month’s inventory purchases are paid for in the month of purchase; the other half are paid for in the month following purchase. The accounts payable on June 30 are the result of December, 2014 purchases of inventory.
Additional Information:
| Account Balances as of December 31, 2015: | |
| Cash | $15,000 |
| Accounts receivable | $105,000 |
| Inventory | $48,000 |
| Buildings and equipment, net | $220,000 |
| Accounts payable | $45,000 |
| Capital stock | $150,000 |
| Retained earnings | $195,000 |
Questions:
- Using the data above, for quarter ending March 2015, prepare the following:
- The schedule of the expected cash collections
- The merchandise purchases budget
Hi everyone, here is more information for B&B: All monthly expenses were paid monthly. Monthly expenses included: commissions, $20,000; rent, $15,200; other expenses (excluding depreciation), 10% of sales. Depreciation is $5,500 for the quarter and includes depreciation on new assets acquired during the quarter. The assets acquired for cash during the quarter included equipment of $15,000 in January and $10,000 in February. The company wishes to maintain a minimum cash balance of $20,000 at the end of January and February and $5,000 at the end of March. The company has a financing facility that allows the company to borrow in increments of $1,000 at the beginning of each month from a local bank. The interest rate on these loans is 1% per month, and interest is not compounded. The company, when able, repays the loan plus accumulated interest at the end of the quarter.
Based on the budgets prepared earlier and the additional information above, complete the:
- Schedule of expected cash disbursements – merchandise purchases
- Schedule of expected cash disbursement –Selling and administrative expenses
- Cash budget
Q4
Hello everyone! How do companies use responsibility centers? How are the managers of the responsibility centers held accountable? Anyone?
Q5
Also, how are responsibility centers used to incentivize managers (of the centers)? Examples? Anyone?
Q6
This topic makes me think whether managers of responsibility centers should be responsible only for costs that they can control? Or should they bear a “portion” of common costs…such as if the corporation owns an airplane? Should responsibility centers be charged an allocated amount for the upkeep and maintenance of this a
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