ACC 206 Week 5

ACC 206 Week 5 Quiz

Assignments

P22-22A Preparing an operating budget

Thumbtacks March 31, 2012, budgeted balance sheet follows:

The budget committee of Thumbtack Office Supply has assembled the following data.

Sales in April were $40,000. You forecast that monthly sales will increase 2% over Aprils sales in May. Junes sales will increase 4% over Aprils sales. Julys sales will increase 20% over Aprils sales. Collections are 80% in the month of sale and 20% in the month following sale.

Thumbtack maintains inventory of $11,000 plus 25% of the COGS budgeted for the month. COGS = 50% of sales revenue. Purchases are paid 30% in the month of purchase and 70% in the month following the purchase.

Monthly salaries amount to $7,000. Sales commissions equal 5% of sales for that month. Salaries and commissions are paid 30% in the month incurred and 70% in the following month.

Other monthly expenses are as follows:

Rent expense $2,400 paid as accrued

Depreciation expense $ 200

Insurance expense $100, expiration of prepaid amount

Income tax 20% of operating income, paid as incurred

Requirements

Prepare Thumbtacks sales budget for April and May, 2012. Round all amounts to the nearest $1.

Prepare Thumbtacks inventory, purchases, and cost of goods sold budget for April and May.

Prepare Thumbtacks operating expenses budget for April and May.

Prepare Thumbtacks budgeted income statement for April and May.

E22-19Preparing a financial budget [2530 min]

Consider the following June actual ending balances and July 31, 2012, budgeted amounts for Oleans.com:

a.June 30 inventory balance, $17,750

b.July payments for inventory, $4,300

c.July payments of accounts payable and accrued liabilities, $8,200

d.June 30 accounts payable balance, $10,600

e.June 30 furniture and fixtures balance, $34,500; accumulated depreciation balance, $29,830

f.June 30 equity, $28,360

g.July depreciation expense, $900

h.Cost of goods sold, 50% of sales

i.Other July expenses, including income tax, total $6,000, paid in cash

j.June 30 cash balance, $11,400

k.July budgeted credit sales, $12,700

l.June 30 accounts receivable balance, $5,140

m.July cash receipts, $14,200

Requirement

1.Prepare a budgeted balance sheet.

P22-22APreparing an operating budget [30 min]

Thumbtack's March 31, 2012, budgeted balance sheet follows:

The budget committee of Thumbtack Office Supply has assembled the following data.

a.Sales in April were $40,000. You forecast that monthly sales will increase 2% over April's sales in May. June's sales will increase 4% over April's sales. July's sales will increase 20% over April's sales. Collections are 80% in the month of sale and 20% in the month following sale.

b.Thumbtack maintains inventory of $11,000 plus 25% of the COGS budgeted for the following month. COGS = 50% of sales revenue. Purchases are paid 30% in the month of purchase and 70% in the month following the purchase.

c.Monthly salaries amount to $7,000. Sales commissions equal 5% of sales for that month. Salaries and commissions are paid 30% in the month incurred and 70% in the following month.

d.Other monthly expenses are as follows:

Requirements

1.Prepare Thumbtack's sales budget for April and May, 2012. Round all amounts to the nearest $1.

2.Prepare Thumbtack's inventory, purchases, and cost of goods sold budget for April and May.

3.Prepare Thumbtack's operating expenses budget for April and May.

4.Prepare Thumbtack's budgeted income statement for April and May.

P23-28A Computing and journalizing standard cost variances [45 min]

Java manufactures coffee mugs that it sells to other companies for customizing with their own logos. Java prepares flexible budgets and uses a standard cost system to control manufacturing costs. The standard unit cost of a coffee mug is based on static budget volume of 60,200 coffee mugs per month:

Actual cost and production information for July 2012 follow:

a.Actual production and sales were 62,900 coffee mugs.

b.Actual direct materials usage was 10,000 lbs., at an actual price of $0.17 per lb.

c.Actual direct labor usage was 202,000 minutes at a total cost of $30,300.

d.Actual overhead cost was $10,000 variable and $30,500 fixed.

e.Marketing and administrative costs were $115,000.

Requirements

1.Compute the price and efficiency variances for direct materials and direct labor.

2.Journalize the usage of direct materials and the assignment of direct labor, including the related variances.

3.For manufacturing overhead, compute the variable overhead spending and efficiency variances and the fixed overhead spending and volume variances.

4.Journalize the actual manufacturing overhead and the applied manufacturing overhead. Journalize the movement of all production from WIP. Journalize the closing of the manufacturing overhead account.

5.Java intentionally hired more-skilled workers during July. How did this decision affect the cost variances? Overall, was the decision wise?

Final Paper

Focus of the Final Paper

Submit a paper on one of the major topics listed below, incorporating at least two related articles of your choice. You may come up with your own topic, but it must be approved by your instructor.

How do stock prices and dividends reflect the value of the firm?

What does a statement of cash flows tell us about the short and long term prospects of the firm? How does an outside review use a statement of cash flows and other financial statements to assess the viability of the firm?

Why is cost accounting so important to the success of the firm? What are the various methods of cost accounting and how are they used?

How does an operating budget work to discipline a firms management? What are the elements of a budget? How are budgets constructed? What is budget variance?

What is management accounting? What are the sources of data? How are the data used to make management decisions?

Writing the Final Paper

The Final Paper:

1. Must be 4 to 6 double-spaced pages in length, and formatted according to APA style as outlined in the Ashford Writing Center.

Discussion Questions

The Master Budget and Responsibility Accounting. From Chapter 22, Ethical Issue 22-1.

Ethical Issue 22-1

This case centers on the ethics of padding the budgetand whether the motivation for this action (personal gain or operational efficiency) makes a difference.

1.What is the ethical issue?

2.What are my options?

3.What are the possible consequences?

4.What should I do?

Flexible Budgets and Standard Costs. What are the benefits of standard costs and how do businesses set those standards?