accounting-Let’s start the week by reviewing the Springfield Budgeting Case Study

QUESTION

Part 1

Question
1

Let’s start the week by reviewing
the Springfield Budgeting Case Study (in Doc Sharing). First, let’s discuss how
the budgeting process as employed by Springfield contributes to the failure to
achieve the president’s sales and profit targets. What could they do
differently that might lead to better employee participation and outcomes?

Question
2

Should the functional areas be
expected to cut their costs when sales volume falls below budget? Explain your
answer.

Question
3
Who should
represent the various departments in the budget committee? What are the roles
of these individuals?

Part 2

Question
1

Solo Company is a small
merchandising firm. During the next month, the company expects to sell 500
units. The company has the following revenue and cost structure
Selling
price per
unit
$60
Cost
per
unit
$15
Sales
commissions
10% of sales
Advertising
expense
$5,000 per month
Administrative
expense
$3,000 per month plus 20% of sales
Required

Calculate the expected gross
margin next month.
Calculate the expected
contribution margin next month.
Calculate the expected total
administrative expense next month.
Calculate the expected net
operating income next month.

Question
2

The following data were taken from the cost records of the Beca
Company for last year.

Depreciation, factory equipment

$30,000

Depreciation, office equipment

7,000

Supplies, factory

1,500

Maintenance, factory equipment

20,000

Utilities, factory

8,000

Sales commissions

30,000

Indirect labor

54,500

Rent, factory building

70,000

Purchases of raw materials

124,000

Direct labor cost

80,000

Advertising expense

90,000

Inventories

Beginning

Ending

Raw materials

$ 9,000

$11,000

Work in process

6,000

21,000

Finished goods

69,000

24,000

Required:Prepare a schedule of cost of goods
manufactured in the text box below.

Question
3

The following information
relates to the break-even point at Pezzo Corporation.

Sales Dollars $120,000
Total fixed expenses $30,000

If Pezzo wants to generate net
operating income of $12,000, what will its sales dollars have to be?

A)

$132,000

B)

$136,000

C)

$168,000

D)

$176,000

ANSWER:

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