亨格瑞管理会计英文第15版练习答案.doc

CHAPTER 7COVERAGE OF LEARNING OBJECTIVESLEARNING OBJECTIVEFUNDA-MENTALASSIGNMENTMATERIALCRITICAL THINKING EXERCISES AND EXERCISESPROBLEMSCASES, EXCEL, COLLAB. & INTERNET EXERCISESLO1: Explain how budgets facilitate planning and coordination.A1,B1LO2: Anticipate possible human relations problems caused by budgets.2540LO3: Explain potentially dysfunctional incentives in the budget process.2239, 40LO4: Explain the difficulties of sales forecasting.234249LO5: Explain the major features and advantages of a master budget.A1,B124,2639LO6: Follow the principal steps in preparing a master budget.A1,B1294043,45LO7: Prepare the operating budget and the supporting schedules.A1,B128,29,30,314043,45,46,48LO8: Prepare the financial budget.A1,B127,29,32,33, 34,3536,37,3843,44,47,48LO9: Use a spreadsheet to develop a budget (Appendix 7).41,42CHAPTER 7Introduction to Budgets and Preparing the Master Budget 7-A1 (60-90 min.) 1.Exhibit IRAPIDBUY ELECTRONICS, INC.Mall of America StoreBudgeted Income StatementFor the Three Months Ending August 31, 20X8Sales $300,000Cost of goods sold (.62 × $300,000) 186,000Gross profit$114,000Operating expenses: Salaries, wages, commissions$60,000 Other expenses 12,000 Depreciation 1,500 Rent, taxes and other fixed expenses 33,000 106,500Income from operations.$ 7,500Interest expense* 1,338Net income$ 6,162 * See schedule g for calculation of interest. Exhibit IIRAPIDBUY ELECTRONICS, INC.Mall of America StoreCash BudgetFor the Three Months Ending August 31, 20X8 June July August Beginning cash balance$ 5,800$ 5,600$ 5,079Minimum cash balance desired 5,000 5,000 5,000(a) Available cash balance$ 800$ 600$ 79Cash receipts & disbursements:Collections from customers (schedule b)$ 75,200$121,400$ 90,800Payments for merchandise (schedule d)(86,800)(49,600)(49,600)Fixtures (purchased in May) (11,000) - - Payments for operating expenses (schedule f) (44,600) (30,200) (30,200)(b) Net cash receipts & disbursements$(67,200)$ 41,600 $ 11,000Excess (deficiency) of cash before financing (a + b) (66,400) 42,200 11,079Financing:Borrowing, at beginning of period$ 67,000$ - $ - Repayment, at end of period - (41,000)(10,000)Interest, 10% per annum - (1,121)* (217)*(c) Total cash increase (decrease) from financing$ 67,000 $(42,121)$(10,217)(d) Ending cash balance (beginning balance + b + c)$ 5,600$ 5,079 $ 5,862* See schedule gExhibit IIIRAPIDBUY ELECTRONICS, INC.Mall of America StoreBudgeted Balance SheetAugust 31, 20X8AssetsLiabilities and Owners EquityCash (Exhibit II)$ 5,862Accounts payable $ 37,200Accounts receivable*86,400Notes payable 16,000*Merchandise inventory 37,200Total current liabilities$ 53,200Total current assets$129,462Net fixed assets:Owners' equity: $33,600 less $102,200 plus net depreciation of $1,500 32,100 income of $6,162 108,362Total assets$161,562Total equities$161,562 *July sales, 20% × 90% × $80,000$ 14,400August sales, 100% × 90% × $80,000 72,000Accounts receivable$86,400* See schedule gJuneJulyAugustTotalSchedule a: Sales Budget Credit sales (90%)$126,000$72,000$72,000$270,000 Cash sales (10%) 14,000 8,000 8,000 30,000 Total sales (to Exhibit I)$140,000 $80,000 $80,000$300,000Schedule b: Cash CollectionsJuneJulyAugust Cash sales$ 14,000 $ 8,000 $ 8,000 On accounts receivable from: April sales10,800 - - May sales50,40012,600 - June sales - 100,800 25,200 July sales - - 57,600 Total collections (to Exhibit II)$75,200 $121,400 $90,800Schedule c: Purchases BudgetMayJuneJulyAugust Desired purchases: 62% × next month's sales$86,800$49,600$49,600$37,200Schedule d: Disbursements for PurchasesJuneJulyAugustLast month's purchases (to Exhibit II)$86,800$49,600$49,600Other required items related to purchasesAccounts payable, August 31, 2008 (62% × September sales - to Exhibit III)$37,200Cost of goods sold (to Exhibit I)$86,800$49,600$49,600Schedule e: Operating Expense BudgetJuneJulyAugustTotalSalaries, wages, commissions$28,000$16,000$16,000$60,000Other Variable expenses5,6003,2003,20012,000Fixed expenses11,00011,00011,00033,000Depreciation 500 500 500 1,500Total operating expenses$45,100$30,700$30,700$106,500Schedule f: Payments for Operating ExpensesJuneJulyAugustVariable expenses $33,600$19,200$19,200Fixed expenses 11,000 11,000 11,000Total payments for operating expenses$44,600$30,200$30,200Schedule g: Interest calculationsJuneJulyAugustBeginning balance$67,000 $67,558 $26,000 Monthly interest expense 10% 558 563 217 Ending balance before repayment$67,558 68,121 26,217 Principal repayment (from statement of receipts and disbursements) (41,000) (10,000)Interest payment (1,121) (217)Ending balance $26,000 $16,000 2.This is an example of the classic short-term, self-liquidating loan. The need for such a loan often arises because of the seasonal nature of a business. The basic source of cash is proceeds from sales to customers. In times of peak sales, there is a lag between the sale and the collection of the cash, yet the payroll and suppliers must be paid in cash right away. When the cash is collected, it in turn may be used to repay the loan. The amount of the loan and the timing of the repayment are heavily dependent on the credit terms that pertain to both the purchasing and selling functions of the business.7-B1(60-120 min.) $ refers to Australian dollars.1.See Exhibits I, II, and III and supporting schedules a, b, c, d.2.The cash budget and balance sheet clearly show the benefits of moving to just-in-time purchasing (though the transition would rarely be accomplished as easily as this example suggests). However, the company would be no better off if it left much of its capital tied up in cash - it has merely substituted one asset for another. At a minimum, the excess cash should be in an interest bearing account - the interest earned or forgone is one of the costs of inventory.Schedule a: Sales BudgetJanuaryFebruaryMarchTotal sales (100% on credit)$248,000$280,000$152,000Schedule b: Cash Collections60% of current month's sales$148,800$168,000$91,20030% of previous month's sales 30,00074,40084,00010% of second previous month's sales 10,000 10,000 24,800Total collections $188,800$252,400$200,000DecemberJanuaryFebruaryMarchSchedule c: Purchases BudgetDesired ending inventory$156,200$ 24,000* $ 24,000$ 24,000Cost of goods sold 50,000 124,000 140,000 76,000Total needed$206,200$148,000 $164,000 $100,000Beginning inventory 64,000 156,200 32,200 24,000Purchases$142,200$ - $131,800 $ 76,000* Actual ending January (and beginning February) inventory level is $32,200, as inventory levels are drawn down toward desired level of $24,000.Schedule d: Disbursements for Purchases100% of previous month's purchases$142,200 $ - $131,800March 31 accounts payable$76,000Exhibit IWALLABY KITECash BudgetFor the Three Months Ending March 31, 20X2JanuaryFebruaryMarchCash balance, beginning$ 20,000$ 20,400$138,767Minimum cash balance desired 20,000 20,000 20,000(a)Available cash balance 0 400 118,767Cash receipts and disbursements:Collections from customers (Schedule b) 188,800 252,400 200,000Payments for merchandise (Schedule d)(142,200) - (131,800)Rent (32,200)(1,000)(1,000)Wages and salaries (60,000)(60,000)(60,000)Miscellaneous expenses(10,000)(10,000)(10,000)Dividends(6,000) - Purchase of fixtures - - (12,000)(b)Net cash receipts & disbursements$ (61,600)$181,400 $ (14,800)Excess (deficiency) of cash before financing (a + b)$ (61,600)$181,800$103,967Financing: Borrowing, at beginning of period$ 62,000$ - $ - Repayment, at end of period - (62,000) Simple interest, 10% monthly - (1,033)(c)Total cash increase (decrease) from financing$ 62,000 $ (63,033)$ - (d)Cash balance, end (beginning balance + c + b)$ 20,400 $138,767$123,967Exhibit IIWALLABY KITEBudgeted Income StatementFor the Three Months Ending March 31, 20X2Sales (Schedule a)$680,000Cost of goods sold (Schedule c) 340,000Gross margin$340,000Operating expenses: Rent* $ 67,000 Wages and salaries 180,000 Depreciation. 3,000 Insurance 1,500 Miscellaneous 30,000 281,500Net income from operations$ 58,500Interest expense 1,033Net income$ 57,467*(January-March sales less $40,000) × .10 plus 3 × $1,000Exhibit IIIWALLABY KITEBudgeted Balance SheetMarch 31, 20X2AssetsCurrent assets: Cash (Exhibit I)$123,967 Accounts receivable* 88,800 Merchandise inventory (Schedule c) 24,000 Unexpired insurance 4,500 $241,267Fixed assets, net: $50,000 + $12,000 - $3,000 59,000Total assets$300,267Liabilities and Stockholders' EquityLiabilities: Accounts payable (Schedule d)$76,000 Rent payable. 64,000 Dividends payable 6,000 $146,000Stockholders' equity* 154,267Total liabilities and stockholders' equity.$300,267*February sales (.10 × $280,000) plus March sales (.40 × $152,000) = $88,800*Balance, December 31, 20X1$102,800 Add: Net income 57,467 Total$160,267 Less: Dividends paid 6,000 Balance, March 31, 20X2$154,2677-1Budgeting 1) provides an opportunity for managers to reevaluate existing activities and evaluate possible new activities, 2) compels managers to think ahead by formalizing their responsibilities for planning, 3) aids managers in communicating objectives to units and coordinating actions across the organization, and 4) provides benchmarks to evaluate subsequent performance.7-2Budgeting is primarily attention directing because it helps managers to focus on operating or financial problems early enough for effective planning or action.7-3Strategic planning covers no specific time period, is quite general, and often is not built around financial statements. Long-range planning usually has a 5- or 10-year horizon and consists of financial statements without much detail. Budgeting usually has a horizon of one year or less, and consists of financial statements with much detail.7-4Continuous budgets add a month (or quarter) in the future as the month (or quarter) just ended is dropped. Therefore, the continuous budget provides a continually updated budget looking twelve months ahead. When the new month (or quarter) is added, the budget for the remainder of the current year may also be revised. When companies revise the budgets for the remainder of the current year, they usually compare subsequent results to the original budget (a fixed target) in addition to comparing them to the latest revised budget.7-5If the measures used to reward employees in the performance evaluation system are not aligned with the goals of the company, the incentives from the evaluation system may lead employees to take actions that conflict with the interests of the company.7-6Lower-level managers bias their forecasts to create budgetary slack or padding. Upper-level managers adjust for this bias in creating a revised budget. Therefore, lower-level managers introduce additional bias to compensate for the adjustment that will be made by upper-level managers, and upper-level managers introduce additional adjustments for the additional bias. This cycle can quickly destroy the potential benefits of budgets.7-7A manager may make short-run decisions to increase profits that are not in the companys best long-run interests, such as offering customers excessively favorable credit terms or cutting discretionary expenditures such as R&D and advertising, trading future sales for current profits. In the extreme, the manager might choose to falsely report inflated profits.7-8First, by moving this year's sales into next year or moving next year's expenses into this year, the manager ensures a higher level of reported profit (and probably a higher bonus) next year. Second, by decreasing this year's income, the manager avoids ratcheting up of performance expectations in setting the bonus target for the next year.7-9Budgeted performance is better than past performance as a basis for judging current performance because the budget contains no hidden inefficiencies and can be founded on current rather than past economic conditions.7-10Budgets are especially important in environments that are rapidly changing. They force managers to look forward and plan for change. Budgets force analysis of the factors that are bringing about the changes.7-11No. When budgeting in done correctly, it is an important aid to managers. Managers need time to plan and coordinate their various activities. Budgeting forces them to take time from the day-to-day problems and focus on longer-term issues.7-12The sales forecast is the starting point for budgeting because all other operating activities of the company are affected by the volume of sales.7-13The sales forecast is influenced by past patterns of sales, estimates made by the sales force, general economic conditions, competitors' actions, changes in prices, market research studies, and advertising and sales promotion plans.7-14An operating budget is used as a guide for production and sales and it focuses on the income statement. A financial budget is used to control the receipt and disbursement of funds and it focuses on the statement of cash receipts and disbursements.7-15Operating expenses are costs charged to the income statement in a particular period. Some operating expenses may be associated with the sales of the period, and others may be c