财务会计英文版课后习题答案

123CHAPTER 18DISCUSSION QUESTIONS1. The first general purpose of budgeting is to allow individuals or companies to develop a plan to achieve a specific goal. The second purpose is to allow ongoing comparison between the plan and actual results in order to better control operations or activities.2. Strategic planning is the macro-level, long-range planning of firms in which management evaluates resources, weaknesses, constraints, and competition and decides how, where, and when to operate. At the strategic planning level, firms decide which products to sell, how to market their products, and how they will respond to demands of government and consumer groups, competition, and so on. Capital budgeting is planning for the acquisition of property, plant, and equipment that will help management reach the goals outlined at the strategic planning level. Capital budgeting involves making decisions such as which assets to purchase and whether to lease or buy. Operations budgeting, or simply “budgeting, is the planning of operations for the coming period. This type of budgeting is usually rather short term. 3. The advantages of a top-down budget are:a. Top management, who knows the strategic direction of a firm, makes budgeting decisions.b. Top management has no special interest to protect and so can be objective.c. Top management, which involves a relatively small group of people, can make more efficient decisions.The advantages of a bottom-up budget are:a. More people participate in the budgets preparations and, therefore, “buy into and support the budget.b. People are better motivated by a budget they help prepare.c. Lower-level managers are closer to customers and technology and, supposedly, have better information and may make better decisions.4. One year is the typical budget horizon because it corresponds to the period over which performance must be measured for tax and financial reporting purposes. Since management will be evaluating its performance over a one-year period, it is convenient to have a budget that covers the same period. In practice, although a one-year period is typical for a master budget, many detailed budgets are prepared on a quarterly, monthly, or even a weekly or daily basis.5. The accuracy of the entire master budget depends on a reliable sales forecast because all production, inventory, and expense levels are budgeted to meet projected sales. If the sales forecast is inaccurate, all other budgets will be wrong.6. The sequence of schedules used in preparing a master budget for a manufacturing firm is: (1) sales (revenues) forecast, (2) production budget, (3) direct materials budget, (4) direct labor budget, (5) manufacturing overhead budget, (6) budgeted product cost sheet, (7) selling and administrative expense budget, and (8) cash budget. Once these budgets are completed, projected or pro-forma financial statements can be prepared.7. The budgeting process for a merchandising firm uses one purchases budget instead of five of the budgets (production, direct materials, direct labor, manufacturing overhead, and the budgeted product cost sheet) used by a manufacturing firm. Hence, the budgeting process for a merchandising firm is significantly simpler than for a manufacturing firm.8. The budgeting process for a service firm is quite similar to the budgeting process for a manufacturing firm. Service firms sell services, not products. Hence, there is no inventory of finished product. This means that the sales (or revenue) budget serves as the production budget (the number of service units to be provided, e.g., billable hours, number of rooms to be rented, etc.). 124 Chapter 18The revenue budget then determines budgets for supplies, wages and salaries, and overhead (similar to direct materials, direct labor, and manufacturing overhead in a manufacturing company). The service firm can then build a budgeted service cost sheet. These budgets, together with a selling and administrative expense budget, provide data for the cash budget and the pro-forma financial statements.9.* The three sections of a cash budget are: (1) the cash receipts section, which lists all cash inflows; (2) the cash payments section, which identifies all cash outflows; and (3) the financing section, which identifies the timing and amount of all borrowings needed and repayments expected during the period. 10.* The cash budget deals with the projected inflows and outflows of cash for the planning period, whereas the pro-forma income statement reflects revenues and expenses on an accrual basis for the planning period. The cash budget helps management plan for periods of either excess cash or deficiencies of cash, while the pro-forma income statement helps management decide whether its operating policies will provide a sufficient return on equity investment and a sufficient return on each sales dollar.11.* With flexible budgets, actual costs at the actual level of production are compared with budgeted costs at that same level of production. By comparing costs at the same level of production, the flexible budget becomes relevant to managing revenues and costs in the current period.*Relates to expanded material.Chapter 18 125PRACTICE EXERCISESPE 181 (LO1) Personal BudgetingThe correct answer is E. PE 182 (LO2) Behavioral Considerations of BudgetingThe correct answer is D. Although budgets should be completed formally, employees should not feel as though they cannot make meaningful, personal suggestions.PE 183 (LO2) Top-Down versus Bottom-Up BudgetingThe correct answer is C. Although a budget prepared by upper management may gain the support of all employees, such support is not likely. Employees who have a say in the budgeting process generally support the final budget more than employees who have a budget “given” to them by upper management.PE 184 (LO3) Master BudgetThe correct answer is B. Information about depreciation is contained in the manufacturing overhead budget for a manufacturing firm.PE 185 (LO3) Master Budget Information FlowThe budgets should be created in the following order:1. Sales budget2. Production budget3. Direct materials budget4. Cash budget5. Pro-forma income statementPE 186 (LO3) Sales BudgetThe correct answer is false. Even though the company cannot control external factors, those factors will influence company sales and should be included in forecasting sales.126 Chapter 18PE 187 (LO3) Production BudgetThe company will need to produce 24,550 units, as shown below:Expected sales. 24,250Add: Desired ending inventory . 3,750Total number of units needed. 28,000Less: Beginning inventory . (3,450)Total number of units to be produced 24,550PE 188 (LO3) Direct Materials BudgetThe total cost of material to be used is $2,188,019, as shown below:Material Unit Cost Cost ofRequired of Materials Materials UsedWood (10 board feet per unit) 245,500 $4.60 $1,129,300Aluminum (7.5 square feet per unit) 184,125 $5.75 1,058,719Total cost of materials used. $2,188,01924,550 units produced (from PE 18-7) 10 board feet per unit = 245,500 board feet required.24,550 units produced (from PE 18-7) 7.5 square feet per unit = 184,125 square feet required.PE 189 (LO3) Direct Labor BudgetThe direct labor cost is $1,767,600, as shown below:Production units . 24,550Direct labor hours per unit. 6Total direct labor hours. 147,300Rate per direct labor hour . $12Direct labor cost . $1,767,600Chapter 18 127PE 1810 (LO3) Manufacturing Overhead BudgetTotal manufacturing overhead is $603,650, as shown below:Variable costs:Indirect labor (21,000 $4.00 per unit) . $ 84,000Indirect materials (21,000 $2.50 per unit) . 52,500Utilities expense (21,000 $1.25 per unit) . 26,250Total variable costs . $162,750Fixed costs:Property tax expense. $ 29,000Depreciation expense. 133,600Insurance expense . 38,000Supervisor salaries expense. 240,300Total fixed costs . 440,900Total manufacturing overhead . $603,650PE 1811 (LO4) Purchases BudgetTotal purchases for the coming period will be $852,825, as shown below:Expected sales (in units). 1,240Add: Desired ending inventory. 128Units needed. 1,368Less: Beginning inventory . (123)Units to be purchased. 1,245Cost per unit. $685Total purchases. $852,825PE 1812 (LO4) Master Budget for Manufacturing Firms versus Service FirmsThe correct answer is D. The following shows which budgets are used by manufacturing firms and which ones are used by service firms. The sales (or revenue) budget is common among all types of firms. a. Direct labor budget Manufacturing firmsb. Supplies budget Service firmsc. Production budget Manufacturing firms d. Revenue budget Manufacturing firms and service firmse. Direct materials budget Manufacturing firms128 Chapter 18PE 1813 (LO4) Revenue BudgetBudgeted gross revenue for the period is $115,596, as shown below:Gross revenue per tune-up$ 180Tune-up capacity per day. 13Revenue per day (at 100% of capacity). $ 2,340Number of working days in period. 76Possible revenues in period (at 100% of capacity) $177,840Occupancy rate . 65%Budgeted gross revenues $115,596PE 1814* (LO5) Flexible BudgetsManufacturing Range of Production Costs per Unit 550 600 650 Direct materials . $ 6.80 $ 3,740 $ 4,080 $ 4,420Direct labor. 8.90 4,895 5,340 5,785Manufacturing overhead . _5.20 _2,860 _3,120 _3,380Total . $20.90 $11,495 $12,540 $13,585PE 1815* (LO5) Flexible Budget Performance ReportActual Costs BudgetedCost Incurred Costs forper Unit at 650 Units 650 Units DifferenceDirect materials . $ 6.80 $ 4,200$ 4,420 $ 220Direct labor. 8.90 5,750 5,785 35Manufacturing overhead . _5.20 _3,430 _3,380 _(50)Total costs . $20.90 $13,380 $13,585 $ 205Note that the company has spent $205 less in costs than it should have based on production of 650 units.*Relates to expanded material.Chapter 18 129PE 1816* (LO6) Cash BudgetThe company must obtain $54,820 in external funding, as shown below:Receipts:Collections from customers. 104,300Payments:Direct labor. $ 24,350Direct materials 43,200Manufacturing overhead. 22,750Income tax payment. 21,680Selling and administrative expense. 54,140Total payments $ 166,120Financing:Beginning cash balance. $ 32,000Total receipts. 104,300 Total payments. (166,120)Minimum cash balance desired (25,000)Cash excess (deficiency). $ (54,820)PE 1817* (LO7) Pro-Forma Financial StatementsThe correct answer is D. Pro-forma financial statements provide companies with valuable information, even though they include many assumptions.*Relates to expanded material.130 Chapter 18EXERCISESE 1818 (LO1) Personal BudgetingMonthly AnnuallySalary. $3,042 $36,500Less withholdings:Federal income taxes (20%) . $608 $7,300State taxes (7.15%). 218 2,610FICA taxes (7.65%). 233 (1,059) 2,792 (12,702)Available income after requiredtax withholdings . $1,983 $23,798Discretionary withholdings:United Way (2%). $ 61 $ 730Credit union savings (5%) . 152 (213) 1,825 (2,555)Net take-home pay. $1,770 $21,243Fixed expenses:Car payments . $225 $2,700Furniture payments. 80 960Rent expense. 410 4,920Loan payments. 100 (815) 1,200 (9,780)Net disposable income . $ 955 $11,463Other expenses:Food. $250 $3,000Clothing . 100 1,200Entertainment. 125 1,500Utilities. 80 960Insurance. 30 360Gas and maintenancecar . 180 2,160Miscellaneous . 200 (965) 2,400 (11,580)Net deficit. $ (10) $ (117)Note: There are minor differences between monthly and annual data because of rounding.Chapter 18 131E 1819 (LO1) Personal Budgeting1. Monthly Budget:Salary (monthly) . $4,500Withholdings:Income taxes (federal and state) . $1,125FICA taxes (7.65%). 344(1,469)Net take-home pay . $3,031Fixed expenses:Boat payment expense. $ 425Rent expense . 600Car payment expense. 350(1,375)Net disposable income . $1,656Other expenses:Food. $ 250Clothing . 125Entertainment. 250Insurance. 150Gas and othercar. 200Uti