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ACC202 Managerial Accounting Module 3 – SLP

BUDGETING

This assignment consists of three independent scenarios for which computations should be shown.

Scenario A

Skaters, Inc. plans to sell 90,000 skateboards next quarter at a price of $36 per unit. Production costs are $14.40 per unit. Selling and administrative expenses are: variable, $7.20 per unit; and fixed, $604,800 per quarter. What are the budgeted earnings for next quarter? (Do not consider federal income taxes.)

Show the analysis in a table format. Write a one-paragraph interpretation of the information presented in the table.

Scenario B

Speedy Delivery currently delivers packages for $9 each. The variable cost is $3 per package, and fixed costs are $60,000 per month. Prepare a budget showing the expected current profit and profit after the changes in costs.

  1. Fixed costs are increased to $75,000.
  2. Selling price is increased by 10%.
  3. Variable cost is increased to $4.50 per unit.
  4. Show the analysis in a table format. Write a one-paragraph interpretation of the information presented in the table.

Show the analysis in a table format. Write a one-paragraph interpretation of the information presented in the table.

Scenario C

Houston Corporation considers materials and labor to be completely variable costs. Expected production for the year is 50,000 units. At that level of production, direct materials cost is budgeted at $198,000, and direct labor cost is budgeted at $450,000.

  1. Prepare a flexible budget for materials and labor for possible production levels of 55,000 and 65,000 units of product.
  2. Assume that in the previous exercise the actual production was 60,000 units, materials cost was $247,000, and labor cost was $510,000. Compute the budget variances. Denote variances as favorable (F) or unfavorable (U).

SLP Assignment Expectations

Show computations in good format and explain answers as required. Excel is a great tool to make computations and present financial information in an easy to understand format. Write comments below the computations in Excel. Submit only the Excel file. Both content and the clarity of the presentation will be evaluated for grading purposes.

ACC202 Managerial Accounting Module 3 – Case

BUDGETING

Assignment Overview

Review the three components in the background material to answer the questions and make computations relating to budgeting.

Case Assignment

Part I

Short-Answer Questions

  1. What are the three main purposes of budgeting?
  2. What are the purposes of master, planned operating, and financial budgets?
  3. How does the management by exception concept relate to budgeting?
  4. What are five basic principles, which, if followed, should improve the probability of preparing a meaningful budget? Why is each important?
  5. Define and explain a budget variance.
    1. What is a favorable variance?
    2. What is an unfavorable variance?
    3. What is the purpose of computing variances?
  6. Distinguish between a master budget and a responsibility budget.
  7. The budget established at the beginning of a given period carried an item for supplies expense in the amount of $40,000. At the end of the period, the supplies used amounted to $44,000. Can it be concluded from these data that there was an inefficient use of supplies or that care was not exercised in purchasing the supplies?
  8. Management must make certain assumptions about the business environment when preparing a budget. What areas should be considered?
  9. Why is budgeted performance better than past performance as a basis for judging actual results?

Part II

Real-World Example

Review the background material and do some research to learn about the budgeting practices of an existing business enterprise. Information can be found in the news, research papers, and on investment sites. Another option is to locate the financial statements for a company, make some assumptions, and prepare your own budget from an external point of view. Describe the situation and the results. Show computations when appropriate.

Assignment Expectations

Part I

Write 3–5 sentences for each question.

Part II

Write an essay (300–500 words).

Show sources when appropriate and APA format is suggested, but not required.

ACC202 Managerial Accounting Discussion: Target Costing

Review the video below and give examples of industries where target costing is prevalent. Comment on the benefits of the practice also.

One original comment the first week and two responses during the second week of the module are expected. Timely contributions lead to interaction and have more value than late contributions.

LICENSES AND ATTRIBUTIONS

Target Costing. Authored by: PremierTrainingUK. Located at: https://www.youtube.com/watch?v=WXo2xEaZZ0U. License: All Rights Reserved. License Terms: Standard YouTube License