Reference no: EM13935207
Assignment: Management Accounting
Discuss some of the advantages and disadvantages of using the operating budget as a control device. You should support your discussion by readings and research evidence and real world examples.
Go Lightly P/L reports the year-end information from 20X5 as follows:
Sales (100,000 units) $250,000
Less: Cost of goods sold 150,000
Gross profit 100,000
Operating expenses (includes $10,000 of Depreciation) 60,000
Net income $ 40,000
Michelle is developing the 20X6 budget. In 20X6 the company would like to increase selling prices by 10%, and as a result expects a decrease in sales volume of 5%. Cost of goods sold as a percentage of sales is expected to increase to 62%. Other than depreciation, all operating costs are variable.
a. Prepare a budgeted income statement for 20X6.
b. Explain how to reduce budgetary slack?
Wilson P/L manufactures jackets and other wool clothing. A certain designed ski parka requires the following:
Direct materials standard 2 square yards at $13.50 per yard
Direct manufacturing labor standard 1.5 hours at $20.00 per hour
During the third quarter, the company made 1,500 parkas and used 3,150 square yards of fabric costing $39,375. Direct labor totaled 2,100 hours for $45,150.
a. Compute the direct materials price and efficiency variances for the quarter.
b. Compute the direct manufacturing labor price and efficiency variances for the quarter.
a. Discuss whether all separable costs in joint-cost allocations are always incremental costs?
b. What revenue or expense amounts are necessary to make a sell-or-process-further decision and why? What items are irrelevant to the decision and why? Your discussion should be supported by readings and real world examples.