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

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

1. Calculate the expected gross
   margin next month.
2. Calculate the expected
   contribution margin next month.
3. Calculate the expected total
   administrative expense next month.
4. 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