Hill Industries had sales in 2019 of $7.120.000 and gross profit of $1,121,000. Management is considering two alternative budgetplans to increase its gross profit in 2020.Plan A would increase the selling price per unit from $8.00 to $8.40. Sales volume would decrease by 10% from its 2019 level. Plan Bwould decrease the selling price per unit by $0.50. The marketing department expects that the sales volume would increaseby 120,000 units.At the end of 2019, Hill has 48,000 units of inventory on hand. If Plan A is accepted, the 2020 ending inventory should be equal to 5%of the 2020 sales. If Plan B is accepted, the ending inventory should be equal to 61,000 units. Each unit produced will cost $1.80 indirect labor, $1.40 in direct materials, and $1.20 in variable overhead. The fixed overhead for 2020 should be $1,110,270. 1. Explain why a company needs these budgets used in #2 of yourhomework and how will they help the manager prepare for the next year?For example: ordering inventory, increasing or decreasing material costs sotheir sales will increase and cost decrease (labor, raw materials, or coststhat pertain to operations)? Make sure to explain what each budget tellsthe manager.

Computation of Gross Profit for 2 Alternative Budgets : S. noParticulars2019Budget for…

1. Explain why a company needs these budgets used in #2 of your homework and how will they help the manager prepare for the next year? For example: ordering inventory, increasing or decreasing material costs so their sales will increase and cost decrease (labor, raw materials, or costs that pertain to operations)? Make sure to explain what each budget tells the manager.

1. Explain why a company needs these budgets used in #2 of your homework and how will they help the manager prepare for the next year? For example: ordering inventory, increasing or decreasing material costs so their sales will increase and cost decrease (labor, raw materials, or costs that pertain to operations)? Make sure to explain what each budget tells the manager.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter9: Profit Planning And Flexible Budgets

Section: Chapter Questions

Problem 8MCQ: The first step in preparing the sales budget is to a. prepare a sales forecast. b. review the...

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Which approach is most likely to result in employee buy-in to the budget? A. top-down approach B. bottom-up approach C. total participation approach D. basing the budget on the prior year
The first step in preparing the sales budget is to a. prepare a sales forecast. b. review the production budget carefully. c. assess the desired ending inventory of finished goods. d. talk with past customers. e. increase sales beyond the forecast level.
A company can expect to receive which of the following benefits when it starts its budgeting process? a. The budget provides managers with a benchmark against which to compare actual results for performance evaluation. b. The planning required to develop the budget helps managers foresee and avoid potential problems before they occur. c. The budget helps motivate employees to achieve sales growth and cost-reduction goals. d. All of the above
Master budgets can provide a great deal of information to managers and investors including: O Sales forecasts that allow costing, production information, staffing. and cash flow information. O How much investors will get in dividends for the year. O A clear guideline for production so they know when to quit making product.
Which of the following should a manager consider when creating a sales budget ? All of the listed choices are correct . Possible entry of new competitors and its effect on sales . Any planned advertising campaigns in the near future and their effect on sales . Expected future economic conditions and their effect on sales . Any planned changes in the selling prices of the company's products and their effect on sales.
Why is it important that a firm prepares a budget and how they analyze the ongoing performance? What advantages does a business have by going through the budget process?
1. Which of the following is an advantage of the budgeting process? a. It forces management to focus on the past and not be distracted by the day-to-day operations of the business. b. It can communicate to employees specific information about their past performance to determine their promotion prospects. c. It can communicate to employees specific information about their past performance to determine their promotion prospects. d. It can communicate to employees information about their performance expectations in the period ahead. 2. Which one of the following statements regarding changing inventory costing methods is true? a. A change in inventory methods can be justified if the change is made to better match profits with revenue b. Changing inventory costing methods violates comparability c. One place that the reader of an annual report would be able to identify that a company changed inventory costing methods is the statement of shareholders' equity d. Changing inventory costing…
1. What is the total budgeted indirect cost at the Elmore store in January 2018? What is the total budgeted cost of each activity at the Elmore store for January 2018? What is the budgeted indirect cost of each product category for January 2018? 2. Which product category has the largest fraction of total budgeted indirect costs? 3. Given your answer in requirement 2, what advantage does Maclin's Corner gain by using an activity-based approach to budgeting over, say, allocating indirect costs to products based on cost of goods sold?
Which of the following budgets will show the expected cash receipts and expected cash disbursements of the firm? * budgeted balance sheet cost of goods sold budget budgeted income statement O cash budget Working capital is the total current assets and current liabilities * True False It is the cost of ordering raw materials. Your answer
Budgeting types Consider the following budgets and budget types. Which budget or budget type should be used to meet the following needs? a. Upper management is planning for the next five years. b. A store manager wants to plan for different levels of sales. c. The accountant wants to determine if the company will have sufficient funds to pay expenses. d. The CEO wants to make companywide plans for the next year.
Use the guiding questions below to develop recommendations based on the June budget to help the manager of the marketing department • How does the budget help the marketing department coordinate their needs with other departments? • How can the budget be used to evaluate the marketing department’s performance?
Briefly (5-10) lines) give a written amswer to the following question: What function does an annual budget serve as a part of a company's performance measurement system and how can a budget be used to encourage goal congruence (or 'alignment')?