Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 6, Problem 6.31E
Kaizen approach to activity-based budgeting (continuation of 6-30). Jiffy Mart has a Kaizen (continuous improvement) approach to budgeting monthly activity costs for each month of 2018. Each successive month, the budgeted cost-driver rate decreases by 0.4% relative to the preceding month. So, for example, February’s budgeted cost-driver rate is 0.996 times January’s budgeted cost-driver rate, and March’s budgeted cost-driver rate is 0.996 times the budgeted February rate. Jiffy Mart assumes that the budgeted amount of cost-driver usage remains the same each month.
- 1. What are the total budgeted cost for each activity and the total budgeted indirect cost for March 2018?
- 2. What are the benefits of using a Kaizen approach to budgeting? What are the limitations of this approach, and how might Jiffy Mart management overcome them?
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Jiffy Mart has a Kaizen (continuous improvement) approach to budgeting monthly activity costs for each month of 2018. Each successive month, the budgeted cost-driver rate decreases by 0.4% relative to the preceding month. So, for example, February’s budgeted cost-driver rate is 0.996 times January’s budgeted cost-driver rate, and March’s budgeted cost-driver rate is 0.996 times the budgeted February rate. Jiffy Mart assumes that the budgeted amount of cost-driver usage remains the same each month.
Q.What are the benefits of using a Kaizen approach to budgeting? What are the limitations of this approach, and how might Jiffy Mart management overcome them?
Use the following data for problems 10 - 12:
Barth Company is preparing the operating budget for the first quarter of 2024. They forecast
sales of $75,000 in January, $80,000 in February, and $85,000 in March. Cost of goods sold is
budgeted at 45% of Sales. Variable and fixed expenses are as follows:
Variable: Miscellaneous expenses: 22% of Sales
Fixed:
Salary expense: $15,000 per month
Rent expense: $3,000 per month
Depreciation expense: $2,000 per month
Miscellaneous expenses/fixed portion: $1,000 per month
Use the following grid for your calculations:
Budgeted Income Statement
Sales Revenue
Less: COGS (45% of sales)
JANUARY
FEBRUARY
= Gross Profit
Less Variable Expenses
= Contribution Margin
Less: Fixed Expenses
Salary expense
Rent expense
Depreciation expense
Misc. expenses
Operating Income/(Loss)
10) What is the budgeted operating income/(loss) for January?
11) What is the budgeted operating income/(loss) for February?
12) What is the budgeted operating income/(loss) for March?…
B. Mahmoud Repair Company is preparing its budget for the first quarter of 2021. The next step in the
budgeting process is to prepare a cash receipts schedule and a cash payments schedule. To that end the
following information has been collected.
Clients usually pay 60% of their fee in the month that service is provided, 30% the month after, and 10%
the second month after receiving service.
Actual service revenue for 2016 and expected service revenues for 2021 are: November 2020, $120,000;
December 2020, $110,000; January 2021, $140,000; February 2021, $160,000; March 2021, $170,000.
Purchases on landscaping supplies (direct materials) are paid 40% in the month of purchase and 60% the
following month. Actual purchases for 2020 and expected purchases for 2021 are: December 2020,
$21,000; January 2021, $20,000; February 2021, $22,000; March 2021, $27,000.
Instructions
(a) Prepare the following schedules for each month in the first quarter of 2021 and for the quarter in total:
(1)…
Chapter 6 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 6 - What are the four elements of the budgeting cycle?Ch. 6 - Define master budget.Ch. 6 - Strategy, plans, and budgets are unrelated to ore...Ch. 6 - Budgeted performance is a better criterion than...Ch. 6 - Production managers and marketing managers are...Ch. 6 - Budgets meet the cost-benefit test. They force...Ch. 6 - Define rolling budget. Give an example.Ch. 6 - Outline the steps in preparing an operating...Ch. 6 - The sales forecast is the cornerstone for...Ch. 6 - Prob. 6.10Q
Ch. 6 - Define Kaizen budgeting.Ch. 6 - Prob. 6.12QCh. 6 - Explain how the choice of the type of...Ch. 6 - What are some additional considerations that arise...Ch. 6 - Prob. 6.15QCh. 6 - Master budget. Which of the following statements...Ch. 6 - Operating and financial budgets. Which of the...Ch. 6 - Production budget. Superior Industries sales...Ch. 6 - Responsibility centers. Elmhurst Corporation is...Ch. 6 - Cash budget. Mary Jacobs, the controller of the...Ch. 6 - Sales budget, service setting. In 2017 Hart Sons,...Ch. 6 - Sales and production budget. The Coby Company...Ch. 6 - Direct material budget. Dawson Co. produces wine....Ch. 6 - Material purchases budget. The McGrath Company has...Ch. 6 - Revenues, production, and purchases budgets. The...Ch. 6 - Revenues and production budget. Saphire, Inc.,...Ch. 6 - Budgeting; direct material usage, manufacturing...Ch. 6 - Budgeting, service company. Ever Clean Company...Ch. 6 - Budgets for production and direct manufacturing...Ch. 6 - Activity-based budgeting. The Jerico store of...Ch. 6 - Kaizen approach to activity-based budgeting...Ch. 6 - Responsibility and controllability. Consider each...Ch. 6 - Responsibility, controllability, and stretch...Ch. 6 - Cash flow analysis, sensitivity analysis....Ch. 6 - Budget schedules for a manufacturer. Hale...Ch. 6 - Budgeted costs, Kaizen improvements environmental...Ch. 6 - Revenue and production budgets. (CPA, adapted) The...Ch. 6 - Budgeted income statement. (CMA, adapted) Smart...Ch. 6 - Prob. 6.39PCh. 6 - Comprehensive problem with ABC costing. Animal...Ch. 6 - Cash budget (continuation of 6-40). Refer to the...Ch. 6 - Comprehensive operating budget. Skulas, Inc.,...Ch. 6 - Cash budgeting, budgeted balance sheet....Ch. 6 - Comprehensive problem; ABC manufacturing, two...Ch. 6 - Cash budget. (Continuation of 6-44) (Appendix)...Ch. 6 - Budgeting and ethics. Jayzee Company manufactures...Ch. 6 - Kaizen budgeting for carbon emissions. Apex...Ch. 6 - Comprehensive budgeting problem; activity-based...
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