Managerial Accounting Budget Project

Managerial Accounting Budget Project 

Using the supplied Excel spreadsheet, complete the required elements contained in the BUDGET PROJECT – ACCT 2202 pdf file. You will be graded on:

1) Your use of Excel formulas and reference cells to build a spreadsheet that functions, in all schedules, when performing “what-if” analysis by changing the assumptions located in the assumptions tab.

2) The accuracy of the budgeted figures as derived from the formulas entered. Since I will be supplying you with check figures, simply hard keying those figures into their respective cells will not count.

A general recommendation: there should not be any cell that doesn’t contain either a formula or a reference back to another cell located either in the assumptions tab or another schedule. Each cell identified with manual calculations or hard keyed figures will be deducted 10 points for each cell.

Finally, a general warning: while I encourage you to work in groups on this project, each student will be graded by their individual spreadsheet submitted for grading. With that in mind, construct your own spreadsheet. There are several ways to track the origination of the spreadsheet, which should act as a deterrent from breaching academic integrity. Any files that are deemed to be someone else’s work will result in a zero for the project and further options will be pursued. There will be substantial opportunity to perform well on this project if those opportunities are harvested.

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Questions on Operating and Financial Budget

Questions on Operating and Financial Budget in $15

E22-24 Preparing an operating budget

Dunbar Company manufactures drinking glasses. One unit is a package of 8 glasses, which sells for $20. Dunbar projects sales for April will be 3,000 packages, with sales increasing by 100 packages per month for May, June, and July. On April 1, Dunbar has 250 packages on hand but desires to maintain an ending inventory of 10% of the next month’s sales. Prepare a sales budget and a production budget for Dunbar for April, May, and June.

E22-27 Preparing a  budget

Cramer Company projects the following sales for the first three months of the year: $12,500 in January; $13,240 in February; and $14,600 in March. The company expects 70% of the sales to be cash and the remainder on account. Sales on account are collected 50% in the month of the sale and 50% in the following month. The Accounts Receivable account has a zero balance on January 1. Round to the nearest dollar.

Master Budget of Earrings Unlimited

Master Budget of Earrings Unlimited US$ 20 only (Instant Download)

You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping

malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash.

Since you are well trained in budgeting, you have decided to prepare comprehensive budgets for the upcoming second quarter in order to show management the benefits that can be gained from an integrated budgeting program. To this end, you have worked with accounting and other areas to gather the information assembled below.

The company sells many styles of earrings, but all are sold for the same price—$10 per pair. Actual sales of earrings for the last three months and budgeted sales for the next six months follow (in pairs of earrings):

  January (actual)


  June (budget)


  February (actual)


  July (budget)


  March (actual)


  August (budget)


  April (budget)


  September (budget)


  May (budget)


The concentration of sales before and during May is due to Mother’s Day. Sufficient inventory should be on hand at the end of each month to supply 40% of the earrings sold in the following month.

Suppliers are paid $4 for a pair of earrings. One-half of a month’s purchases is paid for in the month of purchase; the other half is paid for in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 20% of a month’s sales are collected in the month of sale. An additional 70% is collected in the following month, and the remaining 10% is collected in the second month following sale. Bad debts have been negligible.

Evaluating a Company’s Budget Procedures of Springfield Corporation


Evaluating a Company’s Budget Procedures of Springfield Corporation        in $9 only (Instant Download)

Source: Managerial Accounting by Garrison  11E  Chapter 9: Profit Planning

Springfield Corporation operates on a calendar-year basis.  It begins the annual budgeting process in late August, when the president establishes targets for the total dollar sales and the net income before taxes for the next year. The sales target is given to the Marketing Department, where the marketing manager formulates a sales budget by product line in both units and dollars.  From this budget, sales quotas by product line in units and dollars are established for each of the corporation’s sales districts. The marketing manager also estimates the cost of the marketing activities required to support the target sales volume and prepares a tentative marketing expense budget. The executive vice president uses the sales and profit targets, the sales budget by product line, and the tentative marketing expense budget to determine the dollar amount that can be devoted to manufacturing and corporate expenses, and then forwards to the Production Department the product-line sales budget in units and the total dollar amount that can be devoted to manufacturing. The production manager meets with the factory managers to develop a manufacturing plan that will produce the required units when needed within the cost constraints set by the executive vice president.

The budgeting process usually comes to a halt at this point because the Production Department does not consider the financial resources allocated to be adequate. When this standstill occurs, the vice president of finance, the executive vice president, the marketing manager, and the production manager meet to determine the final budgets for each of the areas.  This normally results in a modest increase in the total amount available for manufacturing costs, while the marketing expense and corporate office expense budgets are cut.  The total sales and net income figures proposed by the president are seldom changed.  Although the participants are seldom pleased with the compromise, these budgets are final.  Each executive then develops a new detailed budget for the operations in his or her area.

None of the areas has achieved its budget in recent years.  Sales often run below the target.  When budgeted sales are not achieved, each area is expected to cut costs so that the president’s profit target can still be met.  However, the profit target is seldom met because costs are not cut enough.  In fact, costs often run above the original budget in all functional areas.

The president is disturbed that Springfield has not been able to meet the sales and profit targets.  He hired a consultant with considerable experience with companies in Springfield’s industry.  The consultant reviewed the budgets for the past four years.  He concluded that the product-line sales budgets were reasonable and that the cost and expense budgets were adequate for the budgeted sales and production levels.

1. Discuss how the budgeting process as employed by Springfield contributes to the failure to achieve the president’s sales and profit targets.

Sample Answer:

The budgeting process as employed by Springfield contributes to the failure to achieve the president’s sales and profit targets. The root cause of failure lies in the budgeting of the Marketing Department where targets (sales quotas and budget is distributed at the same time. The marketing expense budget is bound to fail because the allotment of budget does not automatically lead to sales and profit targets. Further, the sales and profit targets cannot be used to set manufacturing and corporate expenses…..

2. How would you change the cost measurements?


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Management Accounting Multiple Choice Questions (MCQ)

1. Managerial accounting information is generally prepared for

a. stockholders.

b. creditors.

c. managers.

d. regulatory agencies.

2. Managerial accounting information

a. pertains to the entity as a whole and is highly aggregated.

b. pertains to subunits of the entity and may be very detailed.

c. is prepared only once a year.

d. is constrained by the requirements of generally accepted accounting principles.

3. The major reporting standard for presenting managerial accounting information is

a. relevance.

b. generally accepted accounting principles.

c. the cost principle.

d. the current tax law.

4. Managerial accounting is also called

a. management accounting.

b. controlling.

c. analytical accounting.

d. inside reporting.