ACC 227 ACC227 Module 4 Homework Assignment Solution (AAU Online)
Part I: Short Response
1.How are strategic planning, capital budgeting, and operations budgeting different?
2.Describe the advantages of the authoritative approach and the participative approach to budgeting.
3.How is the budgeting process for a service firm similar to the budgeting process for a manufacturing firm? What are any differences?
4.Why is a system of responsibility accounting necessary in most businesses?
5.What is a standard cost?
6.What is the purpose of a standard cost system?
7.Why are two variances, rather than one, used to measure and control materials and labor costs?
8.What is the major advantage of using residual income to evaluate the performance of investment centers?
9.Is the following statement true or false? Since external variables (like customer tastes and economic conditions) cannot be controlled by a company, those inputs are not used when computing a sales budget. Instead, the sales budget is generated using only historical sales data and internal cost information.
10.Krohn Company is producing an exception report. One division had $47,500 in budgeted costs, but it actually spent $45,000. How would this variance appear on the exception report?
11.Over-the-Rhine Company used 5,500 board feet of raw materials with a standard cost of $6.00 per board foot to make 400 tables. The company's standard is 14 board feet per table. Calculate the company's materials quantity variance.
12.Viella Now Company had $400,000 in total assets and $105,000 in operating profit this year, and the company requires at least a 11% return on assets. Compute Viella Now's residual income.
Part II: Application
1.Exercise 18-15 “Personal Budgeting” (p. 917)
2.Problem 18-27 “Personal Budgeting” (p. 922)
3.Exercise 19-27 “Labor Variances” (p. 988)
4.Problem 19-39 “Materials and Labor Variances” (p. 992)
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