Budgeting and Standard Cost Systems

| February 6, 2015

Please find Answers P13-2; P13-3; and P13-4 in the attached pdf and copy those exact answers onto a word and an excel document for me as I don’t know how to re-create the answers onto excel or word.

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363 © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 13 BUDGETING AND STANDARD COST SYSTEMS CLASS DISCUSSION QUESTIONS 1. The three major objectives of budgeting are (1) to establish specific goals for future operations, (2) to direct and coordinate plans to achieve the goals, and (3) to periodically compare actual results with the goals. 2. Managers are given authority and responsibility for responsibility center performance. They are then accountable for the performance of the responsibility center. 3. If goals set by the budgets are viewed as unrealistic or unachievable, management may become discouraged and may not be committed to the achievement of the goals, resulting in the budget becoming less effective as a planning and control tool. 4. Budgeting more resources for travel than requested by department personnel is an example of budgetary slack. 5. A budget that is set too loosely may fail to motivate managers and other employees to perform efficiently. In addition, a loose budget may cause a “spend it or lose it” mentality, where excess budget resources are spent in order to protect the budget from future reductions. 6. Conflicting goals can cause employees or department managers to act in their own selfinterests to the detriment of the organization’s objectives. 7. Zero-based budgeting is used when an organization wishes to take a “clean slate” view of operations. It is often used when the organization wants to cut costs by reevaluating the need for and usefulness of all operations. 8. A static budget is most appropriate in situations where costs are not variable to an underlying activity level. As a result, it is reasonable to plan spending on the basis of a fixed quantity of resources for the year. This will occur in some administrative functions, such as human resources, accounting, or public relations. 9. Computers not only speed up the…

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