Академический Документы
Профессиональный Документы
Культура Документы
DQ #1
Master Budgets
What is a master budget? What are some underlying budgets that form the master budget? What
is the budgeting process at your organization? Is it effective? Why or why not?
A master budget is a sequence of correlated budgets that establishes a strategy of
accomplishment for a quantified time period (Weygandt, Kimmel, & Kieso, 2010, pp 392). A
master budget covers two curricula of budgets, operating and financial budgets.
"Operating budgets are the individual budgets that result in the preparation of the budgeted
income statement and establishes goals for the company's sales and production personnel"
(Weygandt, Kieso, & Kimmel, 2010, 392).
"Financial budgets are the capital expenditures budget, cash budget, and the budgeted balance
sheet, which focus primarily on cash resources needed to fund operations and planned capital
expenditures" (Weygandt, Kieso, & Kimmel, 2010, 392).
The budgeting process at my work starts at the top management who sets standards and budgets
for the departments. The managers of those departments make sure that budget guidelines are
followed. Although not everything needed for processing work is always readily available, things
usually get accomplished within the budget. During the year we have departmental lunches for
when we have a good quarter. One nice thing about where I work, everyone in my department
receives a bonus when we have done a great job keeping within the budget. In turn this keeps us
motivated and boosted morally after a grueling season of work. I think in this manner the budget
process was effective because of the incentives to meet budget that were in place.
Reference
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2010). Managerial Accounting Tools for
Business Decision Making (5th ed.). Hoboken, NJ: John Wiley & Sons, Inc..
DQ #2
Internal vs External Pricing
What is the difference between external and internal pricing? What factors must be considered
when setting internal transfer pricing between company divisions? What are the different
methods of setting internal transfer pricing? Which is the most effective? Why?
The difference between external and internal pricing is external pricing takes into consideration
all of the external factors in the external environment and demographics to determine pricing.
Internal pricing takes into consideration all the internal factors such as the marketing objective
and marketing mix strategies costs which are involved (Weygandt, Kieso, & Kimmel, 2010).
Internal transfer pricing between divisions of a company are set by using fair pricing guidelines
that are accepted by outside entities.
Transfer price - price used to record the transfer between two divisions of a company
Ways to determine a transfer price:
1. Negotiated transfer prices
2. Cost-based transfer prices
3. Market-based transfer prices
Conceptually - a negotiated transfer price is best
Due to practical considerations, companies often use the other two methods
In choosing which will be more effective a company would choose a model which allocates for
the fairest calculation and would test it in order to ensure its effectiveness. Its important that this
is done right in order to prevent unreasonableness of pricing and loss to competition.
Reference
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2010). Managerial Accounting Tools for
Business Decision Making (5th ed.). Hoboken, NJ: John Wiley & Sons, Inc..
DQ #3
Responsibility of Accountants
What is responsibility accounting? For what costs should managers of responsibility centers be
held accountable? What are some behavioral issues that surround responsibility accounting?
How should these issues be addressed?
Responsibility accounting involves accumulating and reporting costs (and revenues, where
relevant) on the basis of the manager who has the authority to make the day-to-day decisions
about the items (Weygandt,Kieso, & Kimmel, 2010, pp 447). Managers should be held
accountable for all those costs for which they have direct control over.
Responsibility accounting can be used at every level of management in which the following
conditions exist. (Weygandt,Kieso, & Kimmel, 2010, pp 447).
Costs and revenues can be directly associated with the specific level of management
responsibility.
The costs and revenues can be controlled by employees at the level of responsibility with
which they are associated.
Budget data can be developed for evaluating the managers effectiveness in controlling
the costs and revenues.
The human factor is critical in evaluating performance. Behavioral principles include the
following. (Weygandt,Kieso, & Kimmel, 2010, pp 458-459).
1. Managers of responsibility centers should have direct input into the process of
establishing budget goals of their area of responsibility
2. The evaluation of performance should be based entirely on matters that are controllable
by the manager being evaluated
3. Top management should support the evaluation process