Author Question: Allscott Company is developing its budgets for 2019 and, for the first time, will use the kaizen ... (Read 76 times)

stephzh · **on:** Mar 6, 2021

Question 1

Variances that are calculated frequently and in a timely manner can provide early warnings to management so corrective action can be taken.
◦ true
◦ false

Question 2

Allscott Company is developing its budgets for 2019 and, for the first time, will use the kaizen approach. The initial 2019 income statement, based on static data from 2018, is as follows:

Sales (140,000 units)

$420,000

Less: Cost of goods sold

280,000

Gross margin

140,000

Operating expenses (includes $28,000 of depreciation)

112,000

Net income

$28,000

Selling prices for 2019 are expected to increase by 8%, and sales volume in units will decrease by 10%. The cost of goods sold as estimated by the kaizen approach will decline by 10% per unit. Other than depreciation, all other operating costs are expected to decline by 5%.

Required:
Prepare a kaizen-based budgeted income statement for 2019.

anyusername12131 · **Reply #1 on:** Mar 6, 2021

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