P16-35. Cost consciousness The Hansens are preparing their household financial budget for December. They have started with their November budget and are adjusting it to reflect the difference between November and December in planned activities. The Hansens are expecting out-of-town guests for two weeks over the holiday season. The following list describes the budgetary changes from November to December that are contemplated by the Hansen family: a. Increase the grocery budget by $165. b. Decrease the commuter transportation budget by $70 to reflect the days off from work. c. Change food budget to reflect serving pizza rather than steak and lobster each weekend. Budget an extra $80 for utilities. d. e. Reduce household maintenance budget by $90 to reflect the fact that outside housekeeping services will not be used over the holiday period. f. Buy generic breakfast cereal rather than name brand due to the quantity the guests will consume. Use paper plates to avoid using the dishwasher as often. g. h. i. Buy the institutional-size packages of paper plates rather than smaller-size packages. Budget the international cellular charges at $40 less because there will be no need to call the relatives who will be visiting from England. j. Budget movie costs at $2 per electronic movie download rather than $12 per person to go to the movies. k. Postpone purchasing of needed work clothes until the January sales. 1. Budget funds for plans to repair car, rather than take the car to a garage in January. Indicate whether each of these items indicates cost understanding (CU), cost containment (CC), cost avoidance (CA), or cost reduction (CR). Some items may have more than one answer.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 1E: At the beginning of the school year, Craig Kovar decided to prepare a cash budget for the months of...

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Transcribed Image Text:P16-35. Cost consciousness The Hansens are preparing their household financial budget for December. They have started with their November budget and are adjusting it to reflect the difference between November and December in planned activities. The Hansens are expecting out-of-town guests for two weeks over the holiday season. The following list describes the budgetary changes from November to December that are contemplated by the Hansen family: a. Increase the grocery budget by $165. b. Decrease the commuter transportation budget by $70 to reflect the days off from work. c. Change food budget to reflect serving pizza rather than steak and lobster each weekend. Budget an extra $80 for utilities. d. e. Reduce household maintenance budget by $90 to reflect the fact that outside housekeeping services will not be used over the holiday period. f. Buy generic breakfast cereal rather than name brand due to the quantity the guests will consume. Use paper plates to avoid using the dishwasher as often. g. h. i. Buy the institutional-size packages of paper plates rather than smaller-size packages. Budget the international cellular charges at $40 less because there will be no need to call the relatives who will be visiting from England. j. Budget movie costs at $2 per electronic movie download rather than $12 per person to go to the movies. k. Postpone purchasing of needed work clothes until the January sales. 1. Budget funds for plans to repair car, rather than take the car to a garage in January. Indicate whether each of these items indicates cost understanding (CU), cost containment (CC), cost avoidance (CA), or cost reduction (CR). Some items may have more than one answer.

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