ACCT 556 RANK Great Stories Here/acct556rank.com ACCT 556 RANK Great Stories Here/acct556rank.com | Page 9

In order to focus on important accounting concepts, certain
simplifications are necessary to make this case manageable. The
student should keep the following simplifications in mind while
working on this case:
 Work in process inventories will be ignored.
 Financial and IRS tax will be the same.
 Some projections for 2006 will be given.
 Standards used for the 2006 budget will be the reasonably
obtainable standards.
 No hourly worker will work overtime.
 A ll price changes will occur on January 1st and will remain in
effect for the entire year.
 The actual 2005 information is available while preparing the
2006 budget.
 All debt transactions will occur either on January 1st or
December 31st.
 There are no bad debts.
The student should also keep in mind that the budgeting process is
not an exact science; therefore, approximate figures provide
adequate information for the decision maker. Figures should be
rounded to the whole dollar throughout the budgeting process and
the control applications. Since it is not possible to have a partial
machine or person, certain figures will always have to be rounded
up.
GENERAL COMPANY INFORMATION
Fantastic, Inc. is a paint manufacturing company that produces two
qualities of paint, Super and Stupendous. The company was
established eight years ago and began with only one type of paint.
Sales of the original product have been rather stable in the past 5
years. In 2003, a second, higher quality paint was introduced, and
sales of this product have increased each year due to reasonably
effective sales efforts. The president is currently concerned about