United Security Systems, Inc. (USSI) manufactures and sells security systems. The company started by installing photoelectric security systems in offices and has expanded into the private-home market. USSI has a basic security system that has been developed into three standard products, each of which can be adapted to meet the specific needs of customers. The manufacturing operation is moderate in size, as the bulk of the component manufacturing is completed by independent contractors. The security systems are approximately 85 percent complete when received from contractors and require only final assembly in the USSI plant. Each product passes through at least one of three assembly operations.
USSI operates in a rapidly growing community. There is evidence that a great deal of new commercial construction will take place in the near future, and management has decided to pursue this new market. In order to be competitive, the firm will have to expand its operations.
In view of the expected increase in business, Sandra Feldman, the controller, believes that USSI should implement a complete budgeting system. Feldman has decided to make a formal presentation to the company's president explaining the benefits of a budgeting system and outlining the budget schedules and reports that would be necessary.
Required:
1. Explain the benefits that USSI would gain from implementing a budgeting system.
2. If Sandra Feldman develops a master budget:
a. Identify, in order, the schedules that will have to be prepared.
b. Identify the subsequent schedules that would be based on the schedules identified above. Use the following format for your answer.
Schedule ............... Subsequent Schedule