Bienestar, Inc., has done a cost analysis for its production of vests. The following activities and cost drivers have been developed: $\begin{array} { l l } \text { Activity } & \text { Cost Formula } \\ \text { Maintenance } & \$ 11,000 + \$ 2 \text { per machine hour } \\ \text { Machining } & \$ 55,000 + \$ 3 \text { per machine hour } \\ \text { Inspection } & \$ 70,000 + \$ 500 \text { per batch } \\ \text { Setups } & \$ 2,000 \text { per batch } \\ \text { Purchasing } & \$ 80,000 + \$ 150 \text { per purchase order } \end{array}$ Following are the actual costs of producing 75,000 vests: 5,000 machine hours; 10 batches; 20 purchase orders $\begin{array}{lr} \text { Maintenance } & \$ 20,000 \\ \text { Machining } & 73,000 \\ \text { Inspection } & 73,000 \\ \text { Setups } & 18,000 \\ \text { Purchasing } & 82,000 \end{array}$ What is the budget variance for inspection in an activity-based performance report?

A) $1,000 F B) $2,000 F C) $3,000 F D) none of these A) $1,000 F B) $2,000 F C) $3,000 F D) none of these

Mikhail Corporation has the following sales forecasts for the first three months of 2018: \[\begin{array} { l r } \text { Month } & \text { Sales } \\ \text { January } & \$ 36,000 \\ \text { February } & 24,000 \\ \text { March } & 40,000 \end{array}\] Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following month. $\begin{array}{lr} \text { Accounts receivable balance (January 1, 2018) } & \$ 16,000 \\ \text { Cash balance (January 1,2018) } & 12,000 \end{array}$ Minimum cash balance is $20,000. Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges). How much cash would be collected in March from sales?

A) $32,000 B) $58,400 C) $48,000 D) $34,400 A) $32,000 B) $58,400 C) $48,000 D) $34,400

Mathew, Inc., is looking for feedback on performance. The company compares the budget for the year with the actual costs. Mathew has the following budgeted data: Budgeted variable costs per unit: $\begin{array} { l r } \text { Direct materials } & \$ 10.00 \\ \text { Direct labor } & 12.00 \\ \text { Supplies } & 0.50 \\ \text { Indirectlabor } & 2.00 \\ \text { Power } & 0.20 \end{array}$ Budgeted fixed overhead for the current year: $\begin{array} { l r } \text { Supervision } & \$ 8,000 \\ \text { Depreciation } & 14,000 \\ \text { Rent } & 10,000 \end{array}$ Required: Prepare a flexible budget for production costs for the following range of activity: 3,000 units, 5,000 units, and 7,000 units.

The answer of Mathew, Inc., is looking for feedback on...

Macheski Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget. Data for the July master budget are given below: The June 30th balance sheet follows: \[\begin{array}{l} \begin{array} { l l r } \text { Cash } & \$ 25,000 \text { Accounts payable } & \$ 45,000 \\ \text { Accounts receivable } & 110,000 \text { Capital stock } & 300,000 \\ \text { Inventory } & 54,000 \text { Retained earnings } & 94,000 \\ \text { Buil ding and equipment (net) } & 250,000 & \end{array}\\ \text { Actual sales for June and budgeted sales for July, August, and September are given below: }\\ \begin{array} { l r } \text { June } & \$ 137,500 \\ \text { July } & 360,000 \\ \text { August } & 400,000 \\ \text { September } & 320,000 \end{array} \end{array}\] Sales are 20 percent for cash and 80 percent on credit. All credit sales are collected in the month following the sale. There are no bad debts. The gross margin percentage is 40 percent of sales. The desired ending inventory is equal to 25 percent of the following month's sales. One fourth of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month. The monthly cash operating expenses are $43,000, and the monthly depreciation expenses are $7,000. What is the balance of the building and equipment (net) account at the end of July?

A) $243,000 B) $250,000 C) $257,000 D) $300,000 A) $243,000 B) $250,000 C) $257,000 D) $300,000

Rammazzotti, Inc., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Rammazzotti Inc., had the following budgeted data: $\text { Rammazzotti Inc., had the following budgeted data: }$ $\begin{array}{ll} \text { Unit sales for } 2018 & 26,000 \\ \text { Unit production for } 2018 & 26,000\\\\\text { Budgeted fixed overhead for } 2018 \text { : }\\ \text { Superrision } & \$ 800 \\ \text { Depreciation } & 2,000 \\ \text { Rent } & 100\\\\\text { Budgeted variable costs per unit: } & \\ \text { Direct materials } & \$ 0.15 \\ \text { Direct labor } & 0.20 \\ \text { Supplies } & 0.02 \\ \text { Indirect labor } & 0.05 \\ \text { Power } & 0.02\\ \end{array}$ $\text { The following actually occurred: }$ $\begin{array}{ll} \text { Actual unit sales for } 2018 & 24,000 \\ \text { Actual unit production for } 2018 & 28,000\\\\ \text {Actual fixed overhead for 2018 : }\\ \text {Supervision }&\$850\\ \text {Depreciation }&2,000\\ \text {Rent }&100\\\\\text { Actual variable costs: } & \\ \text { Direct materials } & \$ 3,500 \\ \text { Direct labor } & 4,900 \\ \text { Supplies } & 530 \\ \text { Indirect labor } & 1,250 \\ \text { Power } & 470 \end{array}$ The static budget variance for supervision is

A) $50 U. B) $50 F. C) 100 U. D) 100 F. A) $50 U. B) $50 F. C) 100 U. D) 100 F.

Splendor, Inc., has done a cost analysis for its production of motorcycle lights. The following activities and cost drivers have been developed: \[\begin{array} { l l } \text { Activity } & \text { Cost Formula } \\ \text { Maintenance } & \$ 5,000 + \$ 8 \text { per machine hour } \\ \text { Machining } & \$ 25,000 + \$ 4 \text { per machine hour } \\ \text { Inspection } & \$ 90,000 + \$ 1,000 \text { per batch } \\ \text { Setups } & \$ 5,000 \text { per batch } \\ \text { Purchasing } & \$ 100,000 + \$ 100 \text { per purchase order } \end{array}\] Required: Prepare an activity-based budget for the following: • 60,000 units: 10,000 machine hours; 30 batches; 20,000 purchase orders • 100,000 units: 18,000 machine hours; 40 batches; 30,000 purchase orders

The answer of Splendor, Inc., has done a cost analysis...

Rammazzotti, Inc., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Rammazzotti Inc., had the following budgeted data: $\text { Rammazzotti Inc., had the following budgeted data: }$ $\begin{array}{ll} \text { Unit sales for } 2018 & 26,000 \\ \text { Unit production for } 2018 & 26,000\\\\\text { Budgeted fixed overhead for } 2018 \text { : }\\ \text { Superrision } & \$ 800 \\ \text { Depreciation } & 2,000 \\ \text { Rent } & 100\\\\\text { Budgeted variable costs per unit: } & \\ \text { Direct materials } & \$ 0.15 \\ \text { Direct labor } & 0.20 \\ \text { Supplies } & 0.02 \\ \text { Indirect labor } & 0.05 \\ \text { Power } & 0.02\\ \end{array}$ $\text { The following actually occurred: }$ $\begin{array}{ll} \text { Actual unit sales for } 2018 & 24,000 \\ \text { Actual unit production for } 2018 & 28,000\\\\ \text {Actual fixed overhead for 2018 : }\\ \text {Supervision }&\$850\\ \text {Depreciation }&2,000\\ \text {Rent }&100\\\\\text { Actual variable costs: } & \\ \text { Direct materials } & \$ 3,500 \\ \text { Direct labor } & 4,900 \\ \text { Supplies } & 530 \\ \text { Indirect labor } & 1,250 \\ \text { Power } & 470 \end{array}$ The flexible budget variance for total cost for 2018 is

A) $90 F. B) $140 F. C) $1,620 F. D) $50 F. A) $90 F. B) $140 F. C) $1,620 F. D) $50 F.

Rammazzotti, Inc., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Rammazzotti Inc., had the following budgeted data: $\begin{array}{ll} \text { Unit sales for } 2018 & 26,000 \\ \text { Unit production for } 2018 & 26,000 \end{array}$ $\begin{array}{l} \text { Budgeted fixed overhead for } 2018 \text { : }\\ \begin{array}{lr} \text { Supervision } & \$ 800 \\ \text { Depreciation } & 2,000 \\ \text { Rent } & 100 \end{array} \end{array}$ $\begin{array}{lr} \text { Budgeted variable costs per unit: } & \\ \text { Direct materials } & \$ 0.15 \\ \text { Direct labor } & 0.20 \\ \text { Supplies } & 0.02 \\ \text { Indirect labor } & 0.05 \\ \text { Power } & 0.02 \end{array}$ $\text { The following actually occurred: }$ $\begin{array}{ll} \text { Actual unit sales for } 2018 & 24,000 \\ \text { Actual unit production for } 2018 & 28,000 \end{array}$ $\begin{array}{l} \text { Actual fixed overhead for } 2018 \text { : }\\ \begin{array}{lr} \text { Supervision } & \$ 850 \\ \text { Depreciation } & 2,000 \\ \text { Rent } & 100 \end{array} \end{array}$ $\begin{array}{lr} \text { Actual variable costs: } & \\ \text { Direct materials } & \$ 3,500 \\ \text { Direct labor } & 4,900 \\ \text { Supplies } & 530 \\ \text { Indirect labor } & 1,250 \\ \text { Power } & 470 \end{array}$ The total budgeted costs for 2018 were

A) $11,440. B) $13,510. C) $14,340. D) $13,460. A) $11,440. B) $13,510. C) $14,340. D) $13,460.

Exam 8: Budgeting for Planning and Control

Foremost Corporation manufactures boxes. The estimated number of boxes sold for the first three months of the current year are: Month Sales January 3,000 February 4,200 March 3,900 Finished goods inventory at the end of December was 900 units. Ending finished goods inventory is equal to 20 percent of the next month's sales. General Corporation expects to sell the boxes for $5 each. April sales is projected at 4,500 boxes. How many boxes should be produced in January?

(Multiple Choice)

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Question 41

Which of the following is true of a budget committee?

(Multiple Choice)

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Question 42

Which of the following is NOT a component of the Cash Budget?

(Multiple Choice)

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Question 43

Bienestar, Inc., has done a cost analysis for its production of vests. The following activities and cost drivers have been developed: Activity Cost Formula Maintenance \ 11,000+\ 2 per machine hour Machining \ 55,000+\ 3 per machine hour Inspection \ 70,000+\ 500 per batch Setups \ 2,000 per batch Purchasing \ 80,000+\ 150 per purchase order Following are the actual costs of producing 75,000 vests: 5,000 machine hours; 10 batches; 20 purchase orders Maintenance \ 20,000 Machining 73,000 Inspection 73,000 Setups 18,000 Purchasing 82,000 What is the budget variance for inspection in an activity-based performance report?

(Multiple Choice)

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Question 44

Mikhail Corporation has the following sales forecasts for the first three months of 2018: Month Sales January \ 36,000 February 24,000 March 40,000 Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following month. Accounts receivable balance (January 1, 2018) \ 16,000 Cash balance (January 1,2018) 12,000 Minimum cash balance is $20,000. Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges). How much cash would be collected in March from sales?

(Multiple Choice)

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Question 45

Which of the following is NOT an advantage of budgeting?

(Multiple Choice)

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Question 46

A functional-based approach to budgeting compares costs for functional line items such as

(Multiple Choice)

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Question 47

Mathew, Inc., is looking for feedback on performance. The company compares the budget for the year with the actual costs. Mathew has the following budgeted data: Budgeted variable costs per unit: Direct materials \ 10.00 Direct labor 12.00 Supplies 0.50 Indirectlabor 2.00 Power 0.20 Budgeted fixed overhead for the current year: Supervision \ 8,000 Depreciation 14,000 Rent 10,000 Required: Prepare a flexible budget for production costs for the following range of activity: 3,000 units, 5,000 units, and 7,000 units.

(Essay)

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Question 48

Macheski Company, an importer and retailer of Polish pottery and kitchenware, prepares a monthly master budget. Data for the July master budget are given below: The June 30th balance sheet follows: Cash \ 25,000 Accounts payable \ 45,000 Accounts receivable 110,000 Capital stock 300,000 Inventory 54,000 Retained earnings 94,000 Buil ding and equipment (net) 250,000 Actual sales for June and budgeted sales for July, August, and September are given below: June \ 137,500 July 360,000 August 400,000 September 320,000 Sales are 20 percent for cash and 80 percent on credit. All credit sales are collected in the month following the sale. There are no bad debts. The gross margin percentage is 40 percent of sales. The desired ending inventory is equal to 25 percent of the following month's sales. One fourth of the purchases are paid for in the month of purchase and the others are purchased on account and paid in full the following month. The monthly cash operating expenses are $43,000, and the monthly depreciation expenses are $7,000. What is the balance of the building and equipment (net) account at the end of July?

(Multiple Choice)

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Question 49

Dali, Inc. is constructing its marketing budget. 1 st quarter 2nd quarter 3rd quarter 4th quarter Sales 30,000 40,000 50,000 60,000 Production 35,000 45,000 55,000 65,000 Commissions are $3 per unit sold. Salesperson salaries are $100,000 per quarter. Depreciation is $25,000 per quarter. Travel is $10,000 per quarter. Advertising is $50,000 in the first quarter; $40,000 in the second quarter; $60,000 in the third quarter; and $55,000 in the fourth quarter. What is the budgeted marketing expense for the third quarter?

(Multiple Choice)

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Question 50

A flexible budget compares actual costs to budgeted costs.

(True/False)

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Question 51

Rammazzotti, Inc., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Rammazzotti Inc., had the following budgeted data: $\text { Rammazzotti Inc., had the following budgeted data: }$ Unit sales for 2018 26,000 Unit production for 2018 26,000 Budgeted fixed overhead for 2018 : Superrision \ 800 Depreciation 2,000 Rent 100 Budgeted variable costs per unit: Direct materials \ 0.15 Direct labor 0.20 Supplies 0.02 Indirect labor 0.05 Power 0.02 $\text { The following actually occurred: }$ Actual unit sales for 2018 24,000 Actual unit production for 2018 28,000 Actual fixed overhead for 2018 : Supervision \8 50 Depreciation 2,000 Rent 100 Actual variable costs: Direct materials \ 3,500 Direct labor 4,900 Supplies 530 Indirect labor 1,250 Power 470 The static budget variance for supervision is

(Multiple Choice)

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Question 52

The budgeted __________ shows projected assets, liabilities, and shareholders' equity of the end of the budget period.

(Short Answer)

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Question 53

The sales forecast is the basis for the sales budget.

(True/False)

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Question 54

Asian Lamp Company manufactures lamps. The estimated number of lamp sales for the last three months for the current year are as follows: Month Sales October 10,000 November 14,000 December 13,000 Finished goods inventory at the end of September was 3,000 units. Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales. Asian Lamp expects to sell the lamps for $25 each. January sales is projected at 16,000 lamps. What is the expected sales revenue for December?

(Multiple Choice)

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Question 55

Splendor, Inc., has done a cost analysis for its production of motorcycle lights. The following activities and cost drivers have been developed: Activity Cost Formula Maintenance \ 5,000+\ 8 per machine hour Machining \ 25,000+\ 4 per machine hour Inspection \ 90,000+\ 1,000 per batch Setups \ 5,000 per batch Purchasing \ 100,000+\ 100 per purchase order Required: Prepare an activity-based budget for the following: • 60,000 units: 10,000 machine hours; 30 batches; 20,000 purchase orders • 100,000 units: 18,000 machine hours; 40 batches; 30,000 purchase orders

(Essay)

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Question 56

Budgeting means to set standards, receive feedback, and executing corrective action.

(True/False)

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Question 57

Participative budgeting detracts from a manager's sense of responsibility and creativity.

(True/False)

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Question 58

Rammazzotti, Inc., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Rammazzotti Inc., had the following budgeted data: $\text { Rammazzotti Inc., had the following budgeted data: }$ Unit sales for 2018 26,000 Unit production for 2018 26,000 Budgeted fixed overhead for 2018 : Superrision \ 800 Depreciation 2,000 Rent 100 Budgeted variable costs per unit: Direct materials \ 0.15 Direct labor 0.20 Supplies 0.02 Indirect labor 0.05 Power 0.02 $\text { The following actually occurred: }$ Actual unit sales for 2018 24,000 Actual unit production for 2018 28,000 Actual fixed overhead for 2018 : Supervision \8 50 Depreciation 2,000 Rent 100 Actual variable costs: Direct materials \ 3,500 Direct labor 4,900 Supplies 530 Indirect labor 1,250 Power 470 The flexible budget variance for total cost for 2018 is

(Multiple Choice)

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(75)

Question 59

Rammazzotti, Inc., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Rammazzotti Inc., had the following budgeted data: Unit sales for 2018 26,000 Unit production for 2018 26,000 Budgeted fixed overhead for 2018 : Supervision \ 800 Depreciation 2,000 Rent 100 Budgeted variable costs per unit: Direct materials \ 0.15 Direct labor 0.20 Supplies 0.02 Indirect labor 0.05 Power 0.02 $\text { The following actually occurred: }$ Actual unit sales for 2018 24,000 Actual unit production for 2018 28,000 Actual fixed overhead for 2018 : Supervision \ 850 Depreciation 2,000 Rent 100 Actual variable costs: Direct materials \ 3,500 Direct labor 4,900 Supplies 530 Indirect labor 1,250 Power 470 The total budgeted costs for 2018 were

(Multiple Choice)

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(90)

Question 60

Which of the following is true of a budget committee?

Which of the following is NOT a component of the Cash Budget?

Which of the following is NOT an advantage of budgeting?

A functional-based approach to budgeting compares costs for functional line items such as

A flexible budget compares actual costs to budgeted costs.

The budgeted __________ shows projected assets, liabilities, and shareholders' equity of the end of the budget period.

The sales forecast is the basis for the sales budget.

Budgeting means to set standards, receive feedback, and executing corrective action.

Participative budgeting detracts from a manager's sense of responsibility and creativity.

Introduction to Cost Management

Basic Cost Management Concepts

Cost Behavior

Activity-Based Costing

Product and Service Costing: Job-Order System

Process Costing

Allocating Costs of Support Departments and Joint Products

Standard Costing: a Functional-Based Control Approach

Decentralization: Responsibility Accounting, Performance

Strategic Cost Management

Activity-Based Management

The Balanced Scorecard: Strategic-Based Control

Quality and Environmental Cost Management

Lean Accounting and Productivity Measurement

Cost-Volume-Profit Analysis

Activity Resource Usage Model and Tactical Decision Making

Pricing and Profitability Analysis

Capital Investment

Inventory Management: Economic Order Quantity, Jit, and the Theory of Constraints

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