Exam 24: Budgetary Planning

Which of the following is not a correct match? 1) Incurs costs 2) Generates revenue 3) Controls investment funds

Performance reports for cost centers compare actual

Given below is an excerpt from a management performance report: The manager's overall performance

All of the following statements are correct about management by exception except it

Polzin Company produces men's shirts. The following budgeted and actual amounts are for 2010: Instructions Prepare a performance report for Polzin Company for the year.

In general, costs ____________________ directly by the level of responsibility are _______________, whereas costs that are ____________________ to the responsibility level are __________________.

The Pacific Division of Patterson Company is operated as a profit center. Sales for the division were budgeted for 2010 at $1,200,000. The only variable costs budgeted for the division were cost of goods sold ($590,000) and selling and administrative ($80,000). Fixed costs were budgeted at $130,000 for cost of goods sold, $120,000 for selling and administrative and $95,000 for noncontrollable fixed costs. Actual results for these items were: Instructions (a) Prepare a responsibility report for the Pacific Division for 2010. (b) Assume the division is an investment center, and average operating assets were $1,200,000. Compute ROI.

Edmunds Division's operating results include: controllable margin of $150,000, sales totaling $1,200,000, and average operating assets of $500,000. Edmunds is considering a project with sales of $100,000, expenses of $86,000, and an investment of average operating assets of $200,000. Edmunds's required rate of return is 9%. Should Edmunds accept this project?

Which responsibility centers generate both revenues and costs?

Controllable costs for responsibility accounting purposes are those costs that are directly influenced by

Which of the following is not an indirect fixed cost?

Which of the following would not be considered an aspect of budgetary control?

The Appliance Division of Quayle Manufacturing Company reported the following results for 2010: Management is considering the following independent alternative courses of action in 2011 in order to maximize the return on investment for the division. 1. Reduce controllable fixed costs by 20% with no change in sales or variable costs. 2. Reduce average operating assets by 20% with no change in controllable margin. 3. Increase sales $400,000 with no change in the contribution margin percentage. Instructions (a) Compute the return on investment for 2010. (b) Compute the expected return on investment for each of the alternative courses of action.

Vernon Inc.'s manufacturing costs for August when production was 1,000 units appear below: Instructions Compute the flexible budget manufacturing cost amount for a month when 800 units are produced.

Cannon Company uses flexible budgets. At normal capacity of 8,000 units, budgeted manufacturing overhead is: $48,000 variable and $135,000 fixed. If Cannon had actual overhead costs of $187,500 for 9,000 units produced, what is the difference between actual and budgeted costs?

Budget reports comparing actual results with planned objectives should be prepared only once a year.

Management by exception

Management by exception

For June, Wynn Manufacturing estimated sales revenue at $200,000. It pays sales commissions that are 4% of sales. The sales manager's salary is $95,000, estimated shipping expenses total 1% of sales, and miscellaneous selling expenses are $5,000. How much are budgeted selling expenses for the month of July if sales are expected to be $180,000?

A flexible budget is appropriate for