Exam 18: Budgeting and Control

A budget that is based on only one estimate of production or sales volume is a:

Exhibit 18-10 Streamer Company sells float-tubes for recreational fly-fishing. A review of the company's historical operations shows that gross margin consistently averages 40% of sales. Company guidelines indicate that ending inventory at the end of any quarter should always be 25% of the next quarter's budgeted cost of goods sold. The expected sales for Streamer's next four quarters are shown below. -Refer to Exhibit 18-10. If Streamer prepares a pro-forma income statement for the first quarter, what amount would be shown for purchases (assume the year end inventory balance is $120,000)?

The overall purpose of a budget is to:

Exhibit 18-7 Cedar Corporation uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows: Fixed overhead costs per month are: -Refer to Exhibit 18-7. If Cedar prepares a flexible budget for 6,000 direct labor hours, what amount will this budget show for total manufacturing overhead costs?

Which of the following budgets contains the labor costs involved directly in providing the service for a service firm?

Exhibit 18-3 Thorne Chemicals makes cleaning solution. The following information is available on December 1, 2011: -Refer to Exhibit 18-3. Given the information above, budgeted production for December is:

The format of the merchant's purchases budget is very similar to the format of the manufacturer's:

Exhibit 18-7 Cedar Corporation uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows: Fixed overhead costs per month are: -Refer to Exhibit 18-7. If Cedar prepares a flexible budget for 4,000 direct labor hours, what amount will this budget show for variable manufacturing overhead costs?

NewGen Computers is preparing its budget for 2011. Sales for the year are budgeted at $1,000,000; 20% are cash sales and 80% are credit sales. The company expects to collect 60% of all credit sales in 2011. Budgeted expenses are $800,000. These expenditures include $25,000 for depreciation and $497,000 for variable manufacturing overhead. Given this information, total cash inflows from sales for 2011 would be:

Exhibit 18-6 The July manufacturing overhead budget of Kyoto Corporation, shown below, was constructed assuming an activity level of 48,000 direct labor hours: - Refer to Exhibit 18-6. If management prepared a flexible budget for July using 40,000 direct labor hours, what amount would this flexible budget show for total variable costs?

Exhibit 18-5 Dr. Gatten began practicing dentistry on January 1, 2011. During January she served 250 patients who had their teeth examined and cleaned. The following information is known in relation to each patient visit: -Refer to Exhibit 18-5. Given the information above, total service cost per patient served in January would be:

Which of the following budgets contains the supplies needed to operate for a service firm?

For 2011, Raster Graphics forecasts cash receipts of $405,000 and cash disbursements of $430,000. If the beginning cash balance is $35,000 and the desired ending balance is $21,000, how much must Raster borrow during the year?

If a company plans to sell 77,000 units of product but sells 132,000 units, the most appropriate comparison of the cost data associated with the sales can be done using a budget based on which of the following number of units?

Exhibit 18-6 The July manufacturing overhead budget of Kyoto Corporation, shown below, was constructed assuming an activity level of 48,000 direct labor hours: - Refer to Exhibit 18-6. If management prepared a flexible budget for July using 54,000 direct labor hours, what amount would this flexible budget show for indirect labor?

Operating budgets:

Kittitas Company provided the following budgeted information for the month: Assuming the budgeted information provided is for an activity level of 10,000 units, prepare a flexible budget for 8,000, 10,000 and 12,000 units.

Exhibit 18-9 Winthrop Merchandising is preparing its budget for 2011 (its first year of operation). Sales for the year are budgeted at $1,500,000; 20% are cash sales and 80% are credit sales. The company expects to collect 60% of all credit sales in 2011. Budgeted expenses are $1,200,000. These expenditures include $37,500 for depreciation and $745,500 for variable manufacturing overhead. - Refer to Exhibit 18-9. If the desired ending cash balance is $45,000, how much must Winthrop borrow during the year?

Which of the following accumulates all the costs for direct materials, direct labor and manufacturing overhead?

Flexible budgeting can be used with which of the following types of manufacturing costs?