Exam 10: Using Budgets for Planning and Coordination

Talladega Industries, Inc., (TII) developed the following standard costs for direct material and direct labor for one of their major products, the 10-gallon plastic container. During August, TII produced and sold 10,000 containers using 980 pounds of direct materials at an average cost per pound of $32 and 500 direct labor hours at an average wage of $15.25 per hour. -August's direct material price variance was:

A budget should/can do all of the following EXCEPT that it:

The actual information pertains to the month of June. As part of the budgeting process, Petrified Products Company developed the following master budget for June. The manager, Pete, is in the process of preparing the flexible budget and understanding the results. -The PRIMARY reason for low operating profits in June was:

Aggregate planning:

A flexible budget variance is $1,500 favorable for unit-related costs.This indicates that:

Although planners update or revise the budgets during the period,________ is typically performed once per year.

The following information for the second quarter of 2011 pertains to Huffington Company: •Cash is collected from customers in the following manner: •40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month. •Labor costs are 20% of sales. Other operating costs are $45,000 per month (including $12,000 of depreciation). Both of these are paid in the month incurred. •The cash balance on June 1 is $6,000. A minimum cash balance of $4,500 is required at the end of the month. Money can be borrowed in multiples of $3,000. •No loans outstanding on June 1. -How much cash will be paid to suppliers in June?

The following information pertains to the October operating budget for Flockhart Corporation. ∙ Budgeted sales for October $100,000 and November $200,000. ∙ Collections for sales are 60% in the month of sale and 40% the next month. ∙ Gross margin is 30% of sales. ∙ Administrative costs are $10,000 each month. ∙ Beginning accounts receivable (October 1)$20,000. ∙ Beginning inventory (October 1)$14,000. ∙ Beginning accounts payable (October 1)$60,000. (All from inventory purchases.) ∙ Purchases are paid in full the following month. ∙ Desired ending inventory is 20% of next month's cost of goods sold (COGS). ∙ No loans are outstanding on October 1 -For October,budgeted cash payments for purchases are:

The following information for the second quarter of 2011 pertains to Huffington Company: •Cash is collected from customers in the following manner: •40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month. •Labor costs are 20% of sales. Other operating costs are $45,000 per month (including $12,000 of depreciation). Both of these are paid in the month incurred. •The cash balance on June 1 is $6,000. A minimum cash balance of $4,500 is required at the end of the month. Money can be borrowed in multiples of $3,000. •No loans outstanding on June 1. -What is the ending cash balance for June?

Abita Manufacturing has prepared the following flexible budget for October and it is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance. -The MOST LIKELY explanation of the above variances for Material A is that:

Operating budgets include all of the following EXCEPT:

Budgets can be prepared for any time period,but are usually developed for one year.

The break-even point in units decreases if the:

The best label for the formula [(AP)× (AQ)- (SP)× (AQ)] is the:

If amounts in the sales forecast change,amounts in the production budgets will also change.

Budgeting provides all of the following EXCEPT:

The following information pertains to the October operating budget for Flockhart Corporation. ∙ Budgeted sales for October $100,000 and November $200,000. ∙ Collections for sales are 60% in the month of sale and 40% the next month. ∙ Gross margin is 30% of sales. ∙ Administrative costs are $10,000 each month. ∙ Beginning accounts receivable (October 1)$20,000. ∙ Beginning inventory (October 1)$14,000. ∙ Beginning accounts payable (October 1)$60,000. (All from inventory purchases.) ∙ Purchases are paid in full the following month. ∙ Desired ending inventory is 20% of next month's cost of goods sold (COGS). ∙ No loans are outstanding on October 1 -At the end of October,budgeted accounts receivable is:

Talladega Industries, Inc., (TII) developed the following standard costs for direct material and direct labor for one of their major products, the 10-gallon plastic container. During August, TII produced and sold 10,000 containers using 980 pounds of direct materials at an average cost per pound of $32 and 500 direct labor hours at an average wage of $15.25 per hour. -August's direct material quantity variance was:

A favorable price variance for direct materials indicates that:

The financing section of the expected cash flow statement includes: