Exam 9: Budgeting

In a performance report,actual costs should be compared to budgeted costs at the original budgeted activity level.

Alaska Company expressed the total expenses (Y) component of its master budget for February with the cost formula Y = $100,000 + $40*X, where X represents the expected number of units of its only product to be manufactured and sold. The budgeted average selling price per unit was $65 for budgeted sales volume 5,000 units. Reported actual results for February were as follows: -What was the sales volume variance for February?

Capelli Hospital bases its budgets on patient-visits. The hospital's static budget for August appears below: -What should be the total fixed overhead cost at an activity level of 9,600 patient-visits per month?

Mandalay Hotel bases its budgets on guest-days. The hotel's static budget for August appears below: -The total overhead cost at an activity level of 5,200 guest-days per month should be:

Information on the actual sales and inventory purchases of the Law Company for the first quarter follow: Collections from Law Company's customers are normally 60% in the month of sale, 30% in the month following sale, and 8% in the second month following sale. The balance is uncollectible. Law Company takes full advantage of the 3% discount allowed on purchases paid for by the end of the following month. The company expects sales in April of $150,000 and inventory purchases of $100,000. Operating expenses for the month of April are expected to be $38,000, of which $15,000 is salaries and $8,000 is depreciation. The remaining operating expenses are variable with respect to the amount of sales in dollars. Those operating expenses requiring a cash outlay are paid for during the month incurred. Law Company's cash balance on March 1 was $43,000, and on April 1 was $35,000 -What would be the expected cash balance on April 30?

Modesto Company produces and sells Product AlphaB.To guard against stockouts,the company requires that 20% of the next month's sales be on hand at the end of each month.Budgeted sales of Product AlphaB over the next four months are: What would be the budgeted production for August?

Capelli Hospital bases its budgets on patient-visits. The hospital's static budget for August appears below: -What should be the total variable overhead cost at an activity level of 9,300 patient-visits per month?

In a not-for-profit entity a budget can be prepared either on an expenditure basis or on a program basis.Discuss.

A cash budget by quarters for the Carney Company is given below (note that some data are missing). Missing data amounts have been keyed with either question marks or lowercase letters (a, b, c, etc.); these lowercase letters will be referred to in the questions that follow. (It may be necessary to calculate a value for items where a question mark appears.) The company requires a minimum cash balance of at least $10,000 to start a quarter. All data are in thousands of dollars. -What are the total disbursements during the third quarter (item f),in thousands of dollars?

What is the budget or schedule that provides necessary input data for the direct labour budget?

Toyworld manufactures and sells a line of toys.The toys are primarily distributed through department stores.As president of Toyworld,you wanted to analyze Toyworld's profitability.Your capable assistant provided you with the following data: Required: a) Your assistant has requested you to complete the "Flexible Budget" and "Static/Master Budget" columns of the analysis, reproduced below (She had to attend to an out-of-town emergency): b) Calculate the following variances: flexible budget variance, sales volume variance, and total static budget variance.

Which of the following is NOT a benefit of budgeting?

Justin's Plant Store, a retailer, started operations on January 1. On that date, the only assets were $16,000 in cash and $3,500 in merchandise inventory. For purposes of budget preparation, assume that the company's cost of goods sold is 60% of sales. Expected sales for the first four months appear below: The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next month's merchandise sales (stated at cost). All purchases of merchandise inventory must be paid in the month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of the credit sales should be collected in the month following the month of sale, with the balance collected in the following month. Variable operating expenses should be 10% of sales, and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable operating expenses are made during the month the expenses are incurred. -In a budgeted income statement for the month of February,what would be the net income?

ABC Company has a cash balance of $9,000 on April 1.The company must maintain a minimum cash balance of $6,000.During April,expected cash receipts are $45,000.Expected cash disbursements during the month total $52,000.What amount will the company need to borrow during April?

Isadore Hospital bases its budgets on patient-visits. The hospital's static budget for July appears below: -What is the variance for laundry costs in the flexible budget performance report for the month?

Pollitt Potato Packers has a flexible budget for manufacturing overhead that is based on direct labour hours. The following overhead costs appear on the flexible budget at the 200,000-hour level of activity: -What amount would the flexible budget estimate for total variable overhead cost per direct labour hour?

Which of the following variances in a comprehensive performance report using the flexible budget concept is the most appropriate for measuring efficiency of operations?

The Stacy Company makes and sells a single product: Product R.Budgeted sales for April are $300,000.Gross margin is budgeted at 30% of sales dollars.If the net income for April is budgeted at $40,000,what are the budgeted selling and administrative expenses?

The International Company makes and sells only one product, Product SW. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available: All expenses other than depreciation are paid in cash in the month they are incurred. -If the company has budgeted to sell 20,000 units of Product SW in October,what will be the total budgeted variable selling and administrative expenses for October?

Zero-based budgeting requires managers to justify all costs of programs as if these programs were being proposed for the first time.