Exam 8: Budgeting for Planning and Control

What is the definition of control?

Villafane, Inc., has done a cost analysis for its production of decals. The following activities and cost drivers have been developed: Design \ 5,000+\ 0.05 per machine hour Machining \ 25,000+\ 0.01 per machine hour Setups \ 35 per batch Purchasing \ 50+\ 15 per purchase order Following are the actual costs of producing 35,000 decals: 1,000 machine hours; 5 batches; 30 purchase orders Design \ 5,080 Machining ? Setups ? Purchasing \ 600 The following variances were given in the activity performance report: Design ? Machining \ 40 Setups \ 15 Purchasing ? -Refer to the figure.The following variances were given in the activity performance report: Design ? Machining \4 0F Setups \1 5F Purchasing ? What is the activity variance for purchasing?

The following forecasted sales pertain to Tigers, Inc. Month Sales September \ 400,000 October 500,000 November 300,000 December 200,000 Accounts receivable as of August 31 \7 0,000 Finished goods inventory as of August 31 8,000 units The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of next month’s sales. -Refer to the figure.How much is accounts receivable as of October 31?

Armati, Inc., is looking for feedback on companyperformance. The company compares the budget for the year with the actual costs. Data have been collected below: Armati, Inc., had the following budgeted data: Unit sales 26,000 Unit production 26,000 Budgeted fixed overhead: \ 800 Supervision 2,000 Depreciation 100 Rent 1800 Budgeted variable costs per unit: Direct materials \0 .15 Direct labour 0.20 Supplies 0.02 Indirect labour 0.05 Power 0.02 Actual unit sales 24,000 Actual unit production 28,000 Actual fixed overhead: Supervision \8 50 Depreciation 2,000 Rent 100 Actual variable costs: Direct materials \3 ,500 Direct labour 4,900 Supplies 530 Indirect labour 1,250 Power 470 -Refer to the figure.What is the flexible budget for direct materials cost?

Sales for October,November,and December are expected to be $200,000,$180,000,and $220,000,respectively,for Ripken Company.All sales are on account (terms 2/15,net 30 days)and are collected 50 percent in the month of sale and 50 percent in the following month.One-half of all sales discounts are taken on the average.Materials are purchased one month before being needed,and all purchases and expenses are paid for as incurred.Activities for the quarter are expected to be: Materials used \ 40,000 \ 36,000 \ 44,000 Salaries 70,000 68,000 72,000 Maintenance and repairs 18,000 18,000 18,000 Depreciation 36,000 36,000 36,000 Utilities and other 14,000 14,000 14,000 Dividends paid 0 10,000 0 Payment on bonds 8,000 8,000 8,000 Using the given information,prepare a cash budget for November.

Campbell, Inc., has an operating environment with considerable uncertainty. The company prepares the budget for several different volume levels. Campbell had the following budgeted data: Budgeted variable costs per unit Direct materials \7 .00 Direct labour 10.00 Supplies 1.00 Indirect labour 0.50 Power 0.05 Budgeted fixed overhead for 2011 Supervision \ 4,000 Depreciation 3,000 Rent 2000 -Refer to the figure.What are the budgeted costs for materials if 5,000 units were produced?

Steve manufactures large picture frames.Sales for July are expected to be 10,000 units of various sizes.Historically,the average frame requires five metres of framing,one square metre of glass,and one square metre of backing.Beginning inventory includes 7,000 metres of framing,1,500 square metres of glass,and 2,500 square metres of backing.Current prices are $0.90 per metre of framing,$4.50 per square metre of glass,and $1.50 per square metre of backing.Ending inventory should be 150 percent of beginning inventory.Purchases are paid for in the month acquired. a.Determine the quantity of framing,glass,and backing that is to be purchased during July. b.Determine the total amount of cash needed for July purchases.

Oriental Lamp Company manufactures lamps. The estimated number of lamp sales for the last three months of the current year is 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.Oriental Lamp expects to sell the lamps for $25 each.January of the following year sales is projected at 16,000 lamps. -Refer to the figure.How many lamps should be produced in November?

Which of the following is a moving 12-month budget?

Glenn, Inc. has done a cost analysis for its production of T-shirts. The following activities and cost drivers have been developed: Activity Cost Farmula Maintenance \ 11,000+\ 2 per machine how Machining \ 55,000+\ 3 per machine how 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 T-shirts: 5,000 machine hours; 10 batches; 20 purchase orders Maintenance \ 20,000 Machining 73,000 Inspection 73,000 Setups 18,000 Purchasing 82,000 -Refer to the figure.What is the budget variance for purchasing in an activity-based performance report?

Which budgets are concerned with the income-generating activities of a firm?

How is a budget variance calculated with an activity flexible budget?

Schrandt 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 Inventary 54,000 Retained earrings 94,000 Building 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 quarter 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. -Refer to the figure.What is the balance of the cash account at the end of July?

Kara Corporation has the following sales forecasts for the selected three-month period: Month sales July \2 4,000 August 14,000 September 16,000 Seventy percent of sales are collected in the month of the sale,and the remainder are collected in the following month. Accounts recervable balance (July 1) \2 0,000 Cash balance (July 1) 10,0000 Minimum cash balance is $10,000.Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges). -Refer to the figure.How much cash would be collected in September from sales?

Harald, Inc., has done a cost analysis for its production of bumper stickers. The following activities and cost drivers have been developed: Activit Cost Formula Maintenance \ 11,000+\ 0.11 per machine hour Machining \ 25,000+\ 0.50 per machine hour Setups \ 50 per batch Purchasing \ 200+\ 45 per purchase order -Refer to the figure.What is the budget variance for machining in an activity-based performance report?

What does goal congruence mean?

General Corporation manufactures boxes.The estimated number of boxes sold for the first three months is: 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 are projected at 4,500 boxes. What is the expected sales revenue for March?

Villafane, Inc., has done a cost analysis for its production of decals. The following activities and cost drivers have been developed: Design \ 5,000+\ 0.05 per machine hour Machining \ 25,000+\ 0.01 per machine hour Setups \ 35 per batch Purchasing \ 50+\ 15 per purchase order Following are the actual costs of producing 35,000 decals: 1,000 machine hours; 5 batches; 30 purchase orders Design \ 5,080 Machining ? Setups ? Purchasing \ 600 The following variances were given in the activity performance report: Design ? Machining \ 40 Setups \ 15 Purchasing ? -Refer to the figure.The following variances were given in the activity performance report: Design ? Machining \4 0F Setups \1 5F Purchasing ? What is the activity variance for design?

Which of the following is a disadvantage of participative budgeting?

The following forecasted sales pertain to Norah Company: Month Sales April \ 200,000 May 250,000 June 150,000 July 100,000 $\text { Finished goods inventory as of March } 31 \quad\quad\quad 4,000 \text { units }$ The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of the next month's sales. How many units are expected to be produced in April?