Exam 8: Budgeting for Planning and Control

What do realistic budgets reflect?

What type of budget is developed around one particular level of activity?

If a static budget forecasted 100,000 units to be sold in the fiscal year and actual units sold amounted to 120,000,what assumption could be made under a flexible budget process?

Which of the following factors is a disadvantage of preparing operating budgets?

What is an operating budget?

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 static budget variance for direct materials?

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 maintenance in an activity-based performance report?

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 were the total actual costs?

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 inventory account at the end of July?

What is a continuous budget?

Rydingsward, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed: Activit Cost Formula Maintenance \ 15,000+\ 4 per machine hour Machiring \ 35,000+\ 1 per machine hour Inspection \ 60,000+\ 750 per batch Setups \ 1,000 per batch Purchasing \ 50,000+\ 10 per purchase order -Refer to the figure.What is the machining cost for production of 50,000 reflectors that will require 8,000 machine hours,25 batches,and 15,000 purchase orders?

When budgets are used to evaluate performance,which factor is insignificant with respect to behaviour behavioural effect?

Activity-based budgets compare costs for items based on which of the following activities?

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 was the static budget variance for rent?

Michael Corporation has the following sales forecasts for the first three months: Month sales January \ 36,000 February 24,000 March 40,000 Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following month. Accaunts recervable balance (January 1) \1 6,000 Cash balance (January 1) 12,000 Minimun cash balance needed 20,000 - Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following month. Accounts recevable balance (January 1) \1 6,000 Cash balance (January 1) 12,000 Minimum cash balance is $20,000.Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges).How much cash would be collected in March from sales?

Sasha Company has a sales budget for next month of $150,000.Cost of goods sold is expected to be 40 percent of sales.All goods are purchased in the month used and paid for in the month following purchase.The beginning inventory of merchandise is $5,000,and an ending inventory of $6,000 is desired.Beginning accounts payable is $38,000. What should the ending accounts payable be for Sasha Company?

Klamaty,Inc.,is looking for feedback on performance.The company compares the budget for the year with the actual costs. Klamaty,Inc.,had the following budgeted data: a.Prepare a performance report for all costs showing static budget variances. b.Prepare a performance report for all costs showing flexible budget variances.

A functional-based approach to budgeting compares costs for which of the following functional line items?

In a merchandising organization,the merchandise purchases budget replaces what budget from a manufacturing firm?

Which of the following is NOT a key feature of an ideal budgetary system?