Exam 8: Budgeting for Planning and Control

What is the formula used to compute the units to be produced?

What is the term for a budget that is developed around one particular level of activity?

What differences do volume variances examine?

What is the term for the quantitative expressions of plans stated in physical or financial terms,or both?

Canceco Company produces and sells pillows. It expects to sell 10,000 pillows in the current year and had 1,000 pillows in finished goods inventory at the end of the previous year. Canceco would like to complete operations in the current year with at least 1,250 completed pillows in inventory. There is no ending work-in-process inventory. The pillows sell for $5 each. -Refer to the figure.How many pillows would be produced in the current year?

Who is responsible for directing and coordinating the overall budgeting process?

Who has the responsibility to review the budget,provide policy guidelines and budgetary goals,resolve differences that may arise as the budget is prepared,approve the final budget,and monitor the actual performance of the organization as the year unfolds?

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 are the total flexible budgeted costs?

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 total budgeted costs for 3,000 units?

The following forecasted sales pertain to Reject City: Month Sales June \ 160,000 July 200,000 August 120,000 September 80,000 Finshed goods inventory as of May 31 $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ 6,000 units Reject City has a selling price of $5 per unit and expects to maintain ending inventories equal to 25 percent of next month's sales. How many units are expected to be produced in June?

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

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.Following are the actual costs of producing 85,000 stickers: 5,000 machine hours; 10 batches; 20 purchase orders Maintenance \ 11,500 Machining 28,300 Setups 550 Purchasing 1,000 What is the budgeted cost per sticker (rounded to three decimal places)?

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 total fixed overhead?

This problem can be broken into components. a.Given the following information,prepare a quarterly sales budget and production budget,in units: i.Last year sales = 500,000 units.The organization is planning a 10 percent increase in sales for the year 2012.The company is a retail organization that sees higher sales due to the holidays in the fourth quarter.40 percent of the sales occur in the fourth quarter and the remaining units are sold equally over the other three quarters. ii.The beginning inventory for the year amounts to 20,000 units.The estimated sales for the first quarter of 2013 amount to 115,000 units.The company requires an ending inventory of 20 percent of the next quarters' sales. b.Given the schedules above,if the projected sales price is $50 per unit,what is the expected revenue per quarter? Also,given the following information,what are the estimated costs of production? Materials: Each unit requires 1 metre of fabric and 1/2 kilogram of fibrefill stuffing.Fabric can be purchased at $9.00 per metre and fibrefill sells for $4.00 per kg.Inventories of materials are listed as follows: Qtr1 Qtr2 Qtr3 Qtr4 Fabric/m 17,000 20,000 18,000 19,000 Fibrefill/kg 5,000 6,700 8,000 8,500 i. Beginning inventory of fabric is 16,000 metres and $6,000 \mathrm{~kg}$ of fibrefill. ii. It takes an estimated time of 25 hours to produce one unit of output. The labour cost per hour is $\$ 25$ per hour and the taxes and benefit load is 25 percent.

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 budgeted maintenance cost if there was production of 50,000 reflectors that will require 8,000 machine hours,25 batches,and 15,000 purchase orders?

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 variance for total cost?

Glock,Inc.,is looking for feedback on performance.The company compares the budget for the year with the actual costs. Glock had the following budgeted data: Budgeted variable costs per unit: Direct materials \ 11.00 Direct labour 15.00 Supplies 0.80 Indirect labour 1.00 Power 0.10 Budgeted fixed overhead for 2011: Supervision \ 9,000 Depreciation 13,000 Rent 12,000 Prepare a flexible budget for production costs for the following range of activity: 2,500 units; 4,000 units; 6,000 units.

What type of budget is most appropriate for control purposes?

Which of the following is the first component of the master budget?

The static budget variance for materials is $200 F and the budgeted cost for materials is $52,000.If the budgeted volume is 13,000 and the actual volume is 13,500,what is the flexible budget variance?