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: $\begin{array}{l} \begin{array} { | l | r | r | } \hline & \text { Variable cost per unit sold } & \text { Monthly fixed cost } \\ \hline \text { Sales commissions } & \$ 0.70 & \\ \hline \text { Shipping } & 1.10 & \\ \hline \text { Advertising } & 0.20 & \$14,000 \\ \hline \text { Executive salaries } & &34,000 \\ \hline \begin{array} { l r } \text { Depreciation on office } \\ \text { equipment } \end{array} & & 11,000 \\ \hline \text { Other } & 0.25 & 19,000\\ \hline \end{array}\\\\\\ \text { All expenses other than depreciation are paid in cash in the month they are incurred. } \end{array}$ -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?

A) $40,000. B) $45,000. C) $56,250. D) $78,000. A) $40,000. B) $45,000. C) $56,250. D) $78,000.

Superior Industries' sales budget shows quarterly sales for the next year as follows: $\begin{array}{|l|r|} \hline \text { Quarter } & \text { Sales (Units) } \\ \hline \text { First } & 10,000 \\ \hline \text { Second } & 8,000 \\ \hline \text { Third } & 12,000 \\ \hline \text { Fourth } & 14,000 \\ \hline \end{array}$ Company policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next quarter's sales.What should be the budgeted production for the second quarter?

A) 7,200 units. B) 8,000 units. C) 8,400 units. D) 8,800 units. A) 7,200 units. B) 8,000 units. C) 8,400 units. D) 8,800 units.

Noel Enterprises has budgeted sales in units for the next five months as follows: $\begin{array} {| l | r |} \hline \text { January } & 6,800 \text { units } \\ \hline \text { February } & 5,400 \text { units } \\ \hline \text { March } & 7,200 \text { units } \\ \hline \text { April } & 4,600 \text { units } \\ \hline \text { May } & 3,800 \text { units } \\ \hline \end{array}$Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units. The inventory on December 31 contained 400 units. The company needs to prepare a production budget for the second quarter of the year. -What is the opening inventory in units for April?

A) 380 units. B) 460 units. C) 720 units. D) 680 units. A) 380 units. B) 460 units. C) 720 units. D) 680 units.

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: $\begin{array} { | l | r | } \hline \text { Variable overhead costs (total): } & \\ \hline \text { Packing supplies } & \$ 120,000 \\ \hline \text { Indirect labour } & \$ 180,000 \\ \hline \text { Fixed overhead costs (total): } &\\ \hline \text { Utilities } & \$ 100,000 \\ \hline \text { Insurance } & \$ 40,000 \\ \hline \text { Rent } & \$ 20,000\\\hline \end{array}$ -At an activity level of 180,000 direct labour hours,what amount would the flexible budget estimate for total budgeted fixed costs?

A) $100,000. B) $144,000. C) $150,000. D) $160,000. A) $100,000. B) $144,000. C) $150,000. D) $160,000.

The LaPann Company has obtained the following sales forecast data: $\begin{array} { | l | r | r | r | r | } \hline & \text { July } & \text { August } & \text { September } & \text { October } \\ \hline \text { Cash Sales } & \$ 80,000 & \$ 70,000 & \$ 50,000 & \$ 60,000 \\ \hline \text { Credit Sales } & 240,000 & 220,000 & 180,000 & 200,000 \\ \hline \end{array}$ The regular pattern of collection of credit sales is 20% in the month of sale, 70% in the month following the month of sale, and the remainder in the second month following the month of sale. There are no bad debts. -What are the budgeted cash receipts for October?

A) $188,000. B) $226,000. C) $248,000. D) $278,000. A) $188,000. B) $226,000. C) $248,000. D) $278,000.

The following is a summarized master budget that Winnipeg Company prepared for January: $\begin{array}{|l|r|r|} \hline \text { Sales } & & 9,000 \text { units } \\ \hline \text { Sales revenue } & \$ 450,000 \\ \hline \text { Less variable costs: } & & \\\hline \text { Manufacturing } & \$ 270,000 & \\ \hline \text { Selling and administrative } & \underline{18,000} & \underline{288,000} \\ \hline \text { Contribution } & & \$ 162,000 \\\hline \text { Less fixed costs: } & & \\ \hline \text { Manufacturing } & 72,000 & \\ \hline \text { Selling and administrative } & \underline{27,000} & \underline{99,000} \\ \hline \text { Operating income } & & \$ 63,000 \\ \hline \end{array}$ $\text { Actual results for January were as follows: }$ $\begin{array}{|l|r|} \hline \text { Units produced and sold } & 8,500 \text { units } \\ \hline \text { Selling price per unit } & \$ 55.00 \\ \hline \text { Variable costs per unit: } & \\ \hline \text { Manufacturing } & \$ 32.00 \\ \hline \text { Selling and administrative } & \$ 1.50 \\ \hline \text { Total fixed costs } & \$ 99,000\\\hline \end{array}$ -What was the master budget operating income for February?

A) $23,000. B) $25,000. C) $35,000. D) $33,000. A) $23,000. B) $25,000. C) $35,000. D) $33,000.

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: $\begin{array} { | l | r | } \hline \text { Variable overhead costs (total): } & \\ \hline \text { Packing supplies } & \$ 120,000 \\ \hline \text { Indirect labour } & \$ 180,000 \\ \hline \text { Fixed overhead costs (total): } &\\ \hline \text { Utilities } & \$ 100,000 \\ \hline \text { Insurance } & \$ 40,000 \\ \hline \text { Rent } & \$ 20,000\\\hline \end{array}$ -At an activity level of 180,000 direct labour hours,what amount would the flexible budget estimate for indirect labour cost?

A) $108,000. B) $144,000. C) $162,000. D) $180,000. A) $108,000. B) $144,000. C) $162,000. D) $180,000.

Friden Company has budgeted sales and production over the next quarter as follows: $\begin{array}{|l|rr|r|} \hline& \text { Apri } & \text { May } & \text { June } \\ \hline \text { Sales in Units } & 100,000 & 120,000 & ? \\ \hline \text { Production in Units } & 104,000 & 128,000 & 156,000 \\ \hline \end{array}$ On April 1,the company has 20,000 units of product on hand.A minimum of 20% of the next month's sales needs (in units)must be on hand at the end of each month.July sales are expected to be 140,000 units.What would be the budgeted sales for June (in units)?

A) 128,000 units. B) 160,000 units. C) 184,000 units. D) 188,000 units. A) 128,000 units. B) 160,000 units. C) 184,000 units. D) 188,000 units.

The following is a summarized master budget that Winnipeg Company prepared for January: $\begin{array}{|l|r|r|} \hline \text { Sales } & & 9,000 \text { units } \\ \hline \text { Sales revenue } & \$ 450,000 \\ \hline \text { Less variable costs: } & & \\\hline \text { Manufacturing } & \$ 270,000 & \\ \hline \text { Selling and administrative } & \underline{18,000} & \underline{288,000} \\ \hline \text { Contribution } & & \$ 162,000 \\\hline \text { Less fixed costs: } & & \\ \hline \text { Manufacturing } & 72,000 & \\ \hline \text { Selling and administrative } & \underline{27,000} & \underline{99,000} \\ \hline \text { Operating income } & & \$ 63,000 \\ \hline \end{array}$ $\text { Actual results for January were as follows: }$ $\begin{array}{|l|r|} \hline \text { Units produced and sold } & 8,500 \text { units } \\ \hline \text { Selling price per unit } & \$ 55.00 \\ \hline \text { Variable costs per unit: } & \\ \hline \text { Manufacturing } & \$ 32.00 \\ \hline \text { Selling and administrative } & \$ 1.50 \\ \hline \text { Total fixed costs } & \$ 99,000\\\hline \end{array}$ -What was the flexible budget operating income (loss)for Winnipeg Company for January?

A) $83,750. B) $54,000. C) $63,000. D) $59,500. A) $83,750. B) $54,000. C) $63,000. D) $59,500.

Exam 9: Budgeting

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: Static/Master Actual Budge Selling price, per unit \ 20.00 \ 21.00 Variable manufacturing cost, per unit 11.00 12.0 Variable marketing and administrative expenses, total 9,000 11,55 Fixed manufacturing cost, total 34,500 36,000 Fixed marketing and administrative expenses, total 40,000 44,000 Sales volume, in units 9,000 10,000 5\% of sales revenue 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): $Toyworld manufactures and sells a line of toys.The toys are primarily distributed through department stores.As president of Toyworld,you wanted to analyze Toyworld's profitability.Your capable assistant provided you with the following data: \begin{array}{|l|r|r|} \hline & \text { Static/Master Actual } & \text { Budge } \\ \hline \text { Selling price, per unit } & \$ 20.00 & \$ 21.00 \\ \hline \begin{array}{l} \text { Variable manufacturing cost, } \\ \text { per unit } \end{array} & 11.00 & 12.0 \\ \hline \begin{array}{l} \text { Variable marketing and } \\ \text { administrative expenses, } \\ \text { total } \end{array} & 9,000 & 11,55 \\ \hline \begin{array}{l} \text { Fixed manufacturing cost, } \\ \text { total } \end{array} &34,500 & 36,000 \\ \hline \begin{array}{l} \text { Fixed marketing and } \\ \text { administrative expenses, } \\ \text { total } \end{array} & 40,000 & 44,000 \\ \hline \text { Sales volume, in units } & 9,000 & 10,000 \\ \hline 5 \% \text { of sales revenue } & \\ \hline \end{array} Required: a)Your assistant has requested you to complete the Flexible Budget and Static/Master Budget columns of the analysis,reproduced below (She had to attend to an out-of-town emergency): b)Calculate the following variances: flexible budget variance,sales volume variance,and total static budget variance.$ b)Calculate the following variances: flexible budget variance,sales volume variance,and total static budget variance.

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Question 61

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: Variable cost per unit sold Monthly fixed cost Sales commissions \ 0.70 Shipping 1.10 Advertising 0.20 \1 4,000 Executive salaries 34,000 Depreciation on office equipment 11,000 Other 0.25 19,000 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?

(Multiple Choice)

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Question 62

The Bandeiras Company, a merchandising firm, has budgeted its activity for December according to the following information: I. Sales at $550,000, all for cash. II. Merchandise inventory on November 30 was $300,000. III. Budgeted depreciation for December is $35,000. IV. The cash balance at December 1 was $25,000. V. Selling and administrative expenses are budgeted at $60,000 for December and are paid in cash. VI. The planned merchandise inventory on December 31 is $270,000. VII. The invoice cost for merchandise purchases represents 75% of the sales price. All purchases are paid for in cash. -What are the budgeted cash disbursements for December?

(Multiple Choice)

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Question 63

Fougere Realtors,Inc.,specializes in home re-sales.It earns revenue from selling fees.Fougere Realtors' major costs are commissions for salespersons,listing agents,and listing companies.Its business has improved steadily over the last ten years.As usual,Chris Fougere,the managing partner of Fougere Realtors,Inc.,received a report summarizing the performance for the most recent year. Fougere Realtors,Inc. Performance Report For the year ended December 31,2007 Budget Actual Variance Number of home re- sales 180 202 22 Variable expenses Sales commissions \ 1,102,950 \ 1,205,183 \ 102,233 Automobile 36,000 39,560 3,560 Advertising 171,000 192,69 21,690 General overhead Total \ 1,966,050 \ 2,154,403 \ 188,353 Fixed expenses General overhead Total expenses \ 2,026,050 \ 2,216,703 \ 190,653 Required: a)Explain the major weakness of the performance report. b)Explain clearly why all the variances for the variable expenses are unfavourable (U). c)As a first step in helping Chris Fougere to evaluate cost/expense control in the organization,complete the following for the year ended December 31,2007,assuming the only cost driver is the number of home re-sales.(Note: Indicate any variance as either favourable (F)or unfavourable (U).)

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Question 64

Superior Industries' sales budget shows quarterly sales for the next year as follows: Quarter Sales (Units) First 10,000 Second 8,000 Third 12,000 Fourth 14,000 Company policy is to have a finished goods inventory at the end of each quarter equal to 20% of the next quarter's sales.What should be the budgeted production for the second quarter?

(Multiple Choice)

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Question 65

Noel Enterprises has budgeted sales in units for the next five months as follows: January 6,800 units February 5,400 units March 7,200 units April 4,600 units May 3,800 units Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units. The inventory on December 31 contained 400 units. The company needs to prepare a production budget for the second quarter of the year. -What is the opening inventory in units for April?

(Multiple Choice)

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Question 66

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: Variable overhead costs (total): Packing supplies \ 120,000 Indirect labour \ 180,000 Fixed overhead costs (total): Utilities \ 100,000 Insurance \ 40,000 Rent \ 20,000 -At an activity level of 180,000 direct labour hours,what amount would the flexible budget estimate for total budgeted fixed costs?

(Multiple Choice)

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Question 67

The LaPann Company has obtained the following sales forecast data: July August September October Cash Sales \ 80,000 \ 70,000 \ 50,000 \ 60,000 Credit Sales 240,000 220,000 180,000 200,000 The regular pattern of collection of credit sales is 20% in the month of sale, 70% in the month following the month of sale, and the remainder in the second month following the month of sale. There are no bad debts. -What are the budgeted cash receipts for October?

(Multiple Choice)

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Question 68

The following costs appear in Malgorzata Company's flexible budget at an activity level of 15,000 machine-hours: Indirect materials: $7,800 Factory rent: $18,000 What would be the flexible budget amounts at an activity level of 12,000 machine hours if indirect material is a variable cost and factory rent a fixed cost? Indirect materials Factory rent A) \ 7,800 \ 14,400 B) 7,800 18,000 C) 6,240 14,400 D) 6,240 18,000

(Multiple Choice)

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Question 69

The beginning cash balance is not included on the cash budget since the cash budget deals exclusively with cash flows rather than with balance sheet amounts.

(True/False)

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Question 70

The usual starting point in budgeting is to make a forecast of cash receipts and cash disbursements.

(True/False)

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Question 71

Budgeting aids planning and controlling the level of both fixed costs and variable costs. Required: Explain the differences,if any,between the planning and controlling of fixed costs and variable costs.

(Essay)

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Question 72

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

(Essay)

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Question 73

The following is a summarized master budget that Winnipeg Company prepared for January: Sales 9,000 units Sales revenue \ 450,000 Less variable costs: Manufacturing \ 270,000 Selling and administrative Contribution \ 162,000 Less fixed costs: Manufacturing 72,000 Selling and administrative Operating income \ 63,000 $\text { Actual results for January were as follows: }$ Units produced and sold 8,500 units Selling price per unit \ 55.00 Variable costs per unit: Manufacturing \ 32.00 Selling and administrative \ 1.50 Total fixed costs \ 99,000 -What was the master budget operating income for February?

(Multiple Choice)

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Question 74

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: Variable overhead costs (total): Packing supplies \ 120,000 Indirect labour \ 180,000 Fixed overhead costs (total): Utilities \ 100,000 Insurance \ 40,000 Rent \ 20,000 -At an activity level of 180,000 direct labour hours,what amount would the flexible budget estimate for indirect labour cost?

(Multiple Choice)

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Question 75

The following overhead data are for a department in a large company. Activity Costs Incurred Static Budget Activity Level (in units) 480 480 Variable costs: Supplies \ 16,734 \ 16,944 Electricity \ 1,02 \ 1,056 Fixed costs: Supervision \ 8,570 \ 8,600 Depreciation \ 5,780 \ 5,800 Required: Prepare a report that would be useful in assessing how well costs were controlled in this department.

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Question 76

The Bandeiras Company, a merchandising firm, has budgeted its activity for December according to the following information: I. Sales at $550,000, all for cash. II. Merchandise inventory on November 30 was $300,000. III. Budgeted depreciation for December is $35,000. IV. The cash balance at December 1 was $25,000. V. Selling and administrative expenses are budgeted at $60,000 for December and are paid in cash. VI. The planned merchandise inventory on December 31 is $270,000. VII. The invoice cost for merchandise purchases represents 75% of the sales price. All purchases are paid for in cash. -What is the budgeted net income for December?

(Multiple Choice)

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Question 77

Friden Company has budgeted sales and production over the next quarter as follows: Apri May June Sales in Units 100,000 120,000 ? Production in Units 104,000 128,000 156,000 On April 1,the company has 20,000 units of product on hand.A minimum of 20% of the next month's sales needs (in units)must be on hand at the end of each month.July sales are expected to be 140,000 units.What would be the budgeted sales for June (in units)?

(Multiple Choice)

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Question 78

The following is a summarized master budget that Winnipeg Company prepared for January: Sales 9,000 units Sales revenue \ 450,000 Less variable costs: Manufacturing \ 270,000 Selling and administrative Contribution \ 162,000 Less fixed costs: Manufacturing 72,000 Selling and administrative Operating income \ 63,000 $\text { Actual results for January were as follows: }$ Units produced and sold 8,500 units Selling price per unit \ 55.00 Variable costs per unit: Manufacturing \ 32.00 Selling and administrative \ 1.50 Total fixed costs \ 99,000 -What was the flexible budget operating income (loss)for Winnipeg Company for January?

(Multiple Choice)

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Question 79

When choosing an activity measure for a flexible budget,it is best to choose an activity that is measured in dollars.

(True/False)

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Question 80

Showing 61 - 80 of 137

The beginning cash balance is not included on the cash budget since the cash budget deals exclusively with cash flows rather than with balance sheet amounts.

The usual starting point in budgeting is to make a forecast of cash receipts and cash disbursements.

Budgeting aids planning and controlling the level of both fixed costs and variable costs. Required: Explain the differences,if any,between the planning and controlling of fixed costs and variable costs.

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

When choosing an activity measure for a flexible budget,it is best to choose an activity that is measured in dollars.

Managerial Accounting and the Business Environment

Cost Terms,concepts,and Classifications

Cost Behaviour: Analysis and Use

Cost-Volume-Profit Relationships

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: A Tool to Aid Decision Making

Variable Costing: A Tool for Management

Standard Costs and Overhead Analysis

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis

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