Exam 9: The Budgeting Process

Cal Company uses the following formula for annual overhead: £360,000 + £1.20 for each machine hour used. For the upcoming month, Cal plans to manufacture 6,000 units. Each unit requires 2 machine hours. Cal's budgeted overhead for the month is

In the production budget, the total units to be produced is computed as

Rydingsward, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed: What is the budgeted purchasing cost if there was production of 50,000 reflectors that will require 8,000 machine hours, 25 batches, and 15,000 purchase orders?

Which is NOT one of the four steps needed to build an activity-based budget?

Describe an activity-based budget.

If the company's cash budget for the month shows a significant amount of cash in excess of their needs, the company should consider doing which of the following?

Rydingsward, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed: What is the budget for maintenance if 20,000 reflectors were made that required 3,500 machine hours, 12 batches, and 5,000 purchase orders?

Rydingsward, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed: 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?

Bronco Company sells a product for £10. Budgeted sales for the first quarter of the current year are as follows: The company wants to maintain an inventory of finished units equal to 30 percent of the following month's sales, and 10,000 units are on hand at the beginning of the year. Each unit requires two pounds of raw material costing £1 per pound. The company maintains a raw materials inventory equal to 20 percent of the following month's production needs. Budgeted production in units for February would be

Which of the following is an example of a discretionary fixed expense?

Continuous budgeting requires managers to

Figure 2 Budgeted sales for the second quarter of the current year are as follows: The company collects 20 percent in the month of sale, 70 percent in the first month following the sale, and 10 percent in the second month following the sale. -Refer to Figure 2. April sales to be collected in May are

Rydingsward, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed: Required: Prepare an activity-based budget for the following:

Steve manufactures picture frames. Sales for July are expected to be 10,000 units of various sizes. Historically, the average frame requires five foot of framing, one square foot of glass, and one square feet of backing. Beginning inventory includes 7,000 feet of framing, 1,500 square feet of glass, and 2,500 square feet of backing. Current prices are £0.90 per foot of framing, £4.50 per square foot of glass, and £1.50 per square foot of backing. Ending inventory should be 150 percent of beginning inventory. Purchases are paid for in the month acquired. Required: 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.

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: What are the budgeted costs for materials if 5,000 units were produced?

Jiggy Company plans to sell 33,000 units during the month of May. Beginning inventory was 1,200 units. The company plans to have 2,500 units on hand at the end of the month. Each unit requires 3 pounds of raw materials. If raw material inventory on May 1 is 4,400 pounds and desired ending inventory is 2,200 pounds, how many pounds of raw materials must be purchased during May?

Harald, Inc., has done a cost analysis for its production of bumper stickers. The following activities and cost drivers have been developed: Following are the actual costs of producing 85,000 stickers: 5,000 machine hours; 10 batches; 20 purchase orders What is the actual cost per sticker? (Round to three decimal places.)

Jiggy Company plans to sell 33,000 units during the month of May. The company plans to have 2,500 units on hand at the end of the month. If 1,200 units are on hand on May 1, how many units must be produced during May?

Figure 1 Projected sales for Sommers, Inc., for next year and beginning and ending inventory data are as follows: The selling price is £40 per unit. Each unit requires four pounds of material which costs £6 per pound. The beginning inventory of raw materials is 12,000 pounds. The company wants to have 3,000 pounds of material in inventory at the end of the year. -Refer to Figure 1. According to Sommers' production budget, how many units should be produced?

A budget based on additions and subtractions from last year's budget is