Exam 8: Budgeting for Planning and Control Key

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?

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

The first section of the master budget is the financial budget.

Laramie, Inc., has an operating environment with considerable uncertainty. The company prepares the budget for several different volume levels. Laramie had the following budgeted data: What are the total budgeted costs for 3,000 units?

An ideal budgeting system is one that achieves goals and encourages managers to achieve goals ethically.

Realistic budgets reflect

With an activity flexible budget, a budget variance is calculated

The condition that exists when managers deliberately underestimate revenues or overestimate costs to provide flexibility is called:

Figure 8-8 Rammazzotti, Inc., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Rammazzotti Inc., had the following budgeted data: The following actually occurred: Refer to Figure 8-8. The flexible budget for direct materials cost in 2014 is

Feedback is not important to managers as a measuring tool of their performance.

Figure 8-7 Macheski 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: Actual sales for June and budgeted sales for July, August, and September are given below: 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 fourth 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 Figure 8-7. What is the balance of the retained earnings account at the end of July?

The budgets that are comprehensive financial plans made up of various individual departmental and activity budgets are the:

Sales for October, November, and December are expected to be $200,000, $180,000, and $220,000, respectively, for the Gurumai 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: Required: Using the given information, prepare a cash budget for November.

The ideal budget system creates

Flexible budgets do NOT provide

Which of the following is NOT an advantage of budgeting?

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

Bienestar, Inc., has done a cost analysis for its production of vests. The following activities and cost drivers have been developed: Following are the actual costs of producing 75,000 vests: 5,000 machine hours; 10 batches; 20 purchase orders What is the budget variance for setups in an activity-based performance report?

Which of the following is NOT an advantage of participative budgeting?

The sales budget shows the expected sales quantity and price of each product or service.