Exam 8: Budgeting for Planning and Control Key

If production was budgeted at 400 units and the actual production was 420 units, what would be the static budget variance for materials if the actual cost of materials was $4,150 and the budgeted cost per unit is $10?

Activity-based budgets

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

When budgets are used for control,

Figure 8-2 Asian Lamp Company manufactures lamps. The estimated number of lamp sales for the last three months of 2014 are as follows: Finished goods inventory at the end of September was 3,000 units. Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales. Asian Lamp expects to sell the lamps for $25 each. January 2014 sales is projected at 16,000 lamps. Refer to Figure 8-2.What is the expected sales revenue for December?

Activity-based budgeting recognizes interdependencies among departments.

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 maintenance in an activity-based performance report?

Firefly Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 20 percent of total sales each month. Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 35 percent in the month after the sale, and the remaining 15 percent two months after the sale. Sales for the quarter are projected as follows: January, $60,000; February, $30,000; and March, $90,000. Accounts receivable on December 31 were $45,000. The expected cash collections of Firefly Manufacturing Company for March are

Villanova, Inc., has done a cost analysis for its production of rubber stamps. The following activities and cost drivers have been developed: Following are the actual costs of producing 35,000 rubber stamps: 1,000 machine hours; 5 batches; 30 purchase orders The following variances were given in the activity performance report: What is the actual cost of machining?

The sales forecast is the basis for the sales budget.

Olga's 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. The cost of goods sold for next month is expected to be

Modern Goods Corporation has the following budgeted sales for the selected six-month period: There were 7,500 units of finished goods in inventory at the beginning of January. Plans are to have an inventory of finished product equal to 20 percent of the unit sales for the next month. Three pounds of materials are required for each unit produced. Each pound of material costs $20. Inventory levels for materials equal 30 percent of the needs for the next month. Materials inventory on January 1 was 5,000 pounds. Required:

Molina Company has the following sales forecast for the next quarter: April, 20,000 units; May, 24,000 units; June, 28,000 units. Sales totaled 16,000 units in March. The March finished goods inventory was 4,000 units. End-of-month finished goods inventory levels are planned to be equal to 20 percent of the next month's planned sales. The planned ending inventory of finished goods for May is

Villanova, Inc., has done a cost analysis for its production of rubber stamps. The following activities and cost drivers have been developed: Following are the actual costs of producing 35,000 rubber stamps: 1,000 machine hours; 5 batches; 30 purchase orders The following variances were given in the activity performance report: What is the activity variance for purchasing?

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

Moriah Manufacturing Company expects to incur the following per unit costs for 1,000 units of production: What is the total amount of overhead included in the overhead 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 budgeted costs for rent if 5,000 units were produced?

The budget committee

Incentives are the means used to encourage managers to achieve goals.

Operating expense budgets include the marketing expense budget and the __________ expense budget.