Exam 8: Budgeting for Planning and Control Key

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 total costs in an activity-based performance report?

Control can be defined as

Foremost Corporation manufactures boxes. The estimated number of boxes sold for the first three months of 2014 are as follows: Finished goods inventory at the end of December was 900 units. Ending finished goods inventory is equal to 20 percent of the next month's sales. General Corporation expects to sell the boxes for $5 each. April 2014 sales is projected at 4,500 boxes. How many boxes should be produced in January?

Activity-based budgets compare costs for items based on activities such as

Refer to Figure 8-5. How many dollars are expected to be collected in December?

High Life Corporation has the following sales budget for the last four months of 2014: Month Sales September $400,000 October 320,000 November 440,000 December 360,000 Historically, the following trend has been established regarding cash collection of sales: 65 percent in month of sale 25 percent in month following sale 8 percent in second month following sale 2 percent uncollectible The company allows a 2 percent cash discount for payments made by customers during the month of the sale. July and August sales were $400,000 and $240,000, respectively. Required: Prepare a schedule of budgeted cash collections from sales for September, October, and November.

Colorado Corporation has the following sales forecast for the next quarter: July, 4,000 units; August, 4,800 units; September, 5,600 units Sales totaled 3,200 units in June. The June ending finished goods inventory was 800 units. End-of-month finished goods inventory levels are planned to be equal to 30 percent of the next month's planned sales. Records showed that each unit is budgeted at 2 pounds of materials costing $3 per pound. Direct labor was budgeted at .5 direct labor hours per unit at a wage of $20 per hour. Budgeted variable overhead is $1.50 per direct labor hour. Fixed overhead is budgeted at $250,000 for the year, and 50,000 units are expected to be produced. After preparing a finished goods inventory budget for August, what is the total ending inventory cost?

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 total budgeted costs for 2014 were

A flexible-based budgeting system

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

The activity-based budget begins with output and then determines the resources necessary to create that output.

Activity-based budgeting is most useful when

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 rent in 2014 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 actual cost of setups?

Wheeling Company produces and sells bikes. It expects to sell 20,000 bikes in April 2014 and had 1,200 bikes in finished goods inventory at the end of March 2014. Wheeling Company would like to complete operations in April with at least 1,500 completed bikes in inventory. The bikes sell for $100 each. How many bikes would be produced in April 2014?

Figure 8-3 Roaming Vehicles Company manufactures buggies. Manufacturing a buggy takes 20 units of wood and 1 unit of steel. Scheduled production of buggies for the next two months is 500 and 600 units, respectively. Beginning inventory is 4,000 units of wood and 30 units of steel. The ending inventory of wood is planned to decrease 500 units in each of the next two months, and the steel inventory is expected to increase 5 units in each of the next two months. Refer to Figure 8-3. How many units of wood are expected to be used in production during the second month?

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 building and equipment (net) account at the end of July?

A budget that is developed around one particular level of activity is

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 5,000 units?

Volume variances examine differences between the __________ budget and the __________ budget.