Exam 8: Budgeting for Planning and Control

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

Figure 8-8 Armati, 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: Armati, Inc., had the following budgeted data: The following actually occurred: -Refer to Figure 8-8.The flexible budget variance for indirect labor for 2011 is

Which of the following is a financial budget?

Figure 8-4 CD Productions needs to know its anticipated cash inflows for the next quarter by month.Cash sales are 10 percent of total sales each month.Historically, sales on account have been collected as follows: 60 percent in the month of sale, 30 percent in the month after the sale, and the remaining 10 percent two months after the sale.Sales for the quarter are projected as follows: April, $120,000; May, $100,000; and June, $80,000.Accounts receivable on March 31 were $60,000. - Refer to Figure 8-4.CD Productions would expect to have an accounts receivable balance on June 30 of

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:

Figure 8-7 Schrandt 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 accounts receivable at the end of July?

Participative budgeting has which of the following potential problems?

The following forecasted sales pertain to Reject City: Reject City has a selling price of $5 per unit and expects to maintain ending inventories equal to 25 percent of next month's sales. What is the budgeted beginning balance in units for finished goods inventory on August 1?

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

Judy'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. - How much merchandise inventory will Judy's need to purchase next month?

Figure 8-7 Schrandt 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 accounts payable at the end of July?

Villafane, 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 35,000 decals: 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?

Sales for October, November, and December are expected to be $200,000, $180,000, and $220,000, respectively, for Ripken 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.

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 total budgeted costs for 3,000 units?

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 budget variance for setups in an activity-based performance report?

Figure 8-8 Armati, 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: Armati, Inc., had the following budgeted data: The following actually occurred: - Refer to Figure 8-8.The static budget variance for rent is

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

_______________ exists when managers deliberately underestimate revenues or overestimate costs to provide flexibility.

The _______________ has the responsibility to review the budget, provide policy guidelines and budgetary goals, resolve differences that may arise as the budget is prepared, approve the final budget, and monitor the actual performance of the organization as the year unfolds.

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?