Exam 8: Budgeting for Planning and Control

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 foot 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:

Compare and contrast static budgets, flexible budgets, and activity-based budgets.

Figure 8-3 Bug 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.What is the number of units of wood that need to be purchased by Bug Company during the first month?

The ideal budget system creates

Johnson Company has the following projected account balances for September 30, 2011: Required:

Which of the following statement is correct regarding a continuous budget?

Activity-based budgets

Dodge Corporation is in the process of preparing its budget for next year.Cost of goods sold has been estimated at 60 percent of sales.Merchandise purchases are to be made during the month preceding the month of the sales.Dodge pays 60 percent in the month of purchase, and 40 percent in the month following.Wages are estimated at 20 percent of sales and are paid during the month of sale.Other operating costs amounting to 10 percent of sales are to be paid in the month following the sale.The accounts payable balance on June 30 was $48,000. Required: Prepare a schedule of cash disbursements for July, August, and September.

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 total cost for 2011 is

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 5,000 units?

Figure 8-2 Oriental Lamp Company manufactures lamps.The estimated number of lamp sales for the last three months of 2011 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.Oriental Lamp expects to sell the lamps for $25 each.January 2011 sales is projected at 16,000 lamps. - Refer to Figure 8-2.What is the expected sales revenue for December?

_______________ is the process of setting standards, receiving feedback on actual performance, and taking corrective action whenever actual performance deviates significantly from planned performance.

The budget committee

Define budgeting and control.How are budgets used in planning? How are budgets used to control? What are some of the reasons for budgeting?

Riemay, Inc., has done a cost analysis for its production of sports cards.The following activities and cost drivers have been developed: Following are the actual costs of producing 35,000 cards: 60 labor hours; 500 machine hours; 5 batches; 30 purchase orders The following variances were given in the activity performance report: Required: Find the missing values. Prepare an activity-based performance report in good form.

Which of the following is NOT a responsibility of the budget committee?

Denver 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?

Analysis that fosters management by exception is

_______________ are the quantitative expressions of plans stated in either physical or financial terms or both.

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