Exam 8: Budgeting for Planning and Control

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 setups?

Ben 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 production for Ben Company for April is

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 total fixed overhead is

Activity-based budgeting is most useful when

Kara Corporation has the following sales forecasts for the selected three-month period in 2011: Seventy percent of sales are collected in the month of the sale, and the remainder are collected in the following month. Minimum cash balance is $10,000.Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges). - How much cash would be collected in September from sales?

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 budgeted costs for materials if 5,000 units were produced?

When the reaction to a budget is negative, resulting in managerial behavior that is negative for the organization, the resulting behavior is known as

If the static budget variance for materials is $200 F and the budgeted cost for materials is $52,000, then the actual cost of materials is

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 retained earnings account at the end of July?

Figure 8-6 The following forecasted sales pertain to Tigers, Inc. Collection pattern: 60 percent in month of sale 40 percent in month following the sale The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20 percent of next month's sales. - Refer to Figure 8-6.How many dollars are expected to be collected in October?

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 supervision is

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 maintenance in an activity-based performance report?

General Corporation manufactures boxes.The estimated number of boxes sold for the first three months of 2011 are: 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 2011 sales is projected at 4,500 boxes. - What is the expected sales revenue for March?

Which of the following is NOT a component of the Cash Budget?

The city of Nevada had the following sales of water for the selected months of 2011: All sales are on credit.Historically, 50 percent is collected in the month of sale, 35 percent during the first month following the sale, and 15 percent in the second month following the sale. Cost of water averages 75 percent of sales.Water is purchased in the month of sale.All purchases are paid during the month following the purchase. Operating costs of $10,000 are paid each month. The March 1 cash balance is expected to be the minimum balance of $5,000. Money can be borrowed from a local bank in increments of $1,000.(Do not include interest charges in your budget.) Required: Prepare a cash budget for March, April, and May.

Realistic budgets reflect

A flexible-based budgeting system

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 total costs in an activity-based performance report?

Which of the following is NOT an advantage of budgeting?

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 activity variance for purchasing?