Exam 8: Budgeting for Planning and Control

The budgets that are concerned with the income-generating activities of a firm are called the:

Volume variances examine differences between

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 steel are expected in the material inventory at the end of the second month?

The following forecasted sales pertain to Shankar Company: Finished goods inventory as of April 30 4,000 units The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 30 percent of the next month's sales. What is the budgeted beginning balance in units for finished goods inventory on July 1?

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: Unit sales for 2016 26,000 Unit production for 2016 26,000 Budgeted fixed overhead for 2016: Supervision $ 800 Depreciation 2,000 Rent 100 Budgeted variable costs per unit: Direct materials $0.15 Direct labor 0.20 Supplies 0.02 Indirect labor 0.05 Power 0.02 The following actually occurred: Actual unit sales for 2016 24,000 Actual unit production for 2016 28,000 Actual fixed overhead for 2016: Supervision $ 850 Depreciation 2,000 Rent 100 Actual variable costs: Direct materials $3,500 Direct labor 4,900 Supplies 530 Indirect labor 1,250 Power 470 -Refer to Figure 8-8. The flexible budget for rent in 2016 is

Cash disbursements and cash excess or deficiency are components of the __________ budget.

Figure 8-2 Asian Lamp Company manufactures lamps. The estimated number of lamp sales for the last three months of 2016 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 2016 sales is projected at 16,000 lamps. -Refer to Figure 8-2. In going from the sales budget to the production budget, adjustments to the sales budget need to be made for

Which of the following is a financial budget?

Once all the operating budgets have been completed, the net income can be estimated.

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. What is the number of units of wood that need to be purchased by Roaming Vehicles Company during the first month?

Wheeling Company produces and sells bikes. It expects to sell 20,000 bikes in April 2016 and had 1,200 bikes in finished goods inventory at the end of March 2016. 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 2016?

Participative budgeting has which of the following potential problems?

Which of the following is NOT a key feature of an ideal budgetary system?

Foremost Corporation manufactures boxes. The estimated number of boxes sold for the first three months of 2016 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 2016 sales is projected at 4,500 boxes. What is the expected sales revenue for March?

Mikhail Corporation has the following sales forecasts for the first three months of 2016: Sixty-five percent of sales are collected in the month of the sale and the remainder are collected in the following Month. Accounts receivable balance (January 1, 2016) $16,000 Cash balance (January 1, 2016) 12,000 Minimum cash balance is $20,000. Cash can be borrowed in $1,000 increments from the local bank (assume no interest charges). How much cash would be collected in March from sales?

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: Unit sales for 2016 26,000 Unit production for 2016 26,000 Budgeted fixed overhead for 2016: Supervision $ 800 Depreciation 2,000 Rent 100 Budgeted variable costs per unit: Direct materials $0.15 Direct labor 0.20 Supplies 0.02 Indirect labor 0.05 Power 0.02 The following actually occurred: Actual unit sales for 2016 24,000 Actual unit production for 2016 28,000 Actual fixed overhead for 2016: Supervision $ 850 Depreciation 2,000 Rent 100 Actual variable costs: Direct materials $3,500 Direct labor 4,900 Supplies 530 Indirect labor 1,250 Power 470 -Refer to Figure 8-8. The total flexible budgeted costs for 2016 are

Bienestar, Inc., has done a cost analysis for its production of vests. The following activities and cost drivers have been developed: Activity Cost Formula Maintenance $11,000 + $2 per machine hour Machining $55,000 + $3 per machine hour Inspection $70,000 + $500 per batch Setups $2,000 per batch Purchasing $80,000 + $150 per purchase order 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?

The city of Charleston had the following sales of water for the selected months of 2016: 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 April 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 April, May, and June

Missoula, Inc., is looking for feedback on performance. The company compares the budget for the year with the actual costs. Missoula, Inc., had the following budgeted data: Unit sales for 2016 10,000 Unit production for 2016 10,000 Budgeted fixed overhead for 2016: Supervision $18,000 Depreciation 20,000 Rent 10,000 Budgeted variable costs per unit: Direct materials $18.00 Direct labor 25.00 Supplies 0.20 Indirect labor 1.00 Power 0.10 The following actually occurred: Actual unit sales for 2016 11,000 Actual unit production for 2016 12,000 Actual fixed overhead for 2016: Supervision $17,850 Depreciation 20,000 Rent 10,000 Actual variable costs for 2016: Direct materials $214,000 Direct labor 320,000 Supplies 2,500 Indirect labor 10,000 Power 1,500 Required: a. Prepare a performance report for all costs showing static budget variances. b. Prepare a performance report for all costs showing flexible budget variances.

Which is NOT one of the four steps needed to build an activity-based budget?