Exam 8: Budgeting for Planning and Control

Flexible budgets do NOT provide

Alana Company manufactures books. Manufacturing a book takes 10 units of A1 and 1 unit of A2. Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively. Beginning inventory is 4,000 units of A1 and 30 units of A2. The ending inventory of A1 is planned to decrease 500 units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the next two months. How many units of A2 are expected in the raw material inventory at the end of the second month?

The budget shows the projected sales and prices.

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

The budgets that are comprehensive financial plans made up of various individual departmental and activity budgets are the:

When managers intentionally underestimate or overestimate revenues and costs it is called budgetary __________ .

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

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 static budget variance for total fixed overhead is

Silver Faces, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed: Activity Cost Formula Maintenance $15,000 + $4 per machine hour Machining $35,000 + $1 per machine hour Inspection $60,000 + $750 per batch Setups $1,000 per batch Purchasing $50,000 + $10 per purchase order 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?

Alana Company manufactures books. Manufacturing a book takes 10 units of A1 and 1 unit of A2. Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively. Beginning inventory is 4,000 units of A1 and 30 units of A2. The ending inventory of A1 is planned to decrease 500 units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the next two months. How many units of A1 does Alana Company expect to use in production during the second month?

The comprehensive financial plans made up of departmental and activity budgets are the __________ .

An ideal budgeting system is one that achieves goals and encourages managers to achieve goals ethically.

Firefly Manufacturing Company needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 20 percent of total sales each month. Historically, sales on account have been collected as follows: 50 percent in the month of the sale, 35 percent in the month after the sale, and the remaining 15 percent two months after the sale. Sales for the quarter are projected as follows: January, $60,000; February, $30,000; and March, $90,000. Accounts receivable on December 31 were $45,000. Firefly Manufacturing Company would expect to have an accounts receivable balance on March 31 of

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 direct materials cost in 2016 is

Activity-based budgets also focus on __________ processes.

Alana Company manufactures books. Manufacturing a book takes 10 units of A1 and 1 unit of A2. Scheduled production of books for the next two months is 1,000 and 1,200 units, respectively. Beginning inventory is 4,000 units of A1 and 30 units of A2. The ending inventory of A1 is planned to decrease 500 units in each of the next two months, and the A2 inventory is expected to increase 5 units in each of the next two months. Based on this information, the number of units of A1 that needs to be purchased by Alana during the first month is

Feedback is not important to managers as a measuring tool of their performance.

A flexible budget compares actual costs to budgeted costs.

Silver Faces, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed: Activity Cost Formula Maintenance $15,000 + $4 per machine hour Machining $35,000 + $1 per machine hour Inspection $60,000 + $750 per batch Setups $1,000 per batch Purchasing $50,000 + $10 per purchase order What is the total cost for production of 50,000 reflectors that will require 8,000 machine hours, 25 batches, and 15,000 purchase orders?

A budget is developed around one particular level of activity.