$12,000 Favourable Nil $8,000 Favourable $6,000 Unfavourable

12/16/21, 1:33 PM Assignment Print View

1.
XYZ Inc. sells a single product for a budgeted selling price of $20 per unit. Budgeted direct
materials costs were $5 per unit, while budgeted direct labour and variable overhead costs were
$3 and $2 respectively. Budgeted fixed overhead costs amount $25,000 per month. The company
has a practical production capacity of 10,000 units per month. Budgeted variable selling costs are
$2 per unit. Budgeted fixed selling costs are $2,000 per month. During the company's first month
of operations, the company produced 10,000 units and sold 6,000 units at an average selling price
of $18 per unit. Fixed costs were as budgeted. Direct material costs were $1 less per unit then
budgeted. All other variable costs were as budgeted. The company's flexible budget variance was:
 $12,000 favourable
 Nil
 $6,000 unfavourable
6,000 × ($20 − $18 − $1) = $6,000 unfavourable.

2.

The effect of responsibility accounting is to personalize the accounting system.
 True
 False
https://ezto.mheducation.com/hm.tpx 1/72

3.
Which of the following best describes the direct materials purchase budget?
 It is the beginning point in the budget process.
 It must provide for the desired ending inventory as well as for production.
 It is accompanied by a schedule of cash collections.
 It is completed after the cash budget.

4.
The Waverly Company has budgeted sales for next year as follows:

Quarter First Second Third Fourth
Sales in Units 12,000 14,000 18,000 16,000
The ending inventory of finished goods for each quarter should equal 25% of the next quarter's
budgeted sales in units. The finished goods inventory at the start of the year is 3,000 units. What
should be the scheduled production for the third quarter?
 13,500 units.
 17,500 units.
 18,500 units.
 22,000 units.
18,000 + 16,000 * .25 - 18,000 * .25 = 17,500 units.

5.
Mongelli Family Inn is a bed and breakfast establishment in a converted 100-year-old mansion. The
Inn's guests appreciate its gourmet breakfasts and individually decorated rooms. The Inn's
overhead budget for the most recent month appears below:

Activity level 90 guests
Variable overhead costs:
Supplies $234
Laundry $315
Fixed overhead costs:
Utilities $220
Salaries and wages $4,290
Depreciation $2,680
Total overhead cost $7,739
The Inn's variable overhead costs are driven by the number of guests.
Assuming that the activity levels of 90 guests and 99 guests are within the same relevant range
and rounding to the nearest dollar, what would be the total budgeted overhead cost for a month if
the activity level is 99 guests? (Round your final answers to nearest whole dollar).
 $7,794
 $61,541
 $8,513
 $7,739
($234 + $315)/90 = $6.10. Total = 99 * $6.10 + $220 + $4,290 + $2,680 = $7,794.

6.
XLM Inc. sells a single product for a budgeted selling price of $21 per unit. Budgeted direct
of $18 per unit. Fixed and variable costs were as budgeted. The company's static budget variance
was:
 $44,000 favourable.
 $44,000 unfavourable.
 $45,000 unfavourable.
Budgeted Contribution Margin: 10,000 × ($21 − $5 − $3 − $2 − $2) = $90,000.

Actual Contribution Margin: 7,500 × ($18 − $5 − $3 − $2 − $2) = $45,000.
Variance = $90,000 − $45,000 = $45,000 unfavourable.
Fixed cost can be ignored here since budgeted and actual fixed costs are the same.

7.
 Nil
6,000 × ($20 − $18 − $1) = $6,000 unfavourable.

8.
What is a continuous (or perpetual) budget?
 It is prepared for a range of activity so that the budget can be adjusted for changes in
activity.
 It is a plan that is updated monthly or quarterly, dropping one period and adding another.
 It is a strategic plan that does not change.
 It is used in companies that experience no change in sales.

9.
The Tobler Company has budgeted production for next year as follows:

Quarter First Second Third Fourth
Production in Units 10,000 12,000 16,000 14,000
Four kilograms of raw materials are required for each unit produced. At the start of the year, raw
materials on hand total 4,000 kilograms. The raw materials inventory at the end of each quarter
should equal 10% of the next quarter's production needs. What would be the budgeted purchases
of raw materials in the third quarter?
 50,400 kilograms.
 63,200 kilograms.
16,000 * 4 + 14,000 * 4 * .10 - 16,000 * 4 * .10 = 63,200 units.

10.
of $18 per unit. Fixed costs were as budgeted. Direct material costs were $1.50 more per unit then
budgeted. All other variable costs were as budgeted. The company s flexible budget variance was:
 Nil
6,000 × ($25 − $18 + $1.50) = $51,000 unfavourable.

11.
 Nil
 $8,000 unfavourable
6,000 × ($20 − $18 − $2) = Nil.

12.
The first step in the master budget is creating a:
 Cash budget
 Sales budget
 Budgeted income statement
 Production budget

13.
If actual sales are greater than the flexible budget sales, it would be considered:
 Favorable
 Unfavorable

14.
Responsibility accounting means that managers are only held responsible for those items that they
can actually influence to a significant extent.
 True
 False

15.
As part of the planning process, budgets are used for all of the following EXCEPT:
 Evaluate and reward employees.
 Encourage managers to think about and plan for the future
 Communicate managementâ€™s financial goals throughout the organization
 Allocate resources to those parts of the organization where they can be used most
effectively.
Evaluating and rewarding employees are part of the control system where budgets are compared
to actual results.

16.

ARO Inc. sold 10,000 units during its second month of operations at an average selling price of $8
per unit. Its Accounts Receivable balance at the start of the second month was $50,000. ARO
collects all sales as follows: 40% during the month of the sale and 60% in the month following the
sale. What was ARO's Accounts Receivable at the end of its second month of operations?
 $50,000
 $82,000
 $98,000
 $48,000
Accounts Receivable: $80,000 × 0.60 = $48,000.

17.
XLM Inc. sold 10,000 units during its second month of operations at an average selling price of $12
per unit. Its Accounts Receivable balance at the start of the second month was $50,000. XLM
sale. What was XLM's Accounts Receivable at the end of its second month of operations?
 $50,000
 $82,000
 $98,000
 $72,000
Accounts Receivable: $120,000 Ã— 0.60 = $72,000.

18.
What is the budget or schedule that provides necessary input data for the direct labour budget?
 Raw materials purchases budget.
 Production budget.
 Schedule of cash collections.
 Cash budget.

19.
Control involves developing objectives and preparing the various budgets to achieve those
objectives.
 True
 False

20.
Avril Company makes collections on sales according to the following schedule:
30% in the month of sale

60% in the month following sale
8% in the second month following sale
The following sales are expected:

Expected Sales
January $100,000
February 120,000
March 110,000
What should be the budgeted cash collections in March?
 $105,000
 $110,000
 $110,800
 $113,000
100,000 * .08 + 120,000 * .60 + 110,000 * .30 = $113,000.

21.
ARO Inc. sold 10,000 units during its second month of operations at an average selling price of $8
per unit. Its Accounts Receivable balance at the start of the second month was $50,000. ARO
collects all sales evenly over a two month period. What were ARO's collections during its second
month of operations?
 $50,000
 $80,000
 $90,000
 $135,000
Sales Collections: $50,000 + ($80,000 × 0.50) = $90,000.

22.
A comprehensive flexible budget prepared for performance evaluation should incorporate both
fixed and variable costs, but not revenues.
 True
 False

23.
Budgeted sales in Allen Company over the next four months are given below:

September October November December
Budgeted Sales $100,000 $160,000 $180,000 $120,000
Twenty-five percent of the company's sales are for cash, and 75% are on account. Collections for
sales on account follow a stable pattern as follows: 50% of a month's sales are collected in the
month of sale, 30% are collected in the month following sale, and 15% are collected in the second
month following sale. The remainder is uncollectible. Given these data, what should be cash
collections for December?
 $133,500
 $120,000
 $138,000
 $153,000
Dec. cash sales 120,000 * .25 + Dec. credit sales 120,000 * .75 * .50 + Nov. credit sales 180,000 * .75
* .30 + Oct. 160,000 * .75 * .15. = $133,500.

24.
Halifax Souvenir Company currently orders 500 units four times each year. Each order costs $12
and each unit costs $1.20 per year to carry. On average, it takes 5 days to receive an order from the
supplier. Company operates 250 days per year.
a) What is the EOQ?
b) Calculate total annual inventory cost under EOQ.
c) What is the current inventory cost?
d) Should the company change to EOQ system? Please explain.
e) What is the re-order point?
a) E = √2QP/C = √ (2*500*4*12)/1.2 = 200 units

b) T = P (Q/E) + C (E/2) = 12*(2000/200) + 1.2 (200/2) = $240
c) Total Cost = 4*12 + 1.2 (500/2) = $348
d) Total cost for EQO system is lower. Company should change to EQO system. It will save the
company $108.
e) ROP = 5 * 500*4/250 = 40 units

25.
Fairmont Inc. uses an accounting system that charges costs to the manager who has been
delegated the authority to make decisions concerning the costs. For example, if the sales manager
accepts a rush order that will result in higher than normal manufacturing costs, these additional
costs are charged to the sales manager because the authority to accept or decline the rush order
was given to the sales manager. What best describes this type of an accounting system?
 Responsibility accounting.
 Contribution accounting.
 Absorption accounting.
 Operational budgeting.

26.
Polly Company's sales are 30% in cash and 70% on credit. Sixty percent of the credit sales are
collected in the month of sale, 25% in the month following sale, and 12% in the second month
following sale. The remainder is uncollectible. The following are budgeted sales data:

January February March April
Total Sales $60,000 $75,000 $52,000 $38,000
What would be the budgeted total cash receipts in April?
 $27,230
 $42,760
 $38,900
 $47,900
$38,000 * 0.3 + $38,000 * 0.7 * 0.6 + $75,000 * 0.7 * 0.12 + $52,000 * 0.7 * 0.25 = $42,760.

27.
In companies that have "no lay-off" policies, the total direct labour cost for a budget period is
computed by taking the total direct labour hours needed to make the budgeted output of
completed units and multiplying them by the direct labour wage rate.
 True
 False

28.
When using the participative budget approach, it is generally best for top management to accept all
budget estimates without question in order to minimize adverse behavioural responses from
employees.
 True
 False

29.
Usually cost of transportation of products is a part of inventory carrying costs.
 True
 False

30.
If actual costs are greater than flexible budget costs, it would be considered
 Favorable
 Unfavorable

31.
A flexible budget is prepared only for the planned or budgeted level of activity.
 True
 False
A flexible budget provides estimates of what revenues and costs should be for any level of activity
within a specified range.

32.
Walsh Company expects sales of Product W to be 60,000 units in April, 75,000 units in May, and
70,000 units in June. The company desires that the inventory on hand at the end of each month be
equal to 40% of the next month's expected unit sales. Due to excessive production during March,
there were 25,000 units of Product W in the ending inventory on March 31. Given this information,
what should be Walsh Company's production of Product W for the month of April?
 60,000 units.
 65,000 units.
 66,000 units.
 75,000 units.
60,000 + 75,000 * .40 - 25,000 = 65,000 units.

33.
Orion Corporation is preparing a cash budget for the six months beginning January 1. Shown below
are the company's expected collection pattern and the budgeted sales for the period:
Expected collection pattern:
65% collected in the month of sale

20% collected in the month after sale
10% collected in the second month after sale
4% collected in the third month after sale
1% uncollectible
Budgeted Sales:

January $160,000
February 185,000
March 190,000
April 170,000
May 200,000
June 180,000
What would be the estimated total cash collections during April from sales and accounts
receivables?
 $155,900
 $167,000
 $171,666
 $173,400
160,000 * .04 + 185,000 * .10 + 190,000 * .20 + 170,000 * .65 = $173,400.

34.
The Stacy Company makes and sells a single product: Product R. Budgeted sales for April are
$300,000. Gross margin is budgeted at 30% of sales dollars. If the net income for April is budgeted
at $40,000, what are the budgeted selling and administrative expenses?
 $50,000
 $78,000
 $102,000
 $133,333
300,000 * .30 - 40,000 = $50,000.

35.
Budgetary slack is the difference between the revenues and expenses a manager expects can be
achieved and the amounts included in the budget.
 True
 False

36.
The process of getting people at all levels of the organization involved in the budgeting process is
known as:
 Master budgeting.
 Budgeting.
 Participative budgeting.
 Controlling.
known as participative budgeting.

37.
Friden Company has budgeted sales and production over the next quarter as follows:

April May June
Sales in Units 100,000 120,000 ?
Production in Units 104,000 128,000 156,000
On April 1, the company has 20,000 units of product on hand. A minimum of 20% of the next
month's sales needs (in units) must be on hand at the end of each month. July sales are expected
to be 140,000 units. What would be the budgeted sales for June (in units)?
 128,000 units.
 160,000 units.
 184,000 units.
 188,000 units.
May EI = 128,000 + 120,000 * .20 - 120,000 = $32,000 = June BI. June sales = 156,000 + 32,000 -
140,000 * .20. = 160,000 units.

38.
The master budget process usually begins with which of the following?
 Production budget.
 Operating budget.
 Sales budget.
 Cash budget.

39.
was:


40.
On March 31st, Akira Enterprises, a merchandising firm, had an inventory of 40,000 units and it had
accounts receivable totaling $90,000. Sales, in units, have been budgeted as follows for the next
four months:

April 60,000
May 75,000
June 90,000
July 80,200
Akira 's board of directors has established a policy to commence in April that the inventory at the
end of each month should contain 40% of the units required for the following month's budgeted
sales.
The selling price is $2 per unit. One-third of sales are paid for by customers in the month of the
sale; the balance is collected in the following month.
Required:
a) Prepare a merchandise purchases budget showing how many units should be purchased for
each of the months April, May, and June.
b) Prepare a schedule of expected cash collections for each of the months April, May, and June.
a)
April May June July
Budgeted sales, in 60,000 75,000 90,000 80,200
units
Desired ending 30,000 36,000 32,080
inventory (40%)
Total needs 90,000 111,000 122,080
Less beginning 40,000 30,000 36,000
inventory
Required 50,000 81,000 86,080
purchases
b)
April May June
Budgeted sales, at $2 $120,000 $150,000 $180,000
per unit
March 31 Accounts $90,000
Receivable
April sales 40,000 $80,000
May sales 50,000 $100,000
June 60,000
Total cash collections $130,000 $130,000 $160,000

41.
The beginning cash balance is not included on the cash budget since the cash budget deals
exclusively with cash flows rather than with balance sheet amounts.
 True
 False

42.
of $18 per unit. Fixed and variable costs were as budgeted. The company's sales volume variance
was:
Sales Volume Variance = (10,000 − 9,500) × $25 = $12,500 unfavourable.

43.
The following costs appear in Malgorzata Company's flexible budget at an activity level of 15,000
machine-hours:
Indirect materials: $8,600

Factory rent: $20,200
What would be the flexible budget amounts at an activity level of 12,000 machine hours if indirect
material is a variable cost and factory rent a fixed cost?

Indirect materials Factory rent
A) $8,600 $10,000
B) $8,600 $20,200
C) $6,240 $14,400
D) $6,880 $20,200
 Option A
 Option B
 Option C
 Option D
Indirect materials = 12,000 * $8,600 /15,000= $6,880 Factory rent $20,200.

44.
When choosing an activity measure for a flexible budget, it is best to choose an activity that is
measured in dollars.
 True
 False

45.
Modesto Company produces and sells Product AlphaB. To guard against stockouts, the company
requires that 20% of the next month's sales be on hand at the end of each month. Budgeted sales
of Product AlphaB over the next four months are:

June July August September
Budgeted Sales in 30,000 40,000 60,000 50,000
Units
What would be the budgeted production for August?
 50,000 units.
 58,000 units.
 62,000 units.
 70,000 units.
60,000 + 50,000 * .20 - 60,000 * .20 = 58,000 units.

46.
was:


47.
known as participative (self-imposed) budgeting:
 True
 False
known as participative (self-imposed) budgeting.

48.
The Doley Company has planned the following sales for the next three months:

January February March
Budgeted Sales $40,000 $50,000 $70,000
Sales are made 20% for cash and 80% on account. From experience, the company has learned that
a month's sales on account are collected according to the following pattern:

Month of sale 60%
First month following sale 30%
Second month following sale 8%
Uncollectible 2%
The company requires a minimum cash balance of $5,000 to start a month. The beginning cash
balance in March is budgeted to be $6,000.
Required:
a) Compute the budgeted cash receipts for March.

b) The following additional information has been provided for March:

Inventory purchases (all paid in March) $28,000
Operating expenses (all paid in March) 40,000
Depreciation expense for March 5,000
Dividends paid in March 4,000
Prepare a cash budget in good form for the month of March, using this information and the
budgeted cash receipts you computed for part a) above. The company can borrow in any dollar
amount and will not pay interest until April.
a)
Cash sales, March: $70,000 * 20% $14,000
Collections on account:
Jan. sales: $40,000 * 80% * 8% 2,560
Feb. sales: $50,000 * 80% * 30% 12,000
Mar. sales: $70,000 * 80% * 60% 33,600
Total cash receipts $62,160
b)
Cash balance, beginning $6,000
Add cash receipts from sales 62,160
Total cash available $68,160

Less disbursements:
Inventory purchases 28,000
Operating expenses 40,000

Dividends 4,000
Total disbursements 72,000
Cash excess (deficiency) (3,840)
Financing - borrowing 8,840
Cash balance, ending $5,000

49.
There are various budgets within the master budget. One of these budgets is the production
budget. Which of the following best describes the production budget?
 It details the required direct labour hours.
 It details the required raw materials purchases.
 It is calculated based on the sales budget and the desired ending inventory.
 It summarizes the costs of producing units for the budget period.

50.
of $18 per unit. Fixed and variable costs were as budgeted. The company's sales volume variance
was:
Sales Volume Variance = (10,000 − 7,000) × $30 = $90,000 unfavourable.

51.
In a performance report, actual costs should be compared to budgeted costs at the original
budgeted activity level.
 True
 False

52.
A sales budget is given below for one of the products manufactured by the Key Co.:

January 21,000 units
February 36,000 units
March 61,000 units
April 41,000 units
May 31,000 units
June 25,000 units
The inventory of finished goods at the end of each month should equal 20% of the next month's
sales. However, on December 31, the finished goods inventory totalled only 4,000 units.
Each unit of product requires three specialized electrical switches. Since the production of these
specialized switches by Key's suppliers is sometimes irregular, the company has a policy of
maintaining an ending inventory at the end of each month equal to 30% of the next month's
production needs. This requirement had been met on January 1 of the current year.
Required:
Prepare a budget showing the quantity of switches to be purchased each month for January,
February, and March, and in total for the quarter.
January February March April

Budgeted sales 21,000 36,000 61,000 41,000
(units)
Add: Desired 7,200 12,200 8,200 6,200
ending inventory
Total needs 28,200 48,200 69,200 47,200
Deduct: Beginning 4,000 7,200 12,200 8,200
inventory
Units to be 24,200 41,000 57,000 39,000
produced
January February March Quarter
Units to be 24,200 41,000 57,000 122,200
produced
Switches per unit X3 X3 X3 X3
Production needs 72,600 123,000 171,000 366,600
Add: Desired 36,900 51,300 35,100 35,100
ending inventory
Total needs 109,500 174,300 206,100 401,700
Deduct: Beginning 21,780 36,900 51,300 21,780
inventory
Required 87,720 137,400 154,800 379,920
purchases
Beginning inventory, January 1: 72,600 × 0.3 = 21,780.

Ending inventory, March 31: (39,000 × 3) × 0.3 = 35,100.

53.
Which of the following is not a reason organizations use budgets?
 Communicate financial goals of the organization.
 Comply with the generally accepted accounting principles.
 Allocate resources.
 Coordinate activities of different departments.

54.
A production budget is required for a service company.
 True
 False
A production budget is only required for a manufacturing company as this type of company is
producing their inventory.

55.
Participative budgeting encourages managers to develop budget estimates for their areas of
responsibility
 True
 False

56.
The participative budget can be a very effective control device in an organization.
 True
 False

57.
A merchandising company prepares an inventory purchases budget whereas a manufacturing firm

prepares a production budget.
 True
 False

58.
The cash budget must be prepared before you can complete which of the following?
 Production budget.
 Budgeted balance sheet.
 Raw materials purchases budget.
 Schedule of cash disbursements.

59.
A detailed plan for the acquisition and use of financial resources is known as a financial plan.
 True
 False
A detailed plan for the acquisition and use of financial resources is known as a budget.

60.
sale. What was XLM's Accounts Receivable at the end of its second month of operations?
 $50,000
 $82,000
 $36,000
 $135,000
Accounts Receivable: $90,000 Ã— 0.40 = $36,000.

61.
sale. What were XLM's collections during its second month of operations?
 $50,000
 $82,000
 $98,000
 $104,000
Sales Collections: $50,000 + ($90,000 × 0.60) = $104,000.

62.
The flexible budget variance is the difference between actual results and the flexible budget.
 True
 False

63.
The static budget can be inadequate for control if the actual level of activity during a period differs
significantly from the budgeted level.
 True
 False

64.
The following overhead data are for a department in a large company.

Activity Costs Incurred Static Budget
Activity Level (in units) 500 500
Variable costs:
Supplies $18,000 $18,200
Electricity $1,020 $1,050
Fixed costs:
Supervision $8,500 $8,600
Depreciation $5,700 $5,800
Required:
Prepare a report that would be useful in assessing how well costs were controlled in this
department.
Cost formula per Actual costs Budget based on Variance

unit incurred actual activity
Variable costs:
Supplies $36.40 $18,000 $18,200 $200 F
Electricity 2.10 1,020 1,050 30 F
Total variable cost $38.50 19,020 19,250 230 F
Fixed costs:
Supervision 8,500 8,600 100 F
Depreciation 5,700 5,800 100 F
Total fixed cost 14,200 14,400 200 F
Total cost $33,220 $33,650 $430 F

65.
Which of the following best describes a typical participative budget?
 It is NOT subject to review by higher levels of management since to do so would

contradict the participative aspect of the budgeting processing.
 It is NOT subject to review by higher levels of management except in specific cases where
the input of higher management is required.
 It is subject to review by higher levels of management in order to prevent the budgets

from becoming too loose.
 It is NOT critical to the success of a budgeting program.
KAB Inc., a small retail store, had the following results for May. The budgets for June and July are
also given.

May (actual) June (budget) July (budget)
Sales $45,000 $46,000 $49,000
Cost of sales $20,000 $21,000 $23,500
Gross margin $25,000 $21,000 $21,500
Operating expenses $19,000 $19,000 $19,000
Operating income $5,000 $1,000 $1,500
Sales are collected 75% in the month of the sale and the balance in the month following the sale.
(There are no bad debts.) The goods that are sold are purchased in the month prior to sale.
Suppliers of the goods are paid in the month following the purchase. The operating expenses are
paid in the month of the sale.

66.
What should be the amount of cash collected during the month of June?
 $32,000
 $40,000
 $45,750
 $41,000
$45,000 * 0.25 + $46,000 * 0.75 = $45,750.

67.
What should be the cash disbursements during the month of June for goods purchased for resale
and for operating expenses?
 $40,000
 $41,000
 $42,500
 $43,500
Purchases in May are paid for in June. May purchases = June budgeted CGS. Cash disbursements
= $21,000 + 19,000 = $40,000.
Justin's Plant Store, a retailer, started operations on January 1. On that date, the only assets were
$16,000 in cash and $3,500 in merchandise inventory. For purposes of budget preparation, assume
that the company's cost of goods sold is 60% of sales. Expected sales for the first four months
appear below:

Expected Sales
January $10,000
February 24,000
March 16,000
April 25,000
The company desires that the merchandise inventory on hand at the end of each month be equal to
50% of the next month's merchandise sales (stated at cost). All purchases of merchandise inventory
must be paid in the month of purchase. Sixty percent of all sales should be for cash; the balance will
be on credit. Seventy-five percent of the credit sales should be collected in the month following the
month of sale, with the balance collected in the following month. Variable operating expenses
should be 10% of sales, and fixed expenses (all depreciation) should be $3,000 per month. Cash
payments for the variable operating expenses are made during the month the expenses are
incurred.

68.
In a budgeted income statement for the month of February, what would be the net income?
 $0
 $1,800
 $4,200
 $9,000
24,000 * (1 -.60) - 24,000 * .10 - 3,000 = $4,200.

69.
In a budgeted balance sheet, what would be the merchandise inventory on February 28?
 $3,200
 $4,800
 $7,500
 $9,600
16,000 * .60 * .50 = $4,800.

70.
What would be the accounts receivable balance that would appear in the March 31 budgeted
balance sheet?
 $8,800
 $12,400
 $15,000
 $16,000
24,000 * .40 * .25 + 16,000 * .40 = $8,800.

71.
In a budget of cash receipts for March, what would be the total cash receipts?
 $8,200
 $16,000
 $17,800
 $20,200
16,000 * .60 + 24,000 * .40 * .75 + 10,000 * .40 * .25 = $17,800.

72.
In a budget of cash disbursements for March, what would be the total cash disbursements?
 $11,200
 $13,900
 $16,900
 $22,300
CGS + EI - BI + Op. Expenses = 16,000 * .60 + 25,000 * .60 * .50 - 4,800 + 16,000 * .10 = $13,900.
Information on the actual sales and inventory purchases of the Law Company for the first quarter
follow:

Inventory Sales Purchases
January $106,000 $60,000
February $92,000 $72,000
March $120,000 $92,000
Collections from Law Company's customers are normally 60% in the month of sale, 30% in the month
following sale, and 8% in the second month following sale. The balance is uncollectible. Law
Company takes full advantage of the 2% discount allowed on purchases paid for by the end of the
following month.
The company expects sales in April of $150,000 and inventory purchases of $109,000. Operating
expenses for the month of April are expected to be $36,000, of which $15,000 is salaries and
$8,000 is depreciation. The remaining $13,000 of operating expenses are variable with respect to
the amount of sales in dollars. Those operating expenses requiring a cash outlay are paid for during
the month incurred. Law Company's cash balance on March 1 was $42,000, and on April 1 was
$35,200.

73.

What would be the expected cash collections from customers during April?
 $117,600
 $133,360
 $139,000
 $150,000
$150,000 * 0.6 + $120,000 * 0.3 + $92,000 * 0.08 = $133,360.

74.
What would be the expected cash disbursements during April for inventory purchases?
 $87,300
 $90,160
 $97,000
 $100,000
$92,000 * (1-0.02) = $90,160.

75.
What would be the expected cash disbursements during April for operating expenses?
 $15,000
 $23,000
 $28,000
 $38,000
$36,000 - $8,000 = $28,000.

76.
What would be the expected cash balance on April 30?
 $19,700
 $28,700
 $50,400
 $62,700
$35,200 + $133,360 - $90,160 - $28,000 = $50,400.
The LaPann Company has obtained the following sales forecast data:

July August September October
Cash Sales $80,000 $70,000 $50,000 $60,000
Credit Sales 240,000 220,000 180,000 200,000
The regular pattern of collection of credit sales is 20% in the month of sale, 70% in the month
following the month of sale, and the remainder in the second month following the month of sale.
There are no bad debts.

77.
What are the budgeted accounts receivable balance on September 30?
 $126,000
 $148,000
 $166,000
 $190,000
180,000 * .80 + 220,000 * .10 = $166,000.

78.
What are the budgeted cash receipts for October?
 $188,000
 $226,000
 $248,000.
 $278,000
60,000 + 200,000 * .20 + 180,000 * .70 + 220,000 * .10 = $248,000.
The LaGrange Company had the following budgeted sales for the first half of the current year:

Cash Sales Credit Sales
January $70,000 $340,000
February 50,000 190,000
March 40,000 135,000
April 35,000 120,000
May 45,000 160,000
June 40,000 140,000
The company is in the process of preparing a cash budget and must determine the expected cash
collections by month. To this end, the following information has been assembled:
Collections on sales:
60% in month of sale
30% in month following sale
10% in second month following sale
The accounts receivable balance on January 1 of the current year was $70,000, of which $50,000
represents uncollected December sales and $20,000 represents uncollected November sales.

79.
What would be the total cash collected by LaGrange Company during January?
 $261,500
 $331,500
 $344,000
 $274,000
70,000 + 20,000 + 50,000/.40 * .30 + 340,000 * .60 = $331,500.

80.
What is the budgeted accounts receivable balance on June 1 of the current year?
 $56,000
 $64,000
 $76,000
 $132,000
120,000 * .10 + 160,000 * .40 = $76,000.
Paradise Company plans the following beginning and ending inventory levels (in units) for June:

June 1 June 31
Raw material 60,000 52,500
Work in process 10,000 10,000
Finished goods 82,000 52,500
Two units of raw material are needed to produce each unit of finished product.

81.
If Paradise Company plans to sell 480,000 units during June, what would be the number of units it
would have to manufacture during June?
 440,000 units.
 450,000 units.
 450,500 units.
 510,000 units.
480,000 + 52,500 - 82,000 = 450,500 units.

82.
If 500,000 finished units were to be manufactured during June, what would be the units of raw
material needed to be purchased?
 900,000 units.
 1,000,000 units.
 992,500 units.
 1,020,500 units.
500,000 * 2 + 52,500 - 60,000 = 992,500 units.
Barley Enterprises has budgeted unit sales for the next four months as follows:

October 4,800 units
November 5,800 units
December 6,400 units
January 5,200 units
The ending inventory for each month should be equal to 15% of the next month's sales in units. The
inventory on September 30 was below this level and contained only 600 units.

83.
What are the total units to be produced in October?
 4,530 units.
 5,070 units.
 5,670 units.
 5,890 units.
4,800 + 5,800 * .15 - 600 = 5,070 units.

84.
What is the desired ending inventory for December?
 690 units.
 780 units.
 870 units.
 960 units.
5,200 * .15 = 780 units.
Roberts Enterprises has budgeted sales in units for the next five months as follows:

June 4,500 units
July 7,100 units
August 5,300 units
September 6,700 units
October 3,700 units
Past experience has shown that the ending inventory for each month must be equal to 10% of the
next month's sales in units. The inventory on May 31 contained 410 units. The company needs to
prepare a production budget for the second quarter of the year.

85.
What is the opening inventory in units for September?
 370 units.
 530 units.
 670 units.
 6,700 units.
6,700 * .10 = 670 units.

86.
What is the total number of units to be produced in July?
 6,920 units.
 7,100 units.
 7,280 units.
 7,630 units.
7,100 + 5,300 * .10 - 7,100 * .10 = 6,920 units.

87.
What is the desired ending inventory for August?
 370 units.
 530 units.
 670 units.
 710 units.
6,700 * .10 = 670 units.
Noel Enterprises has budgeted sales in units for the next five months as follows:

January 5,000 units
March 8,000 units
April 4,200 units
May 2,900 units
Past experience has shown that the ending inventory for each month must be equal to 10% of the
next month's sales in units. The inventory on December 31 contained 400 units. The company needs
to prepare a production budget for the second quarter of the year.

88.
What is the opening inventory in units for April?
 380 units.
 460 units.
 720 units.
 420 units.
4,200 * 0.1 = 420 units.

89.
What is the total number of units to be produced in February?
 5,220 units.
 5,400 units.
 5,930 units.
 6,120 units.
5,700 + 8,000 * 0.1 - 5,700 * 0.1 = 5,930 units.

90.
What is the desired ending inventory for March?
 380 units.
 420 units.
 540 units.
 720 units.
4,200 * 0.10 = 420 units.
The LFM Company makes and sells a single product: Product T. Each unit of Product T requires 1.3
hours of labour at a labour rate of $9.10 per hour. LFM Company needs to prepare a Direct Labour
Budget for the second quarter of next year.

91.
What would be the budgeted direct labour cost per unit of Product T?
 $7.00
 $9.10
 $10.40
 $11.83
1.3 hrs * $9.10/hr.= $11.83 per unit.

92.
The company has budgeted to produce 25,000 units of Product T in June. The finished goods
inventories on June 1 and June 30 were budgeted at 500 and 700 units, respectively. What would
be the budgeted direct labour costs incurred in June?
 $227,500
 $293,384
 $295,750
 $304,031
25,000 * 1.3 * 9.10 = $295,750.
The International Company makes and sells only one product, Product SW. The company is in the
process of preparing its Selling and Administrative Expense Budget for the last half of the year. The
following budget data are available:

Variable cost per unit sold Monthly fixed cost
Sales commissions $0.70
Shipping 1.10
Advertising 0.20 $14,000
Executive salaries 34,000
Depreciation on office equipment 11,000
Other 0.25 19,000
All expenses other than depreciation are paid in cash in the month they are incurred.

93.
If the company has budgeted to sell 25,000 units of Product SW in July, what will be the total
budgeted selling and administrative expenses for July?
 $56,250
 $78,000
 $123,250
 $134,250
Total VC = $2.25. Total FC = $78,000. 25,000 * 2.25 + 78,000 = $134,250.

94.
If the company has budgeted to sell 20,000 units of Product SW in October, what will be the total
budgeted variable selling and administrative expenses for October?
 $40,000
 $45,000
 $56,250
 $78,000
20,000 * 2.25 = $45,000.

95.
If the budgeted cash disbursements for selling and administrative expenses for November total
$123,250, then how much was the total selling and administrative budget for November?
 $123,250
 $134,250
 $168,250
 $187,250
123,250 + 11,000 = $134,250.

96.
If the company has budgeted to sell 24,000 units of Product SW in September, what would be the
total budgeted fixed selling and administrative expenses for September?
 $48,000
 $54,000
 $67,000
 $78,000
Total FC = $78,000.
The Culver Company is preparing its Manufacturing Overhead Budget for the third quarter of the
year. Budgeted variable factory overhead is $3.50 per unit produced; budgeted fixed factory
overhead is $80,000 per month, with $17,000 of this amount being factory depreciation.

97.
If the budgeted production for July is 6,000 units, what is the total budgeted factory overhead for
July?
 $101,000
 $75,000
 $93,000
 $109,000
6,000 * $3.50 + $80,000 = $101,000.

98.
If the budgeted production for August is 5,000 units, what is the total budgeted factory overhead
per unit?
 $15
 $19.50
 $20
 $22.50
$3.50 + $80,000 /5,000 = $19.50 per unit.

99.
If all cash expenses are paid for in the month incurred what is the budgeted cash disbursements for
manufacturing overhead if 5,500 units are produced?
 $16,500
 $82,250
 $91,500
 $99,000
5,500 * $3.50 + $80,000 - $17,000 = $82,250.
The Bandeiras Company, a merchandising firm, has budgeted its activity for December according to
the following information:
I. Sales at $550,000, all for cash.

II. Merchandise inventory on November 30 was $300,000.
III. Budgeted depreciation for December is $35,000.
IV. The cash balance at December 1 was $25,000.
V. Selling and administrative expenses are budgeted at $60,000 for December and are paid in cash.
VI. The planned merchandise inventory on December 31 is $270,000.
VII. The invoice cost for merchandise purchases represents 75% of the sales price. All purchases are
paid for in cash.

100.
What are the budgeted cash receipts for December?
 $137,500
 $412,500
 $550,000
 $585,000
all sales $550,000.

101.
What are the budgeted cash disbursements for December?
 $382,500
 $442,500
 $472,500
 $477,500
550,000 * .75 + 270,000 - 300,000 + 60,000 = $442,500.

102.
What is the budgeted net income for December?
 $42,500
 $77,500
 $107,500
 $137,500
550,000 * (1 -.75) - 35,000 - 60,000 = $42,500.
A cash budget by quarters for the Carney Company is given below (note that some data are
missing). Missing data amounts have been keyed with either question marks or lowercase letters (a,
b, c, etc.); these lowercase letters will be referred to in the questions that follow. (It may be necessary
to calculate a value for items where a question mark appears.) A zero amount is designated by a
dash (-). The company requires a minimum cash balance of at least $10,000 to start a quarter. All
data are in thousands of dollars.
Carney Corporation
Cash Budget

Quarters
1 2 3 4
Cash balance, $16 $e $13 $10
beginning
Add: collections from $a $70 $67 $80
customers
Total cash available $? $? $80 $90
Less: disbursements
Purchase of inventory $31 $c $40 $35
Operating expenses $10 $14 $19 $-
Dividends $- $6 $- $5
Total disbursements $76 $? $f $55
Excess (deficiency) of $7 $17 $(2) $35
cash available over
disbursements
Financing:
Borrowings $b $- $12 $-
Repayments (including $- $d $- $(16)
interest)
Total financing $? $? $12 $(16)
Cash balance, ending $10 $? $10 $19

103.
What are the collections from customers during the first quarter (item a), in thousands of dollars?
 $43
 $67
 $60
 $73
76 + 7 - 16 = $67.

104.
What is the borrowing required during the first quarter to meet the minimum cash balance (item b),
in thousands of dollars?
 $0
 $3
 $7
 $10
10 - 7 = $3.

105.
What is the cash disbursed for purchases during the second quarter (item c), in thousands of
dollars?
 $9
 $13
 $21
 $55
10(e) + 70 - 17 - 6 - 14 - 22 = $21.

106.
What is the repayment (including interest) of financing during the second quarter (item d), in
thousands of dollars?
 $0
 $4
 $7
 $17
17 - 13 = $4.

107.
What is the cash balance at the beginning of the second quarter (item e), in thousands of dollars?
 $0
 $7
 $10
 $14
the same as ending first quarter.

108.
What are the total disbursements during the third quarter (item f), in thousands of dollars?
 $59
 $78
 $82
 $84
80 + 2 = $82.

109.
What are the total collections from customers for the year, in thousands of dollars?
 $260
 $277
 $290
 $284
67 + 70 + 67 + 80 = $284.
Pollitt Potato Packers has a flexible budget for manufacturing overhead that is based on direct
labour hours. The following overhead costs appear on the flexible budget at the 200,000-hour level
of activity:

Variable overhead costs (total):
Packing supplies $120,200
Indirect labour $160,000
Fixed overhead costs (total):
Utilities $105,000
Insurance $41,300
Rent $23,000

110.
At an activity level of 190,000 direct labour hours, what amount would the flexible budget estimate
for indirect labour cost? (Round your final answer to the nearest whole dollar).
 $100,102
 $152,000
 $170,255
 $188,256
190,000 * ($160,000 / 200,000) = $152,000.

111.
What amount would the flexible budget estimate for total variable overhead cost per direct labour
hour? (Round your final answer to the nearest 2 decimal places).
 $0.60
 $0.90
 $1.40
 $1.80
($120,200 + $160,000) /200,000 = $1.40 per unit.

112.
for total budgeted fixed costs?
 $63,200
 $144,000
 $169,300
 $160,000
$105,000 + $41,300 + $23,000 = $169,300.

113.
for the utilities?
 $80,000
 $105,000
 $120,000
 $160,000
Utilities are fixed.
Capelli Hospital bases its budgets on patient-visits. The hospital's static budget for August appears
below:

Budgeted number of patient-visits 8,300
Budgeted variable overhead costs:
Supplies (@$5.00 per patient-visit) $41,500
Laundry (@$7.30 per patient-visit) 60,590
Total variable overhead cost 102,090
Budgeted fixed overhead costs:
Wages and salaries 60,590
Occupancy costs 73,040
Total fixed overhead cost 133,630
Total budgeted overhead cost $235,720

114.
What should be the total variable overhead cost at an activity level of 9,300 patient-visits per
month?
 $114,390
 $149,730
 $102,090
 $133,630
9,300 * (5 + 7.30) = $114,390.

115.
What should be the total fixed overhead cost at an activity level of 9,600 patient-visits per month?
 $133,630
 $154,560
 $235,720
 $272,640
Total Fixed overhead cost.

116.
What should be the total overhead cost at an activity level of 9,400 patient-visits per month?
 $235,720
 $249,250
 $266,960
 $250,640
9,400 * (5 + 7.30) + 133,630 = $249,250.
Mandalay Hotel bases its budgets on guest-days. The hotel's static budget for August appears
below:

Budgeted number of guest-days 5,000
Supplies (@$9.60 per guest-day) $48,000
Laundry (@$9.40 per guest-day) $47,000
Total variable overhead cost $95,000
Wages and salaries $58,000
Occupancy costs $50,000
Total fixed overhead cost $108,000

117.
What is the expected total variable overhead cost at an activity level of 6,000 guest-days per
month?
 $114,000
 $109,220
 $95,000
 $81,700
6,000 * ($9.60 + $9.40) = $114,000.

118.
What is the expected total fixed overhead cost at an activity level of 5,500 guest-days per month?
 $139,700
 $190,920
 $244,200
 $108,000
Will be same as given for 5,000 guests.

119.
The total overhead cost at an activity level of 5,200 guest-days per month should be:
 $206,800
 $230,880
 $209,940
 $190,920
5,200 * ($9.60 + $9.40) + $108,000 = $206,800.
Isadore Hospital bases its budgets on patient-visits. The hospital's static budget for July appears
below:

Budgeted number of patient-visits 7,700
Supplies (@$4.60 per guest-day) $35,420
Laundry (@$7.20 per guest-day) 55,440
Total variable overhead cost 90,860
Salaries 46,200
Occupancy costs 67,760
Total fixed overhead cost 113,960
Actual results for the month were:

Actual number of patient-visits 7,800
Supplies $38,250
Laundry $61,240
Salaries $46,190
Occupancy costs $65,650

120.
What is the variance for supplies costs in the flexible budget performance report for the month?
 $2,370 U
 $2,370 F
 $2,830 F
 $2,830 U
7,800 * 4.60 - 38,250 = $2,370 U.

121.
What is the variance for laundry costs in the flexible budget performance report for the month?
 $5,080 F
 $5,080 U
 $5,800 U
 $5,800 F
7,800 * 7.20 - 61,240 = $5,080 U.

122.
What is the variance for occupancy costs in the flexible budget performance report for the month?
 $2,110 U
 $2,990 U
 $2,990 F
 $2,110 F
67,760 - 65,650 = $2,110 F.
The following is a summarized master budget that Winnipeg Company prepared for January:

Sales 9,000 units
Sales revenue $450,000
Less variable costs:
Manufacturing $270,000
Selling and administrative $18,000 $288,000
Contribution $162,000
Less fixed costs:
Manufacturing $72,000
Selling and administrative $27,000 $99,000
Operating income $63,000
Actual results for January were as follows:

Units produced and sold 8,500 units
Selling price per unit $55.00
Variable costs per unit:
Manufacturing $32.00
Selling and administrative $1.50
Total fixed costs $99,000

123.
What was the flexible budget operating income (loss) for Winnipeg Company for January?
 $83,750
 $54,000
 $63,000
 $59,500
Bud. Selling price = $450,000/9,000 = $50/unit. Flex Bud Operating Income = 8,500 * $50 - 8,500 *
($270,000/9,000 + $18,000/9,000) - $99,000. = $54,000 (Required for further questions).

124.
What total sales volume variance did Winnipeg Company report for January?
 $3,500 U
 $9,000 U
 $25,000 U
 $27,500 U
$54,000 - $63,000 = $9,000U.

125.
What was the total flexible budget variance for January?
 $20,750 F
 $9,000 U
 $29,750 F
 $12,750 U
Actual Operating Income = 8,500 * ($55 - $32 - $1.50) - $99,000 = $83,750.

Variance = $83,750 - $54,000 = $29,750 F.

126.
What were the total flexible budget expenses for January?
 $383,750
 $371,000
 $387,000
 $365,500
8,500 * ($30 + $2) + $99,000 = $371,000.

127.
What was the total static budget variance for January?
 $20,750 F
 $9,000 U
 $29,750 F
 $12,750 U
$83,750 - $63,000 = $20,750 F.
Alaska Company expressed the total expenses (Y) component of its master budget for February with
the cost formula Y = $100,000 + $40 * X, where X represents the expected number of units of its
only product to be manufactured and sold. The budgeted average selling price per unit was $65 for
budgeted sales volume 5,000 units. Reported actual results for February were as follows:

Sales 5,400 units
Sales revenue $324,000
Less variable costs $194,400
Contribution margin $129,600
Less fixed expenses $102,000
Operating income $27,600

128.
What was the master budget operating income for February?
 $23,000
 $25,000
 $35,000
 $33,000
5,000 * ($65 - $40) - $100,000 = $25,000.

129.
What was the flexible operating income for February?
 $23,000
 $25,000
 $35,000
 $33,000
5,400 * ($65 - $40) - $100,000 = $35,000.

130.
What was the total static budget variance for February?
 $7,400 U
 $2,600 F
 $10,000 F
 $1,000 U
Variance = $27,600 - $25,000 = $2,600 F.

131.
What was the sales volume variance for February?
 $10,000 F
 $26,000 F
 $7,400 U
 $2,600 F
Variance = $35,000 - $25,000 = $10,000 F.

132.
What was the flexible budget variance for February?
 $10,000 F
 $26,000 F
 $7,400 U
 $2,600 F
Variance = $27,600 - $35,000 = $,7400 U.
Windsor Limited makes and sells a single product. The company employs a flexible budgeting
system that covers a relevant range from 20,000 units to 25,000 units and a just in time inventory
system. Budget data for April, based on 22,000 units, are as follows:

Prime costs $40 per unit
Manufacturing overhead $138,000 plus $3 per unit
Selling and administrative expenses $30,000 plus $2 per unit
Selling price $70 per unit

133.
What is the company's master budget operating income (loss) for April?
 $382,000
 $463,000
 $550,000
 $625,000
22,000 * ($70 - $40 - $3- $2) - $138,000 - $30,000 = $382,000.

134.
Suppose the company produces and sells 25,000 units instead of the original 22,000 units at an
average selling price of $55. What is the company's flexible budget operating income (loss) for
April, given the actual sales volume of 25,000 units?
 $457,000
 $463,000
 $550,000
 $625,000
25,000 * ($70- $40 - $3 - $2) - $138,000 - $30,000 = $457,000.

135.
average selling price of $55. What will be the company's sales volume variance for April?
 $3,000 F
 $75,000 F
 $75,000 U
 $180,000 F
$382,000 - $457,000 = $75,000 F.
Children Toys Limited makes and sells a single product. The company employs a flexible budgeting
system that covers a relevant range from 25,000 units to 30,000 units and a just in time inventory
system. Budget data for April, based on 27,000 units, are as follows:

Prime costs $40 per unit
Manufacturing overhead $140,000 plus $4 per unit
Selling and administrative expenses $40,000 plus $3 per unit
Selling price $85 per unit

136.
What is the company's master budget operating income (loss) for April?
 $846,000
 $550,000
 $719,000
 $625,000
27,000 * ($85 - $40 - $4 -$3) - $140,000 - $40,000 = $846,000.

137.
average selling price of $70. What is the company's flexible budget operating income (loss) for
April, given the actual sales volume of 29,000 units?
 $388,000
 $463,000
 $550,000
 $922,000
29,000 * ($85- 40 - 4 -3) - 140,000 - 40,000 = $922,000.

138.
average selling price of $70. What will be the company's sales volume variance for April?
 $3,000 F
 $76,000 F
 $375,000 U
 $379,000 U
846,000 - 922,000 = $76,000 F.
The Shoe Company, a merchandising firm, has budgeted its activity for April according to the
following information:
I. Sales at $700,000, all for cash.

II. Merchandise inventory on March 31st was $350,000.
III. Budgeted depreciation for April is $30,000.
IV. The cash balance at April 1 was $20,000.
V. Selling and administrative expenses are budgeted at $62,200 for April and are paid in cash.
VI. The planned merchandise inventory on April 30 is $300,000.
VII. The invoice cost for merchandise purchases represents 75% of the sales price. All purchases are
paid for in cash.

139.
What are the budgeted cash receipts for April?
 $137,500
 $412,500
 $700,000
 $585,000
all sales $700,000.

140.
What are the budgeted cash disbursements for April?
 $382,500
 $537,200
 $472,500
 $477,500
$700,000 * 0.75 + ($300,000 - $350,000) + $62,200 = $537,200.

141.
What is the budgeted net income for April?
 $40,600
 $82,800
 $107,500
 $137,500
$700,000 (1-0.75) - $30,000 - $62,200 = $82,800.
James Enterprises has budgeted unit sales for the next four months as follows:

November 4,800 units
December 5,800 units
January 6,400 units
The ending inventory for each month should be equal to 15% of the next month's sales in units. The
inventory on October 31 was below this level and contained only 600 units.

142.
What are the total units to be produced in October?
 4,530 units.
 5,070 units.
 5,670 units.
 5,890 units.
4,800 + 5,800 * .15 - 600 = 5,070 units.

143.
What is the desired ending inventory for December?
 690 units.
 780 units.
 870 units.
 960 units.
5,200 * .15 = 780 units.
Fallon Inc., a small retail store, had the following results for April. The budgets for May and June are
also given.

April (actual) May (budget) June (budget)
Sales $40,000 $38,000 $50,000
Cost of sales $20,000 $19,000 $24,000
Gross margin $20,000 $19,000 $26,000
Operating expenses $20,000 $20,000 $20,000
Operating income $0 $1,000 $6,000
Sales are collected 70% in the month of the sale and the balance in the month following the sale.
(There are no bad debts.) The goods that are sold are purchased in the month prior to sale.
Suppliers of the goods are paid in the month following the purchase. The operating expenses are
paid in the month of the sale.

144.
What should be the amount of cash collected during the month of May?
 $32,000
 $40,000
 $38,600
 $41,000
$40,000 * 0.3 + $38,000 * 0.7 = $38,600.

145.
What should be the cash disbursements during the month of June for goods purchased for resale
and for operating expenses?
 $44,000
 $41,000
 $42,500
 $43,500
Purchases in May are paid for in June. May purchases = June budgeted CGS. Cash disbursements
= $24,000 + $20,000 = $44,000.

$12,000 Favourable Nil $8,000 Favourable $6,000 Unfavourable

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What is the flexible budget variance for XYZ Inc. based on the information provided?

What is the flexible budget variance for XYZ Inc. based on the information provided?

What is the scheduled production for the third quarter for the Waverly Company?

What is the scheduled production for the third quarter for the Waverly Company?

12/16/21, 1:33 PM Assignment Print View

6,000 × ($20 − $18 − $1) = $6,000 unfavourable.

The effect of responsibility accounting is to personalize the accounting system.

 It is the beginning point in the budget process.

 It is accompanied by a schedule of cash collections.

 It is completed after the cash budget.

18,000 + 16,000 * .25 - 18,000 * .25 = 17,500 units.

($234 + $315)/90 = $6.10. Total = 99 * $6.10 + $220 + $4,290 + $2,680 = $7,794.

Budgeted Contribution Margin: 10,000 × ($21 − $5 − $3 − $2 − $2) = $90,000.

6,000 × ($20 − $18 − $1) = $6,000 unfavourable.

What is a continuous (or perpetual) budget?

 It is a strategic plan that does not change.

 It is used in companies that experience no change in sales.

16,000 * 4 + 14,000 * 4 * .10 - 16,000 * 4 * .10 = 63,200 units.

6,000 × ($25 − $18 + $1.50) = $51,000 unfavourable.

6,000 × ($20 − $18 − $2) = Nil.

The first step in the master budget is creating a:

 Budgeted income statement

 Evaluate and reward employees.

 Encourage managers to think about and plan for the future

 Communicate managementâ€™s financial goals throughout the organization

Accounts Receivable: $80,000 × 0.60 = $48,000.

Accounts Receivable: $120,000 Ã— 0.60 = $72,000.

 Raw materials purchases budget.

 Schedule of cash collections.

Avril Company makes collections on sales according to the following schedule:

30% in the month of sale

The following sales are expected:

What should be the budgeted cash collections in March?

100,000 * .08 + 120,000 * .60 + 110,000 * .30 = $113,000.

Sales Collections: $50,000 + ($80,000 × 0.50) = $90,000.

a) E = √2QP/C = √ (2*500*4*12)/1.2 = 200 units

What would be the budgeted total cash receipts in April?

Usually cost of transportation of products is a part of inventory carrying costs.

60,000 + 75,000 * .40 - 25,000 = 65,000 units.

Expected collection pattern:

65% collected in the month of sale

160,000 * .04 + 185,000 * .10 + 190,000 * .20 + 170,000 * .65 = $173,400.

300,000 * .30 - 40,000 = $50,000.

Budgeted Contribution Margin: 10,000 × ($22 − $5 − $3 − $2 − $2) = $100,000.

Sales Volume Variance = (10,000 − 9,500) × $25 = $12,500 unfavourable.

Indirect materials: $8,600

Indirect materials = 12,000 * $8,600 /15,000= $6,880 Factory rent $20,200.

What would be the budgeted production for August?

60,000 + 50,000 * .20 - 60,000 * .20 = 58,000 units.

Budgeted Contribution Margin: 10,000 × ($22 − $5 − $3 − $2 − $2) = $100,000.

a) Compute the budgeted cash receipts for March.

Operating expenses 40,000

 It details the required direct labour hours.

 It details the required raw materials purchases.

 It summarizes the costs of producing units for the budget period.

Sales Volume Variance = (10,000 − 7,000) × $30 = $90,000 unfavourable.

January February March April

Beginning inventory, January 1: 72,600 × 0.3 = 21,780.

Which of the following is not a reason organizations use budgets?

a) E = √2QP/C = √ (25004*12)/1.2 = 200 units