ACCT434 Advanced Cost Management: Week 2 Master Budget Flexible Budgets (Version 5)

Reminder: There are several versions of this week’s questions, please make sure you have reviewed and compared our questions with your questions. ACCT434 Advanced Cost Management Week 2 Master Budget Flexible Budgets (Version 5) 1. (TCO 2) If initial budgets prove unacceptable, planners achieve the MOST benefit from (Points : 3) planning again in light of feedback and current conditions. deciding not to budget this year. accepting an unbalanced budget. using last year's budget. 2. (TCO 2) A budget can help implement (Points : 3) strategic planning. long-run planning. short-run planning. All of the above 3. (TCO 2) The operating budget process generally concludes with the preparation of the (Points : 3) research and development budget. budgeted income statement. distribution budget. production budget. 4. (TCO 2) A feature of a standard-costing system is that the costs of every product or service planned to be worked on during the period can be computed at the start of that period. This feature of standard costing makes it possible to (Points : 3) maintain actual costs as an integral part of the costing system. use a simple recording system. eliminate routine reports. justify eliminating the budgeting process. 5. (TCO 2) An unfavorable variance indicates that actual costs are less than budgeted costs. actual revenues exceed budgeted revenues. the actual amount decreased operating income relative to the budgeted amount. All of the above 6. (TCO 2) Performance evaluation using variance analysis should guard against (Points : 3) emphasis on a single performance measure. emphasis on total company objectives. basing effect of a manager's action on total costs of the company as a whole. highlighting individual aspects of performance. 7. (TCO 2) Variable overhead costs include (Points : 3) machine maintenance. depreciation on plant equipment. plant-leasing costs. the plant manager's salary. 8. (TCO 2) Katie Enterprises reports the year-end information from 20X8 as follows: Sales (70,000 units) $560,000; Cost of goods sold 210,000; Gross margin 350,000; Operating expenses 200,000; Operating income $150,000. Katie is developing the 20X9 budget. In 20X9, the company would like to increase selling prices by 4%, and as a result expects a decrease in sales volume of 10%. All other operating expenses are expected to remain constant. Assume that COGS is a variable cost and that operating expenses are a fixed cost. What is budgeted operating income for 20X9? (Points : 3) $135,160 $145,160 $125,160 $130,160 9. (TCO 2) Hester Company budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for the fiscal year of July 1, 2008, through June 30, 2009. July 1, 2008 June 30, 2009 Raw material (note) 40,000 10,000 Work in process 8,000 8,000 Finished goods 30,000 5,000 (note) Three units of raw material are needed to produce each unit of finished product. If Hester Company plans to sell 500,000 units during the 2008-2009 fiscal year, the number of units it would have to manufacture during the year would be (Points : 3) 505,000. 500,000. 480,000. 475,000. 10. (TCO 2) Information pertaining to Brenton Corporation's sales revenue is presented in the following table: February March April Cash Sales $160,000 $150,000 $120,000 Credit Sales 300,000 400,000 280,000 Total Sales $460,000 $550,000 $400,000 Management estimates that 5% of credit sales are not collectible. Of the credit sales that are collectible, 60% are collected in the month of sale and the remainder in the month following the sale. Cost of purchases of inventory each month are 70% of the next month's projected total sales. ll purchases of inventory are on account; 25% are paid in the month of purchase, and the remainder is paid in the month following the purchase. Brenton's budgeted total cash receipts in March are (Points : 3) $478,000. $457,000. $492,000. $428,000.