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

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 2) 1. (TCO 2) Benchmarking is (Points : 3) relatively easy to do with the amount of available financial information about companies. best done with the best in their field regardless of type of company. simply reporting the magnitude of differences in costs or revenues across companies. making comparisons to direct attention to why differences in costs exist across companies. 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) Which budget is not necessary to prepare the budgeted balance sheet? (Points : 3) Revenues budget Budgeted income statement Cash budget Budgeted statement of cash flows 4. (TCO 2) A flexible budget (Points : 3) provides favorable operating results. is based on the budgeted level of output. is developed at the end of the period. is another name for management by exception. 5. (TCO 2) A variance is (Points : 3) the difference between a budgeted amount and a standard amount. the gap between an actual result and a benchmark amount. the required number of inputs for one standard output. the difference between an actual result and a budgeted amount. 6. (TCO 2) Which of the following statements is true about overhead cost variance analysis using activity-based costing? (Points : 3) Overhead cost variances are calculated for output-unit level costs only. Overhead cost variances are calculated for variable manufacturing overhead costs only. A four-variance analysis can be conducted. Activity-based costing uses input measures for all activities, resulting in the inability to do flexible budgets needed for variance analysis. 7. (TCO 2) Overhead costs have been increasing due to all of the following except (Points : 3) product proliferation. tracing more costs as direct costs with the help of technology. more complexity in distribution processes. increased automation. 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 20X2 budget. In 20X2, 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 sales for 20X2? (Points : 3) $582,400 $524,160 $504,000 $560,000 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, 20x2, through June 30, 20x3. July 1, 20X2 June 30, 20X3 Raw material1 40,000 10,000 Work in process 8,000 8,000 Finished goods 30,000 5,000 1 Three (3) units of raw material are needed to produce each unit of finished product. If Hester Company plans to sell 600,000 units during the 20x2-20x3 fiscal year, the number of units it would have to manufacture during the year would be (Points : 3) 625,000. 575,000. 540,000. 640,000. 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 April are (Points : 3) $448,000. $437,000. $431,600. $328,000.