Acct Exam 3 Study

Bartosiewicz Clinic uses client-visits as its measure of activity. During January, the clinic budgeted for 4,900 client-visits, but its actual level of activity was 4,880 client-visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January: Data used in budgeting: The *activity* variance for net operating income in January would be closest to:

Variable: Revenue - Total Expenses = 15.60 Fixed: Total Expenses = 49,400 Flexible Budget: 15.60 x 4,880 = 26,728 Planning Budget: 15.60 x 4,900 = 27,040 - =312 U

When preparing a direct materials budget, the required purchases of raw materials in units equals:

raw materials needed to meet the production schedule + desired ending inventory of raw materials − beginning inventory of raw materials.

The usual starting point for a master budget is:

the sales forecast or sales budget.

The BRS Corporation makes collections on sales according to the following schedule: 45% in month of sale 50% in month following sale 5% in second month following sale The following sales have been budgeted: Sales April$160,000 May$180,000 June$170,000 Budgeted cash collections in June would be:

$174,500 Exp: June sales collected in June ($170,000 × 45%)$ 76,500 May sales collected in June ($180,000 × 50%)$ 90,000 April sales collected in June ($160,000 × 5%)$ 8,000 Total cash collections in June$ 174,500

Sedita Incorporated is working on its cash budget for July. The budgeted beginning cash balance is $24,000. Budgeted cash receipts total $196,000 and budgeted cash disbursements total $195,000. The desired ending cash balance is $41,000. The excess (deficiency) of cash available over disbursements for July will be

$25,000 exp: 24,000 + 196,000 = 220,000 - 195,000 = 25,000

Hamiter Framing's cost formula for its supplies cost is $1,640 per month plus $9 per frame. For the month of August, the company planned for activity of 572 frames, but the actual level of activity was 573 frames. The actual supplies cost for the month was $7,080. The supplies cost in the *planning* budget for August would be closest to:

$6,788 exp: Cost = Fixed cost + (Variable cost per unit × q) = $1,640 + ($9 × 572) = $6,788

Given the following data: Average operating assets$ 1,116,000 Total liabilities$ 167,400 Sales$ 837,000 Contribution margin$ 502,200 Net operating income$ 167,400 Return on investment (ROI) is:

15.0% exp: ROI = Net operating income ÷ Average operating assets = $167,400 ÷ $1,116,000 = 15.0%

Parwin Corporation plans to sell 24,000 units during August. If the company has 8,500 units on hand at the start of the month, and plans to have 9,500 units on hand at the end of the month, how many units must be produced during the month?

25,000 Exp: 24,000 + 9,500 = 33,500 + 8,500 = 25,000

Cabell Products is a division of a major corporation. Last year the division had total sales of $21,720,000, net operating income of $1,346,640, and average operating assets of $4,778,400. The company's minimum required rate of return is 15%. The division's margin is closest to:

6.2% exp: Margin = Net operating income ÷ Sales = $1,346,640 ÷ $21,720,000 = 6.2%

Which of the following would be considered an operating asset in return on investment computations?

Accounts receivable.

Which of the following will not result in an increase in return on investment (ROI), assuming other factors remain the same?

An increase in operating assets.

Which of the following may appear on a flexible budget performance report?

An unfavorable activity variance. A favorable revenue variance. An unfavorable spending variance. - All of the above may appear on a flexible budget performance report.

All other things equal, which of the following would increase a division's residual income?

Decrease in average operating assets.

Tracie Corporation manufactures and sells women's skirts. Each skirt (unit) requires 2.2 yards of cloth. Selected data from Tracie's master budget for next quarter are shown below: July August September Each unit requires 0.7 hours of direct labor, and the average hourly cost of Tracie's direct labor is $20. What is the cost of Tracie Corporation's direct labor in September?

Just take the months budgeted production and multiply it by the cost per one unit then multiply that by the average hourly cost of direct labor

ROI is

Margin x Turnover

Margin is

Net Operating Income / Sales

Which of the following budgets are prepared before the sales budget? Budgeted Income Statement (Y or N) Direct Labor Budget (Y or N)

No and No

Turnover is

Sales / Average Operating Assets

The *spending* variance for medical supplies in November would be closest to:

Take Actual Results of medical supplies = 33,941 Then you take the cost of medical supplies per visit (7.50) and x by the number given 4150 and add the per month medical supplies to get 33,100. - =841 U

In a flexible budget, what will happen to fixed costs as the activity level increases?

The fixed cost per unit will decrease.