Exam 3 Acct

A manufacturing company has budgeted direct labor hours of 600 at a variable overhead rate per direct labor hour of $20. The budgeted fixed cost is $500 per month. The total budgeted overhead cost will be $

12500

A company's sales budget indicates the following sales: January: 25,000; February: 30,000; March: 35,000. Beginning inventory is 12,000 units and the company desires ending inventory of 45% of the next month's sales. Units to be produced in January will be

26500 30000*.45 + 25,000 - 12000

A manufacturing company has units to produce of 940 units for the month. Each unit requires 3.5 hours of labor to produce. The cost of direct labor is $15 per hour. The total cost of direct labor for the month will be $

49350

Fixed budget

Based on a single activity level

Flexible budget

Based on several activity levels

The budget which shows predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period is the:

Budgeted Balance sheet

Uncontrollable costs

Costs not within manager's control or influence

Variance

Diff between budgeted and actual amounts is Favorable --> leads to higher income Unfavorable --> Leads to lower income

controllable costs

Manager can control or influence these costs

A manufacturing company would typically prepare all of the following budgets except: Multiple choice question. Cash budget Factory overhead budget Production budget Merchandise inventory budget

Merchandise inventory budget

standard cost

Preset cost for a product or service

Standard costs are

Preset costs for delivering a product or service under normal conditions. Used for DM, DL, and overhead

Purpose of flexible budget

Provide a "what-if" analysis that includes best-case and worst-case activity levels. Provides an "apples to apples" comparison. Prepared after period ends help evaluate performance. Management can focus on problems.

Total budgeted costs formula

Total fixed costs + (Total VC per unit x units of activity level)

Management by exception

When managers focus on signfiicant differences between actual costs and standard costs

profit center

a center that incurs costs and generates revenues

investment center

a center that incurs costs and generates revenues and where managers are responsible for center investments

cost center

a center that incurs costs but generates no revenues

A flexible budget performance report compares

actual performance and budgeted performance based on actual level.

Direct expenses

can be readily traced to departments, not allocated

Budget reports

compare actual results to budgeted results.

All of the following are guidelines that should be followed for budgets to be a positive motivating force except: a. evaluations offer opportunities to explain differences between actual and budgeted amounts b. employees should help prepare the budget c. goals should be challenging but attainable d. budgets should be prepared using a top-down approach

d. budgets should be prepared using a top-down approach

Indirect expenses

incurred for joint benefit of more than one department; must be allocated

Budgeted performance considers all of the following in relation to a benchmark: (Select all that apply). Multiple select question. Expected performance factors Industry factors Economic factors Past performance factors Company factors

industry economic company

A flexible budget

or variable budget, based on more than one amount of sales or other activity measure.

A manufacturing company's sales budget indicates the following sales: January: $25,000; February: $30,000; March: $35,000. The company expects 70% of the sales to be on account and the remainder to be cash sales. Credit sales are collected in the month following the sale. The total cash collected during March will be $

prior period + current prior = .70*30,000 = 21000 current = .30*35000 = 10500 = 31500

Fixed budget

static budget, based on one predicted amount of sales or other activity measure.