ACCT 2 EXAM 3 REVIEW

Hatzenbuhler Manufacturing Corporation has prepared the following overhead budget for next month. Activity level........................ 6,800 machine-hours Variable overhead costs: Supplies............................ $22,440 Indirect labor................... 55,760 Fixed overhead costs: Supervision..................... 19,300 Utilities............................ 5,700 Depreciation.................... 7,400 Total overhead cost......... $110,600 The company's variable overhead costs are driven by machine-hours. What would be the total budgeted overhead cost for next month if the activity level is 6,600 machine-hours rather than 6,800 machine-hours? Assume that the activity levels of 6,800 machine-hours and 6,600 machine-hours are within the same relevant range.

$108,300.00

Product A has a sales price of $10 per unit. Based on a 10,000-unit production level, the variable costs are $6 per unit and the fixed costs are $3 per unit. Using a flexible budget for 12,500 units, what is the budgeted operating income from Product A?

$20,000

Which of the following budgets are prepared before the sales budget?

Budgeted I/S: NO Direct Labor Budget: NO

Which of the following might be included as a disbursement on a cash budget?

Depreciation on factory equipment: NO Income taxes to be paid: YES

When using a flexible budget, what will occur to fixed costs as the activity level increases within the relevant range?

Fixed costs per unit will decrease

Comparing actual results to a budget based on actual activity for the period is possible with the use of a:

Flexible budget

Which of the following benefits could an organization reasonably expect form an effective budget program?

Increased employee motivation: YES Uncover potential bottlenecks: YES

There are various budgets within the master budget. One of these budges is the production budget. Which of the following BEST describes the production budget?

It is calculated based on the sales budget and the desired ending inventory.

In developing a flexible budget within a relevant range of activity:

It is necessary to relate variable cost data tot he activity increments chosen

A plan that reports the units or costs of merchandise to be purchased by a merchandising company during the budget period is called a:

Merchandise purchases budget

The set of periodic budgets that are prepared and periodically revised in the practice of continuous budgeting is called:

Rolling budgets

Which of the following represent the normal sequence in which the below budgets are prepared?

Sales budget, budgeted Income Statement, Budgeted Balance Sheet

A major disadvantage of static budgets is:

That the variances between actual and budget on a static budget result from comparing actual costs at one level of activity to budgeted costs at a different level of activity

Which of the following statements is NOT correct concerning the Manufacturing Overhead Budget?

The Manufacturing Overhead Budget shows only the variable portion of manufacturing overhead

Which of the following is NOT an objective of the budgeting process?

To ensure that the company continues to grow

All of the following are considered to be benefits of participative budgeting, except for:

When managers set their own targets for the budget, top management need not be concerned with the overall profitability of operations.

A static budget is:

a budget for a single level of activity