ACCT 207 ASP Chapter 9

Producto Corp. is preparing its overhead budget. Budgeted fixed overhead amounts to $1,670,000. Budgeted variable overhead rate is $10 per direct labor hour. The company estimates 25,000 direct labor hours and direct labor cost of $925,000. Producto's total overhead budget is:

$1,920,000.

After examining the records of Gamma Inc. for the month of December, the following information is obtained: Beginning cash balance$2,800Cash receipts58,000Cash payments40,000Loan repayments8,000 Based on the given information, compute Gamma's ending cash balance for the month of December.

$12,800

After examining the records of Theta Company for the month of October, the following information is obtained: Beginning cash balance$2,700Cash receipts56,000Cash payments41,000Minimum cash balance1,000Loan repayments15,000 Based on the given information, calculate Theta's cash surplus (deficiency) for the month of October.

$16,700

Assume that the salespeople of Excellent Corp. are paid 2% of sales as commission. The level of sales is $260,000 for this month, and the only fixed selling costs are $30,000. Excellent's budgeted selling costs for this month are:

$35,200.

Assume that the salespeople of Excellent Corp. are paid 5% of sales as commission. The level of sales is $240,000 for this month, and the only fixed selling costs are $30,000. Excellent's budgeted selling costs for this month are:

$42,000.

A company is planning to sell 2,900 tables in the first quarter. Desired ending inventory is 250 tables, and beginning inventory is 400 tables. How many tables need to be produced during the first quarter?

2,750 tables

Which of the following is true of a continuous budget?

A continuous budget is a plan where one month or quarter is dropped as it expires and another future period is added.

Which of the following budgets enables a firm to compute expected costs for a range of activity levels?

A flexible budget

Which of the following budgets serves as the basis for all other operating budgets and most financial budgets?

A sales budget

Which of the following is an operating budget?

A sales budget

Which of the following statements is true of budgets?

Budgets help business owners and managers to plan ahead.

_____ are excluded from the cash disbursements section of a cash budget.

Depreciation expenses

_____ budgets detail the inflows and outflows of cash.

Financial

Which of the following is true of participative budgeting?

It fosters a sense of responsibility among managers.

Which of the following is true of the master budget of a company?

It is a comprehensive financial plan for an organization as a whole.

Which of the following is true of a direct materials purchases budget?

It must be separately prepared for every type of raw material used.

_____ budgets describe the income-generating activities of a firm: sales, production, and finished goods inventories.

Operating

The actual and budgeted costs for Learner Corp.'s actual level of activity are as follows: Actual CostsBudgeted CostsUnits produced1,5001,500Direct materials cost$5,690$5,080Direct labor cost1,6001,460VOH:Maintenance725635Power250230FOH:Grounds keeping1,4101,240Depreciation530530 Which of the following conclusions can be made based on the provided data?

There is an unfavorable variance for grounds keeping.

The actual and budgeted costs for Learner Corp.'s actual level of activity are as follows:Actual CostsBudgeted CostsUnits produced1,5001,500Direct materials cost$5,670$5,090Direct labor cost1,6401,480VOH:Maintenance720630Power280210FOH:Grounds keeping1,4201,280Depreciation520520Which of the following conclusions can be made based on the provided data?

There is an unfavorable variance for grounds keeping.

Which of the following formulas is used to compute units to be produced while preparing a production budget?

Units to Be Produced = Expected Units Sales + Units in Desired Ending Inventory - Units in Beginning Inventory

In an overhead budget, _____.

both variable and fixed overhead items are included

A(n) _____ is a financial budget.

budget for capital expenditures

A budgeted income statement is the ultimate outcome of the:

operating budgets.

An overhead budget shows the expected cost of all production costs:

other than direct materials and direct labor.

A strategic plan:

plots a direction for an organization's future activities.

Budgeted costs change because:

total variable costs go up as output increases.

Budgetary slack exists when a manager deliberately:

underestimates revenues.

Budgets can be improved as performance measures by:

using participative budgeting.