31. A flexible budget is sometimes referred to as a variable budget
a. True
b. False
32....Activity...based budgets also focus on business processes.
33. Asian Lamp Company manufactures lamps. The estimated number of lamp sales for the last three months of 2014 are as follows:
Finished goods inventory at the end of September was 3,000 units. Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales. Asian Lamp spects to sell the lamps for $25 each. January 2014 sales is projected at 16,000 lamps.
Refer to Figure 8-2. In going from the sales budget to the production budget, adjustments to the sales budget need to be made for
a. cash receipts
b. selling expenses
c. finished goods inventories
d. factory overhead costs
34. Alpha Beta Company has a sales budget for next month of $50,000. Cost of goods sold is expected to be 60 percent of sales. All goods are purchased in the month used and paid for in the month following their purchase. The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is desired. Beginning accounts payable is $13,000.
How much merchandise inventory will Alpha Beta Company need to purchase next month?
a. $29,500
b. $30,000
c. $29,000
d. $30,500
($50,000 x 0.6) + $2,000 - $1,500 - $30.500
35. If production was budgeted at 400 units and the actual production was 420 units, what would be the static budget variance for materials if the actual cost of materials was $4,150 and the budgeted cost per unit is $10?
a. $200 U
b. $150 U
c. $50 F
d. $100 F
Actual: $4,150
Budget (400 x $10): 4,000
Variance: $150 U
36. Rammazzotti, Inc., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below:
Rammazzotti Inc., had the following budgeted data:
Unit sales for 2014: 26,000
Unit production for 2014: 26,000
Budgeted fixed overhead for 2014:
Supervision: $ 800
Depreciation: 2,000
Rent: 100
Budgeted variable costs per unit:
Direct materials: $0.15
Direct labor: 0.20
Supplies: 0.02
Indirect labor: 0.05
Power: 0.02
The following actually occurred:
Actual unit sales for 2014: 24,000
Actual unit production for 2014: 28,000
Actual fixed overhead for 2014:
Supervision: $ 850
Depreciation: 2,000
Rent: 100
Actual variable costs:
Direct materials: $3,500
Direct labor: 4,900
Supplies: 530
Indirect labor: 1,250
Power: 470
Refer to Figure 8-8. The total budgeted costs for 2014 were
a. $11,440
b. $14,340
c. $13,510
d. $13,460
37. Silver Faces, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed:
What is the budget for maintenance if 20,000 reflectors were made that required 3,500 machine hours, 12 batches, and 5,000 purchase orders?
a. $3,500
b. $14,000
c. $15,000
d. $29,000
$15,000 + ($4 x 3,500) = $29,000
38. Activity-based budgets compare costs for items based on activities such as
a. direct labor
b. power
c. setups
d. direct material
39. In a for-profit service firm, the sales budget is also the production budget.
a. True
b. False
40. If a static budget forecasted 100,000 units to be sold in the fiscal year and actual units sold amounted to 120,000, what assumption could be made under a flexible budget process?
a. Since the actual volume exceeds the budgeted volume, there is an unfavorable volume variance for output
b. The effectiveness of the manager is in question
c. Fixed costs would increase in the flexible budget due to the volume change
d. Variable costs will be higher than projected in the static budget due to the volume variance
a. True
b. False
32....Activity...based budgets also focus on business processes.
33. Asian Lamp Company manufactures lamps. The estimated number of lamp sales for the last three months of 2014 are as follows:
| Month | Sales |
| October | 10,000 |
| November | 14,000 |
| December | 13,000 |
Finished goods inventory at the end of September was 3,000 units. Ending finished goods inventory is budgeted to equal 25 percent of the next month's sales. Asian Lamp spects to sell the lamps for $25 each. January 2014 sales is projected at 16,000 lamps.
Refer to Figure 8-2. In going from the sales budget to the production budget, adjustments to the sales budget need to be made for
a. cash receipts
b. selling expenses
c. finished goods inventories
d. factory overhead costs
34. Alpha Beta Company has a sales budget for next month of $50,000. Cost of goods sold is expected to be 60 percent of sales. All goods are purchased in the month used and paid for in the month following their purchase. The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is desired. Beginning accounts payable is $13,000.
How much merchandise inventory will Alpha Beta Company need to purchase next month?
a. $29,500
b. $30,000
c. $29,000
d. $30,500
($50,000 x 0.6) + $2,000 - $1,500 - $30.500
35. If production was budgeted at 400 units and the actual production was 420 units, what would be the static budget variance for materials if the actual cost of materials was $4,150 and the budgeted cost per unit is $10?
a. $200 U
b. $150 U
c. $50 F
d. $100 F
Actual: $4,150
Budget (400 x $10): 4,000
Variance: $150 U
36. Rammazzotti, Inc., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below:
Rammazzotti Inc., had the following budgeted data:
Unit sales for 2014: 26,000
Unit production for 2014: 26,000
Budgeted fixed overhead for 2014:
Supervision: $ 800
Depreciation: 2,000
Rent: 100
Budgeted variable costs per unit:
Direct materials: $0.15
Direct labor: 0.20
Supplies: 0.02
Indirect labor: 0.05
Power: 0.02
The following actually occurred:
Actual unit sales for 2014: 24,000
Actual unit production for 2014: 28,000
Actual fixed overhead for 2014:
Supervision: $ 850
Depreciation: 2,000
Rent: 100
Actual variable costs:
Direct materials: $3,500
Direct labor: 4,900
Supplies: 530
Indirect labor: 1,250
Power: 470
Refer to Figure 8-8. The total budgeted costs for 2014 were
a. $11,440
b. $14,340
c. $13,510
d. $13,460
| FC | $800+$2,000+ $100 = | $2,900 |
| VC | $3,900 $5,200+ $520+ $1,300+ $520 = | $11.440 |
| TC | $14,340 |
37. Silver Faces, Inc., has done a cost analysis for its production of reflectors. The following activities and cost drivers have been developed:
| Activity | Cost Formula |
| Maintenance | $15,000+ $4 per machine hour |
| Machining | $35,000 +$1 per machine hour |
| Inspection | $60,000+ $750 per batch |
| Setups | $1,000 per batch |
| Purchasing | $50,000+ $10 per purchase order |
What is the budget for maintenance if 20,000 reflectors were made that required 3,500 machine hours, 12 batches, and 5,000 purchase orders?
a. $3,500
b. $14,000
c. $15,000
d. $29,000
$15,000 + ($4 x 3,500) = $29,000
38. Activity-based budgets compare costs for items based on activities such as
a. direct labor
b. power
c. setups
d. direct material
39. In a for-profit service firm, the sales budget is also the production budget.
a. True
b. False
40. If a static budget forecasted 100,000 units to be sold in the fiscal year and actual units sold amounted to 120,000, what assumption could be made under a flexible budget process?
a. Since the actual volume exceeds the budgeted volume, there is an unfavorable volume variance for output
b. The effectiveness of the manager is in question
c. Fixed costs would increase in the flexible budget due to the volume change
d. Variable costs will be higher than projected in the static budget due to the volume variance
