ACCY 202 Lecture Notes - Lecture 16: Direct Labor Cost, Budget, General Order

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ivoryhippopotamus195

5 Dec 2018

School

Department

Patterson School of Accountancy

Course

ACCY 202

Professor

Barton

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Document Summary

Exam 3 review, chapters 21, 22, and 24. Be familiar with the general order in which the budgets are prepared. You should be able to prepare a sales budget, production budget, direct materials purchases budget, and cash budget. Be very careful with your study of the cash budget, and make sure you can work the problems we worked in class and for homework. Be able to answer questions about whether a company would need to borrow money in a given month. Be able to prepare a flexible budget for a given level of production (both the complete budget including sales or the budget for just the expenses). It will require you to calculate the unit cost for variable expenses and adjust the total variable costs to the level required for the other levels of production. The key to the fixed costs is to remember that those are fixed at all levels within a relevant range.

Related Questions

Answer each question with a minimum of two to three(2-3) sentences. Some questions will require substantiallymore than that to fully respond to the prompt. Be thorough whenaddressing each item and make sure you answer each part ofthe prompt.

What is a budget?

What are the (six) benefits of having a budget?

What is a master budget? Describe its components.

What is a static planning budget?

What is a flexible budget?

How does a flexible budget differ from a static planningbudget?

What are three reasons that actual results may differ from whathad been budgeted for at the beginning of a period?

How does a flexible budget account for these variances?

5.Operating budgets consist of all except: Select one:

a. sales budget

b. pro forma income sheet

c. production budget

d. direct materials budget

e. direct labor budget

6-Major steps in preparing the budget include all except: Selectone:

a. break-down of marginal revenue and expenses

b. prepare a sales forecast

c. determine expected production volume

d. estimate manufacturing costs and operating expenses

e. determine cash flow and other financial effects

7-Cash budget consists typically of all the following except:Select one:

a. cash receipts section

b. cash disbursement section

c. cash surplus or deficit section

d. cash retrieval section

e. financing section

8-The performance report based on analysis of variances shouldaddress the following questions except: Select one:

a. is it favorable or unfavorable

b. if unfavorable, is it significant enough for furtherinvestigation

c. if it is significant, is it controllable

d. if it is controllable who is responsible for the variance

e. what causes favorable variances

chocolaterabbit394

I need some feedback if these are correct.
1.
A flexible budget is a budget that:
A) is updated with actual costs as they occur during theperiod.
B) is updated to reflect the actual level of activity during theperiod.
C) is prepared using a computer spreadsheet application.
D) contains only variable production costs.
2.
Ofarrell Snow Removal's cost formula for its vehicle operating costis $1,840 per month plus $377 per snow-day. For the month ofNovember, the company planned for activity of 14 snow-days, but theactual level of activity was 19 snow-days. The actual vehicleoperating cost for the month was $9,280. The vehicle operating costin the flexible budget for November would be closest to:
A) $9,003
B) $7,118
C) $9,280
D) $9,660
3.
Entler Framing's cost formula for its supplies cost is $2,250 permonth plus $16 per frame. For the month of June, the companyplanned for activity of 502 frames, but the actual level ofactivity was 497 frames. The actual supplies cost for the month was$10,580. The supplies cost in the planning budget for June would beclosest to:
A) $10,580
B) $10,282
C) $10,686
D) $10,202
4.
Johannsen Catering uses two measures of activity, jobs and meals,in the cost formulas in its budgets and performance reports. Thecost formula for catering supplies is $310 per month plus $103 perjob plus $23 per meal. A typical job involves serving a number ofmeals to guests at a corporate function or at a host's home. Thecompany expected its activity in February to be 28 jobs and 187meals, but the actual activity was 26 jobs and 192 meals. Theactual cost for catering supplies in February was $7,620. Thecatering supplies in the flexible budget for February would beclosest to:
A) $7,495
B) $7,404
C) $7,620
D) $6,960
5.
Kimbril Catering uses two measures of activity, jobs and meals, inthe cost formulas in its budgets and performance reports. The costformula for catering supplies is $530 per month plus $91 per jobplus $12 per meal. A typical job involves serving a number of mealsto guests at a corporate function or at a host's home. The companyexpected its activity in January to be 27 jobs and 174 meals, butthe actual activity was 31 jobs and 173 meals. The actual cost forcatering supplies in January was $5,330. The activity variance forcatering supplies in January would be closest to:
A) $255 F
B) $255 U
C) $352 F
D) $352 U
6.
Lapinsky Air uses two measures of activity, flights and passengers,in the cost formulas in its budgets and performance reports. Thecost formula for plane operating costs is $31,400 per month plus$2,148 per flight plus $7 per passenger. The company expected itsactivity in April to be 89 flights and 261 passengers, but theactual activity was 84 flights and 260 passengers. The actual costfor plane operating costs in April was $204,810. The spendingvariance for plane operating costs in April would be closestto:
A) $8,842 U
B) $19,589 F
C) $19,589 U
D) $8,842 F
7.
Velten Corporation's flexible budget performance report for lastmonth shows that actual indirect materials cost, a variable cost,was $45,198 and that the spending variance for indirect materialscost was $9,114 favorable. During that month, the company worked18,600 machine-hours. Budgeted activity for the month had been19,000 machine-hours. The cost formula per machine-hour forindirect materials cost must have been closest to:
A) $1.90
B) $2.86
C) $1.94
D) $2.92
8.
Which of the following comparisons best isolates the impact thatchanges in prices of inputs and outputs have on performance?
A) static planning budget and flexible budget
B) static planning budget and actual results
C) flexible budget and actual results
D) master budget and static planning budget
9.
The excess or deficiency of cash available over disbursements onthe cash budget is calculated as follows:
A) The beginning balance less the expected cash receipts less theexpected cash disbursements.
B) The cash available less the expected cash receipts plus theexpected cash disbursements.
C) The beginning balance plus the expected cash receipts less theexpected cash disbursements.
D) None of the above.
10.
There are various budgets within the master budget. One of thesebudgets is the production budget. Which of the following BESTdescribes the production budget?
A) It details the required direct labor hours.
B) It details the required raw materials purchases.
C) It is calculated based on the sales budget and the desiredending inventory.
D) It summarizes the costs of producing units for the budgetperiod.
1.B
2.A
3.A
4.C
5.D
6.C
7.A
8.B
9.A
10.C

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ACCY 202 Lecture Notes - Lecture 16: Direct Labor Cost, Budget, General Order

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