ACTG 2020 Lecture Notes - Lecture 1: Stabilisation Force In Bosnia And Herzegovina

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15 Sep 2016

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Chap 11 flexible budgets and overhead analysis. A performance report compares actual costs with budgeted costs: compare actual costs with the budgeted costs for the budgeted level of activity, compare actual costs with the actual level of activity. The first choice^ requires a report on static budgets, the second requires a reposed based on flexible budgets. Prepared in advance based on a particular level of activity and is not adjusted or altered regardless of any subsequent changes in actual output, revenues, or costs. Fundamentally, this does not make sense because two different activity levels are being compared. A meaningful report would compare the same activity levels. A flexible budget enables a firm to compute the expected costs per unit and then estimate costs for a range of activity levels or production volumes. Two types of flexible budgets: before the fact. Gives expected outcomes for a range of activity levels or production volumes.

Related Questions

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

magentabat295

Several years ago, Westmont Corporation developed acomprehensive budgeting system for planning and control purposes.While departmental supervisors have been happy with the system, thefactory manager has expressed considerable dissatisfaction with theinformation being generated by the system.

A typical departmental cost report for a recent periodfollows:

Assembly Department Cost Report For the Month Ended March 31
	Actual Results		Planning Budget		Variances
Machine-hours		50,000		55,000
Variable costs:
Supplies	$	48,950	$	52,250	$	3,300	F
Scrap		32,400		33,000		600	F
Indirect materials		82,800		88,000		5,200	F
Fixed costs:
Wages and salaries		89,250		90,000		750	F
Equipment depreciation		70,000		70,000		â
Total cost	$	323,400	$	333,250	$	9,850	F

After receiving a copy of this cost report, the supervisor ofthe Assembly Department stated, âThese reports are super. It makesme feel really good to see how well things are going in mydepartment. I canât understand why those people upstairs complainso much about the reports.â

For the last several years, the companyâs marketing departmenthas chronically failed to meet the sales goals expressed in thecompanyâs monthly budgets.

Required:

1. The companyâs president is uneasy about the cost reports,what can be the reason? (You may select more than oneanswer. Single click the box with the question mark to produce acheck mark for a correct answer and double click the box with thequestion mark to empty the box for a wrong answer.)

	Cost reports are ineffective sincebudgeted costs at one level of activity are compared to actualcosts at another level of activity.
	Cost reports show whether fixedcosts are controlled and do not show whether variable costs arecontrolled.
	Cost reports are effective sincebudgeted costs at one level of activity are compared to actualcosts at another level of activity.
	Cost reports show whether fixedcosts and variable costs are controlled.

2. What kind of reports should be used to give better insightinto how well departmental supervisors are controlling costs?

	Flexible budget performance reportsmust be used
	Fixed budget performance reportsmust be used

3. Complete the new performance report for the quarter, based onFlexible Budget Performance approach. (Indicate the effectof each variance by selecting "F" for favorable, "U" forunfavorable, and "None" for no effect (i.e., zero variance). Inputall amounts as positive values.)

4. Were costs well controlled in March?

chocolateworm132

B&L Landscapes, Inc. Mini Practice Part5

WITH EQUETIONS PLEASE, WOULD LIKE TO UNDERSTANDIT

Bill Graham and Larry Miller incorporated B&L Landscapes,Inc. on July 1, 2014. The business consists of lawn care andsprinkler system installations. In addition, they also sell twotypes of fertilizer.

During 2015, B&L Landscapes, Inc. acquired a 30% interest inCrestline Pipe. The president of Crestline wants to develop amanagement report to evaluate Manufacturing Overhead costs. Billand Larry want to help and have volunteered your services toprovide some managerial reporting for Crestline.

Crestline Pipe distributes high-quality PVC pipe and has thefollowing information for the month of March, 2015

Crestline Pipe

Manufacturing Overhead Budget (Static)

For the Month of March, 2015

Budgeted production inLF 117,500

Budgeted costs

Indirect materials ($0.30/DLH) 7,050

Indirect labor($0.50/DLH) 11,750

Utilities($0.40/DLH) 9,400

Maintenance($0.25/DLH) 5,875

Salaries 42,000

Depreciation 16,800

Propertytaxes 2,500

Insurance 1,200

Janitorial 1,300

Total budgetedcosts $97,875

Crestline Pipe

Manufacturing Overhead Costs (Actual)

For the Month of March, 2015

Actual production inLF 118,500

Actual costs

Indirectmaterials) 7,100

Indirectlabor 11,825

Utilities 10,700

Maintenance 5,900

Salaries 42,000

Depreciation 16,800

Propertytaxes 2,500

Insurance 1,200

Janitorial 1,300

Total budgetedcosts $99,325

Crestline Pipe had the following static budget and overheadcosts for March. Manufacturing overhead is budgeted based on directlabor hours (DLH). Direct labor is budgeted at 12 minutes perlinear foot (LF).

Instructions:

Prepare a flexible manufacturing overhead budget based on thefollowing amounts produced.

115,500 LF

116,500 LF

117,500 LF

118,500 LF

119,500 LF

Prepare a flexible budget report showing the differences(favorable and unfavorable) in manufacturing overhead costs for themonth of March. Include your analysis of what variances should beinvestigated further.

Prepare a responsibility report for the manufacturing overheadfor March, assuming only variable costs are controllable. Provide abrief evaluation of how this information could be used to measurethe manufacturing managerâs performance.

olivecrab193

ACTG 2020 Lecture Notes - Lecture 1: Stabilisation Force In Bosnia And Herzegovina

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