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Which of the following is not part of the operating​ budget?

A) The direct labor budget.

B) The cost of goods sold budget.

C) The production budget.

D) The capital budget.

E) The selling and administrative expenses budget.

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Deanna Hettinger
Deanna HettingerLv2
12 Mar 2020

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11. A static budget report is appropriate for

a. evaluating a manager’s performance in controlling variable costs.

b. fixed manufacturing costs and fixed selling and administrative expenses.

c. variable costs and fixed costs.

d. none of the above.
12. The flexible budget report includes all of the following sections except

a. cost data for variable and fixed costs .

b. data for excess of contribution margin over controllable fixed costs (controllable margin).

c. production data for a selected activity index.

d. All of the choices are included in a flexible budget report.


13. At 40,000 direct labor hours, the flexible budget for indirect labor is $160,000. If $172,000 of indirect labor costs are incurred at 44,000 direct labor hours, the flexible budget report should show the following difference for indirect labor.

a. $12,000 favorable.
b. $4,000 unfavorable.

c. $4,000 favorable.

d. $12,000 unfavorable.


14. Controllable fixed costs are deducted from the contribution margin to arrive at

a. income from operations.

b. net income.

c. controllable margin.
d. realized income.


15. The numerator in computing return on investment is

a. controllable margin.

b. average operating assets.

c. contribution margin.
d. net assets.

Nell Company Machining Department Monthly Production Budget

Wages $464,000

Utilities 27,000

Depreciation 45,000

Total $536,000

The actual amount spent and the actual units produced in the first three months of 2014 in the Machining Department were as follows:

Amount Spent Units Produced

January $505,000 112,000

February 482,000 102,000

March 460,000 92,000

The Machining Department supervisor has been very pleased with this performance, since actual expenditures have been less than the monthly budget. However, the plant manager believes that the budget should not remain fixed for every month but should "flex" or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows:

Wages per hour $19.00

Utility cost per direct labor hour $1.10

Direct labor hours per unit 0.20

Planned monthly unit production 122,000

a. Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume depreciation is a fixed cost. Enter all amounts as positive numbers. If required, use per unit amounts carried out to two decimal places.

Nell Company-Machining Department

Flexible Production Budget

For the Three Months Ending March 31, 2014

January February March

Units of production

Wages

Utilities

Depreciation $ 45000 $ 45000 $45000

Total

b.

Compare the flexible budget with the actual expenditures for the first three months.

January February March

Total flexible budget

Actual cost

Excess of actual cost over budget

1. (TCO 7) The culmination of preparing operating budgets is the: (Points : 4)

pro forma balance sheet.
production budget.
cash budget.
pro forma income statement.

Question 2. 2. (TCO 7) The starting point in preparing a master budget is the preparation of the: (Points : 4)
production budget.
sales budget.
purchasing budget.
personnel budget.
Question 3. 3. (TCO 7) The production budget shows planned sales of 32,000. Beginning inventory is 5,600. Units to be produced are 33,600. What is the desired ending inventory? (Points : 4)
4,000
5,600
6,400
7,200
Question 4. 4. (TCO 7) The direct materials budget shows:

Units to be produced

3,000

Production needs

12,000

Total needs

13,200



What are the direct materials per unit? (Points : 4)
0.44 pounds
4.0 pounds
4.4 pounds
Cannot be determined from the data provided.
Question 5. 5. (TCO 7) ABC Company expects the following sales and collection pattern for the last four months of the year:

Month

Cash Sales

Credit Sales

Total Sales

September

$25,000

$65,000

$90,000

October

$28,000

$72,000

$100,000

November

$26,000

$68,000

$94,000

December

$30,000

$71,000

$101,000


· 5% of credit sales are collected in the same month
· 65% of sales are collected in the following month
· 25% of sales are collected in the second following month
What are the projected cash collections for the month of December? (Points : 4)

$65,750
$92,200
$95,750
$99,000

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