ACC 406 Chapter Notes - Chapter 11: Stabilisation Force In Bosnia And Herzegovina

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jadegnat800

12 Nov 2012

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Acc406 - chapter 11: using budgets for performance evaluation, static budgets vs. Performance report = compares actual costs with budgeted costs: two possibilities exist for making this comparison, 1) comparison of actual costs with the budgeted costs for the budgeted level of activity. Report based on static budgets: 2) comparison of actual costs with the actual level of activity. Flexible budget = enables a firm to compute expected costs for a range of activity levels: two types of flexible budgets, 1) before-the-fact. Helps managers deal with uncertainty by allowing them to see the expected outcomes for a range of activity levels. Used to generate financial results for a number of plausible scenarios: 2) after-the-fact. Used to compute what costs should have been for the actual level of activity. Flexible budget variance = difference between the actual amount and the flexible budget amount: overhead is divided into fixed and variable categories, total variable overhead variance.

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In a flexible budget performance report,

a. the budget is based on the activity that was expected at the beginning of the period.

b. the budget is adjusted to the actual activity for the period.

c. budgeted fixed costs are different than they would be in a static budget.

d. only the unfavorable variances are recorded for managers to explore.

blushweasel787

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

I NEED 2 PARAGRAPHS REPLY TO THIS TYPING SO I CAN COPY IT

How are budgets used for performance evaluation?

Financial budgets are normally prepared by the finance oraccounting department of a company. In small businesses, the owneris required to prepare this budget. A performance budget allowsbusinesses to plan for future expenditures. A budget, therefore,determines the amount of capital required to generate a certainlevel of sales. Businesses also adjust future expenses based on thepast budget performance. Through analyzing and reviewing thebudgets, a business will know the amount it has and identifies ifexternal financing is required.

A budget helps businesses track its spending variances. Althoughfinancial budgets are prepared on annual basis, tracking of budgetvariances is done monthly (Vitez, 2018). This tracking enablesbusinesses to understand where the funds were spent and comparewith the number of revenues generated. Anny excessive budgetvariances will require businesses to review their budgets to makesure they are accurately forecasted.

Businesses use performance reports to provide additionalinformation to the managers concerning the budget variances (Vitez,2018). This information may be either financial or non-financialinformation which may impact the budget to exceed its allowablelimits. Resource costs may cause the financial budgets to increase.Inferior resources are examples of non-financial budgets which maymake the budget to increase.

Performance evaluation requires managers to have a benchmark forthe past years will act as a guideline in future. This is normallycommunicated to managers through a budget for their responsibilitycenter. At the end of the accounting year, each center is evaluatedbased on the actual sales generated. This information will onlyappear on the performance evaluation report.

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ACC 406 Chapter Notes - Chapter 11: Stabilisation Force In Bosnia And Herzegovina

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