Operational Budgeting

True/False 2. The typical starting point of a master budget would be to prepare a budgeted balance sheet. Answer: False 4. A company that is profitable may not have sufficient cash on hand to meet their immediate needs. Answer: True 5. In a master budget the sales forecast would be dependent upon the budgeted production figures. Answer: False . The behavioral approach to budgeting has as its goal the complete elimination of inefficiency. Answer: False !. A budget prepared using the total "uality management approach is always achievable by departments within a company. Answer: False ##. A company$s operating cycle is the time between purchases of direct materials and conversion of these materials bac% into cash. Answer: True #2. The operating cycle is the average time re"uired to manufacture products for sale. Answer: False #&. 'ecause a budget is merely a forecast of future events( its benefits are e)tremely narrow and limited. Answer: False #5. If the behavioral approach is employed to determine the levels at which budgeted amounts are set( then reasonable and achievable levels should be used. Answer: True #*. A master budget is a comprehensive financial plan setting forth the financial and operational goals of a business. Answer: True #+. A master budget actually includes a number of related budgets. Answer: True # . In preparing a master budget( budgeted levels for production( manufacturing costs( and operating e)penses normally are determined after preparing the sales forecast. Answer: True 2,. A cash budget determines the ma)imum limit amount of money that can be spent during the period. Answer: False

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2#. The preparation of a budgeted balance sheet re"uires consideration of the budgeted capital e)penditures and budgeted net income. Answer: True 22. A debt service budget summari-es cash payments re"uired for interest( and includes those re"uired to pay down principal. Answer: True 2&. If a budget is to provide a basis for evaluating departmental performance( departmental managers should not %now what their budget targets are until after the budget period has ended. Answer: False Multiple Choices: 25. A budget that adds a new month when the current month ends is called a: A. /apital budget. '. 0aster budget. /. 1olling budget. 2. There is no such budget. Answer: / 2*. The benefits of budgeting include all of the following e)cept: A. 3nabling the company to produce more for less cost. '. Assigning responsibility for situations that re"uire corrective action. /. /oordinating activities between departments within the organi-ation. 2. /reating standards for evaluating performance. Answer: A 2+. A master budget usually includes all of the following e)cept: A. A sales forecast. '. A cash budget. /. A pro4ected ta) return. 2. 5ro4ected financial statements. Answer: / 2 . A master budget can be used as a6n.: A. Aid to planning. '. 3valuation tool. /. 0eans to coordinate activities. 2. All of the above. Answer: 2

&#. 7hich of the following is not a benefit of a careful and thorough budgeting process8 A. 'udgeting increases management$s awareness of the company$s e)ternal economic environment. '. 'udgeted net income assures the company of operating profitably. /. The budget may provide advance warning of pending problems. 2. 'udgets provide a yardstic% for evaluating future performance. Answer: '
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&5. 7hen budgeted amounts are set at reasonable and achievable levels: A. They reflect a 9total "uality management9 philosophy of management. '. A highly efficient department should fall slightly short of budget standards. /. 0eeting the budgeted amounts ensures a ma)imum level of profitability. 2. Failure to stay within the budget is viewed as an unacceptable level of performance. Answer: 2 &*. A segment of a master budget relating to that portion of a business under the control of a particular manager is termed a: A. 5erformance report. '. 5roduction report. /. 1esponsibility budget. 2. /ash budget. Answer: / &+. 7hich of the following is not considered an operating budget8 A. 0anufacturing cost budget. '. 5roduction schedule. /. /apital e)penditures budget. 2. :ales forecast. Answer: / & . 7hich element of a master budget would normally be prepared first8 A. A production budget. '. A cash budget. /. A budget of operating e)penses. 2. A sales forecast. Answer: 2 &!. 7hich of the following is a ma4or component of a master budget8 A. A production throughput schedule. '. A machinery maintenance schedule. /. A manufacturing cost budget. 2. An employee training budget. Answer: / 4,. 7hich of the following is considered an operating budget estimate8 A. The prepayments budget. '. The debt service budget. /. The manufacturing cost budget. 2. The capital e)penditures budget. Answer: / 4#. The sales forecast directly affects many elements of the master budget. 7hich of the following would be least affected by short;term fluctuations in the sales forecasts8 A. The production schedule. '. The budgeted income statement. /. The capital e)penditures budget. 2. The operating e)pense budget. Answer: /
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42. The production schedule in units: A. /annot be prepared until the budgeted income statement is completed. '. Is dependent upon the sales forecast for the period. /. Is based upon the manufacturing cost budget( that is( upon the level of funds available for manufacturing costs. 2. Is the starting point in the preparation of the master budget. Answer: ' 4&. 5reparation of a budgeted income statement does not re"uire: A. 3stimates of cost of goods sold. '. 3stimates of the timing of cash receipts and payments. /. 5reparation of a sales forecast. 2. Anticipation of operating e)penses. Answer: '

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44. 7hich of the following is considered a financial budget estimate8 A. The manufacturing cost budget. '. The cost of goods sold budget. /. The operating e)pense budget. 2. The prepayments budget. Answer: 2 45. 7hich element of a master budget would normally be prepared last8 A. A cash budget. '. A budgeted balance sheet. /. A budgeted income statement. 2. A production budget. Answer: ' 4*. A cash budget is affected directly by each of the following e)cept: A. A capital e)penditures budget. '. A sales forecast. /. A manufacturing cost budget. 2. A budgeted income statement. Answer: 2 4+. In a cash budget( the budgeted level of cash receipts depends on all of the following e)cept: A. The sales forecast. '. The credit terms offered to customers. /. The credit terms offered by suppliers. 2. 3)perience in collecting receivables. Answer: / <se the following for "uestions 55;5* The following information is from the manufacturing budget and budgeted financial statements of Taylor /orp.:

55. 1efer to the information above. For the year( budgeted purchases of direct materials amounted to: A. =&42(,,,. '. =&2*(,,,. /. =&5 (,,,. 2. =&* (,,,. Answer: / Response: 84,000 + x _0342,000 = 100,000 X = 358,000 5*. 1efer to the information above. For the year( budgeted cash payments to suppliers amounted to: A. =&42(,,,. '. =&4 (,,,.

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/. =&&2(,,,. 2. =&52(,,,. Answer: ' Feedback: 52,000 + 358,000 x = 62,000 X = 348,000 5+. :horeline /orporation has budgeted a total of =&*#( ,, in costs and e)penses for the upcoming "uarter. >f this amount( =45(,,, represents depreciation e)pense and =+(&,, represents the e)piration of prepayments. :horeline $s current payables balance is =2*5(,,, at the beginning of the "uarter. 'udgeted payments on current payables for the "uarter amount to =&+,(,,,. The company$s estimated current payables balance at the end of the "uarter is: A. =#+!(5,,. '. =2,4(5,,. /. =2,&(5,,. 2. =&#,(,,,. Answer: ' Feedback: 265,000 + (361,800 45,000 7,300 ! 370,000 = 204,500

5 . 2olphin has budgeted sales for the upcoming "uarter as follows:

The desired ending finished goods inventory for each month is one;half of ne)t month$s budgeted sales. Three pounds of direct material are re"uired for each unit produced. If direct material costs =4 per pound( and must be paid for in the month of purchase( the budgeted direct materials purchases 6in dollars. for April are: A. =#!(! ,. '. =2,(+,,. /. =#!( ,,. 2. =# (,,,. Answer: / Feedback: "5(1,500 + "5(1,800 = 1,650 x 3 = 4,#50 x 4 = 1#,800 1eference: 2&?,2 <se the following to answer 5!;*, >n 0arch #( @rant /orporation plans to borrow =45,(,,, from the Ireland :tate 'an% by signing a #2A( #5;year note payable. The note calls for # , monthly payments of =5(,,,( which includes both interest and principal components. 5!. 1efer to the information above. @rant $s budgeted interest e)pense for 0arch is:
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A. =5,,. '. =4(,,,. /. =4(5,,. 2. =5(,,,. Answer: / Feedback: 450,000 x "01 = 4,500 *,. 1efer to the information above. >f @rant $s budgeted debt service cost of =5(,,, in 0arch( the amount applied to the principal of the note totals: A. =5,,. '. =4(,,,. /. =4(5,,. 2. =5(,,,. Answer: A Feedback: 5,000 4,500 = 500 <se the following to answer *#;*2 0orrow /orporation ma%es all sales on account. The Bune &,th balance sheet balance in its accounts
receivable is =4,,(,,,( of which =24,(,,, pertain to sales that were made during Bune. 'udgeted sales for Buly are =#(25,(,,,. 0orrow collects +,A of sales in the month of saleC 2,A in the following monthC and the final #,A in the second month after the sale.

*#. 1efer to the information above. 7hat are 0orrow $s budgeted collections for Buly8 A. = ,,(,,,. '. =!&!(,,,. /. =#(, &(,,,. 2. =!#5(,,,. Answer: ' Feedback: "7(1,250,000 + "2(240,000 + "1(160,000 = #3#,000 *2. 1efer to the information above. 7hat is the budgeted balance of 0orrow $s accounts receivable as of Buly &#8 A. =&+5(,,,. '. =&!!(,,,. /. =4#5(,,,. 2. =&!*(,,,. Answer: ' Feedback: "3(1,250,000 + "1(240,000 = 3##,000 <se the following to answer *&;*5 >n >ctober # of the current year( Bac%son /orporation prepared a cash budget for >ctober( Dovember( and 2ecember. All of Bac%sonEs sales are made on account. The following information was used in preparing estimated cash collections:

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Appro)imately *,A of all sales are collected in the month of the sale( &,A is collected in the following month( and #,A is collected in the month thereafter. *&. 1efer to the information above. 'udgeted collections from customers in >ctober total: A. =52(,,,. '. =&!(,,,. /. =4#(,,,. 2. =*&(,,,. Answer: / Feedback: "6(30,000 + "3(60,000 + "1(50,000 = 41,000 *4. 1efer to the information above. 'udgeted collections from customers in Dovember total: A. =42(,,,. '. =*&(,,,. /. =*!(,,,. 2. =5 (,,,. Answer: ' Feedback: "6(80,000 + "3(30,000 + "1(60,000 = 63,000 *5. 1efer to the information above. 'udgeted collections from customers in 2ecember total: A. =*5(,,,. '. =+,(,,,. /. =+4(,,,. 2. =*!(,,,. Answer: 2 Feedback: "6(70,000 + "3(80,000 + "1(30,000 = 6#,000 **. /apricorn( Inc. uses a fle)ible budget. /apricorn produced #*(,,, units in 0ay incurring direct materials cost of =2,(4 ,. Its master budget for the year pro4ected direct materials cost of =&*2(5,,( at a production volume of 2!,(,,, units. A fle)ible budget for 0ay should reflect direct materials cost of: A. =2,(4 ,. '. =2,(,,,. /. =2#(,,,. 2. =#!(+5,. Answer: ' Feedback: 362,500$2#0,000 = 1"25 x 16,000 = 20,000 1eference: 2&?,* <se the following to answer +,;+2
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Essay +&. :teps in the budgeting process Fisted below are eight operating budget estimates. In the space provided( list which of these estimates is typically made first( second( third( etc. 6a. ____>perating e)pense budget 6b. ____'udgeted income statement 6c. ____3nding finished goods forecast 6d. ____5roduction schedule 6in units. 6e. ____0anufacturing cost estimates 6f. ____/ost of goods sold budget 6g. ____:ales forecast 6h. ____0anufacturing cost budget Answer: 6a. + 6or *. 6b. 6c. 5 6d. 2 6e. & 6f. * 6or +. 6g. # 6h. 4 +4. 'udgeted material purchases and payments to suppliers >n Banuary # of the current period( 0atson /orporation has direct materials on hand of = ,(,,,. >f this amount( 0atson owes suppliers =4!(,,, on account. The company has prepared the following budget estimates for Banuary:

6a. 5urchases of direct materials budgeted in Banuary amount to: =??????????????? 6b. /ash payments to suppliers budgeted in Banuary amount to: =??????????????? /omputations

Answer: 6a. =&#5(,,, 6b. =&,4(,,, /omputations:

+5. 5roduction and purchases budgets :tewart Furniture( Inc. manufactures a variety of des%s( chairs( tables( and shelf units which are sold to public school systems throughout the 0idwest. The controller of the company$s :chool 2es% 2ivision is currently preparing a budget for the second "uarter of 2,, . The following sales forecast has been developed by the division$s sales manager:

The inventory of finished des% and chair sets at the end of each month must be e"ual to &,A of the budgeted sales for the ne)t month. >n April #( there will be 2(5,, units of des% and chair sets on hand. 7or%;in;process inventories are negligible and can be safely ignored. 3ach des% and chair set re"uires #, board feet of pine plan%s. 5ine plan%s cost =,.+, per board foot( and the division ends each month with enough pine to cover 2,A of the ne)t month$s production re"uirements. This re"uirement will be met on April # of 2,, . 1e"uired. 5repare a production budget and a materials purchases budget for April( 0ay( and Bune and in total for the three;month period.

Answer:

+*. 'udgeted debt service costs >n April #( /rawford /orporation borrowed =4,,(,,, from its ban% by signing a !A( 5;year note payable. The note calls for *, monthly payments of =*(#5,( which includes both interest and principal components. 6a. Interest e)pense budgeted for April amounts to: =??????????????? 6b. The carrying value of the note to be reported in the company$s budgeted balance sheet as of April &, is: =??????????????? 6c. Interest e)pense budgeted for 0ay amounts to 6round to nearest whole dollar.: =??????????????? 6d. The carrying value of the note to be reported in the company$s budgeted balance sheet as of 0ay &# is 6round to nearest whole dollar.: =??????????????? /omputations Answer: 6a. =&(,,, 6b. =&!*( 5, 6c. =2(!+*.& 6d. =&!&(*+*.&

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/omputations

++. /ash receipts budget The director of budgeting for 7ard 5roducts is beginning the process of preparing a cash budget for each month of the coming year. The sales forecast for the month of Banuary is as follows:

In the past( the accounts receivable originating from credit sales have been collected in the following pattern:

/redit sales in the last two months of the current year( some of which remain uncollected at year;end( were as follows:

/ompute the amount of cash e)pected to be collected from customers in Banuary of the coming year. =??????????????? /omputations /ash e)pected to be collected in Banuary: From Dovember credit sales =???????? Answer: =+2 (5,, /omputations

+ . 5reparation of cash budget <se the following information to prepare a cash budget for 2alton /orporation for the month of Bune 2,, . In 0ay( &,;day credit sales were =#5,(,,,C ,A of this amount is estimated to be collectible in Bune. Bune sales are estimated to be =45,(,,,C cash sales are usually 25A of total sales. >nly #,A of credit sales are collected in the month in which the sale is made. Total fi)ed e)penses are =5,(,,, per month( including =24(,,, depreciation. Gariable e)penses are 55A of sales. All e)penses re"uiring payment are paid in cash when incurred. A =5,(,,, note payable must be paid on Bune &,. As of 0ay &#( the cash balance is = 4(,,,.

Answer:

+!. Fle)ible budget;variances The cost accountant for Fleming( Inc.( prepared the following monthly performance report relating to the Finishing 2epartment:

6a. /ompute the amounts that should be included for each of the following in a fle)ible budget prepared for a *(5,,;unit level of production: 6#. 2irect materials: =??????????????? 62. 2irect labor: =??????????????? 6&. Fi)ed manufacturing overhead: =??????????????? 6b. Assume that a revised performance report is prepared for the *(5,,;unit level of production using a fle)ible budget approach. /ompute the cost variances for each of the following. Indicate whether each variance is favorable 6F. or unfavorable 6<.. 6#. 2irect materials: =??????????????? 62. 2irect labor: =??????????????? 6&. Fi)ed manufacturing overhead: =???????????????

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,. 3lements of the master budget 2escribe briefly the purpose of a master budget and discuss its elements. Answer: A master budget is a group of related budgets and forecasts which( together( summari-e and coordinate all planned activities of a business. The master budget usually consists of a sales forecast( a production schedule( a manufacturing costs budget( an operating e)pense budget( a capital e)penditures budget( and pro4ected financial statements. The number and type of individual budgets and schedules which ma%e up the master budget depend upon the si-e and the characteristics of the business. &. 'isset /ompany e)pected sales to be 5,(,,, units in February( 45(,,, in 0arch and 55(,,, units in April. 3ach unit sells for =#*.,, each. The following costs pertain to each unit:

'isset is considering an advertising campaign which will cost =#,(,,, per month from Banuary to 0arch and is e)pected to increase sales by A a month. At the same time 'isset will reduce sales prices to =#5.,, per unit while %eeping costs steady. 1e"uired: 6A.. 7hat will operating income be in each of the three months before the advertising campaign8 6'.. If 'isset goes ahead with the advertising campaign( how much would operating income increase or decrease each month8 7ould you advise them to go ahead with the campaign8

Answer:

Total operating income for the three months decreases at all sales levels. There is no financial advantage to have the advertising campaign.

NAME 10-MINUTE QUIZ A ECTI!N

Indicate the best answer for each "uestion in the space provided. 1 7hich of the following is not normally a characteristic of a profit rich( cash poor company8 a Fow inventory turnover. " High accounts receivable turnover. c High operating income( but low cash flow from operations. # A long operating cycle. $ 7hich of the following is not considered a benefit from budgeting8 a Fimited managerial perspectives. " Advance warning of problems. c 'etter coordination among activities. # A measure of performance evaluation. % 7hich of the following is a characteristic of the behavioral approach to setting budget targets8 a /omplete elimination of inefficiency. " /omplete elimination of non;value;adding activities. c /onstant need for improvement. # Achievable performance e)pectations. & 7hich of the following is not normally considered an element of a master budget8 a The production schedule. " The employee turnover budget. c The operating e)pense budget. # The cash budget. ' 7hich budget typically serves as a starting point in developing a master budget8 a The sales budget. " The cost of goods sold budget. c The employee turnover budget. # The manufacturing cost budget.

NAME 10-MINUTE QUIZ ( ECTI!N

Use the following data for questions 1 through 3. The following budget for the 2epartment for :eptember: ,(,,,;unit product level was prepared for the 5roduction

(u#)ete# *+0,000 U-its. Gariable costs: 2irect materials cost.......................................................................... 2irect labor....................................................................................... Gariable overhead............................................................................. Fi)ed costs: 0anufacturing overhead................................................................... Total manufacturing costs.................................................................... = 42(,,, 5,(,,, &4(,,, **(,,, =#!2(,,,

2uring :eptember( the 5roduction 2epartment actually produced !,(,,, units at a total manufacturing cost of =2,2(,,,.

Refer to the above data. 7hich of the following is not an accurate amount to be included in a fle)ible budget prepared for the !,(,,,;unit level of production8 a Total overhead cost( =#,4(25,. " Total manufacturing costs( =2, (+5,. c 2irect materials( =4+(25,. # 2irect labor( =5*(25,. Refer to the above data. A performance report prepared for :eptember operations under a fle)ible budget approach would show: a Actual costs under budget by =5(+5,. " Total costs per fle)ible budget of =2,5(,,,. c Actual costs under budget by = (,,,. # Actual costs over budget by =#,(,,,. Refer to the above data. The cost;volume relationship used to prepare the fle)ible budget for this department includes: a 0anufacturing overhead cost of =#.,, per unit. " Fi)ed cost of =,. & per unit. c Total cost of =2.4, per unit. # Gariable costs of =#.5 per unit.

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The /ompanyIs actual manufacturing costs for the month of 0ay totaled =+2(,,,( while the budgeted manufacturing costs were = ,(,,,. /omparison of the budgeted costs with actual amounts: a Is not significant unless the budgeted and actual figures are based upon the same level of production. " 2emonstrates that the 0anufacturing 2epartment operated very efficiently during 0ay. c Indicates that production cost per unit was #,A below budgeted cost per unit. # Indicates that the /ompany produced only !,A of the number of units budgeted for production in 0ay. A fle)ible budget is used to evaluate: a /osts that should have been incurred for a level of output achieved. " /osts that should have been incurred for a level of output considered to be normal. c How variable unit costs change as output changes. # How fle)ible management was at adapting to changes in business conditions.

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NAME # 10-MINUTE QUIZ C ECTI!N

The cost accountant for 2unbarIs /o. prepared the following monthly performance report relating to the 5roduction 2epartment. (u#)ete# /ro#uctio610,000 U-its. 2irect materials used.......................................................... 2irect labor ..................................................................... Gariable manufacturing overhead....................................... Fi)ed manufacturing overhead........................................... 1 =2#,(,,, +,(,,, &,(,,, #&,(,,, Actual /ro#uctio*11,000 U-its. =2&,(,,, #(,,, &5(,,, #&4(,,,

Refer to the above data. /ompute the amounts that should be included for each of the following in a fle)ible budget prepared at an ##(,,,;unit level of production: a 2irect materials: =???????????? " 2irect labor: =???????????? c Fixed manufacturing overhead: =????????????

Refer to the above data. Assume that a revised performance report is prepared for the ##(,,,;unit level of production using a fle)ible budget approach. /ompute the cost variances for each of the following. Indicate whether each variance is favorable 6F. or unfavorable 6<.. a 2irect materials variance from fle)ible budget: =???????????? " 2irect labor variance from fle)ible budget: =???????????? c Total manufacturing overhead variance from fle)ible budget: =????????????

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NAME 10-MINUTE QUIZ 0 1 ECTI!N

Hayden /orporation budgeted its cost of finished goods manufactured at =5,,(,,, for 0ay. Its 0ay &# finished goods inventory budgeted to be twice the level of its 0ay # finished goods inventory. The cost of goods sold budget for 0ay has been set at =45,(,,,. HaydenIs finished goods inventory at 0ay &# is budgeted at: =????????????

:uffol% /orporation e)pects to incur =&*,(,,, in e)penses during Bune 6e)cluding interest and ta)es.. >f this amount( depreciation is budgeted at =+,(,,,( and e)pired prepayments are budgeted at =&5(,,,. :uffol%Is current payables total =*,(,,, at Bune # and are budgeted to increase to =+,(,,, by Bune &,. 5ayments on current payables budgeted for Bune total: =????????????

7eaver /orporation pays its debt service costs in full each month. April debt service costs are budgeted at =!(,,,. However( of this amount( only =#(,,, represents a reduction principal. The company e)pects to issue no new debt during the month. 7hat cash disbursement amount will be shown on 7eaverIs debt service budget8 =????????????

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'ergen /orporationIs accounts receivable remain outstanding appro)imately 42 days( whereas its inventory remains in stoc% appro)imately #2 days before it is sold. It ta%es suppliers appro)imately + days to deliver inventory to 'ergen once an order is received. BasperIs operating cycle is: ?????????? days

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As budgeted output per the fle)ible budget increases( per;unit fi)ed costs 6increaseJdecrease.: ???????????

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E1F-TE T QUE TI!N F2!M TE3T(!!4 /hoose the best answer for each of the following "uestions and insert the identifying letter in the space provided. 1 7hich of the following statements correctly describe relationships within the master budget8 60ore than one answer may be correct.. a The manufacturing budget is based in large part upon the sales forecast. " In many elements of the master budget( the amounts budgeted for the upcoming "uarter are reviewed and subdivided into monthly budget figures. c The manufacturing cost budget affects the budgeted income statement( the cash budget( and the budgeted balance sheet. # The capital e)penditures budget has a greater effect upon the budgeted income statement than it does upon the budgeted balance sheet. 2uring the first "uarter of its operations( 0orris 0fg. /o. e)pects to sell 5,(,,, units and create an ending inventory of 2,(,,, units. Gariable manufacturing costs are budgeted at =#, per unit( and fi)ed manufacturing costs at =#,,(,,, per "uarter. The companyIs treasurer e)pects that ,A of the variable manufacturing costs will re"uire cash payment during the "uarter and that 2,A will be financed through accounts payable and accrued liabilities. >nly 5,A of the fi)ed manufacturing costs are e)pected to re"uire cash payments during the "uarter. In the cash budget( payments for manufacturing costs during the "uarter will total: a = ,,(,,,. " =*#,(,,,. c =*,,(,,,. # =45,(,,,. 1odgers 0fg. /o. prepares a fle)ible budget. The original budget forecasted sales of #,,(,,, units K =2,( and operating e)penses of =&,,(,,, fi)ed plus =2 per unit. 5roduction also was budgeted at #,,(,,, units. Actual sales and production for the period totaled ##,(,,, units. 7hen the budget is ad4usted to reflect these new activity levels( which of the following budgeted amounts will increase( but by less than #,A8 a :ales revenue. " Gariable manufacturing costs. c Fi)ed manufacturing costs. # Total operating e)penses.

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Famberton 0anufacturing /ompany has 4ust completed its master budget. The budget indicates that the companyIs operating cycle needs to be shortened. Thus( the company will li%ely attempt: a 2ecreasing its inventory turnover. " 2ecreasing its accounts receivable turnover. c Tighten credit policies. # Done of the above selections is correct. 7hich of the following is not an element of the master budget8 a The capital e)penditures budget. " The production schedule. c The operating e)pense budget. # All of the above are elements of the master budget. 7hich of the following is not a potential benefit of using budgets8 a 3nhanced coordination of firm activities. " 0ore motivated managers. c 0ore accurate e)ternal financial statements. # Improved interdepartmental communication.

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!1UTI!N T! - 10-MINUTE QUIZZE QUIZ A QUIZ ( 1 ' 1 ' $ A $ A % 2 % 2 & ' & A ' A ' A %ea&n'n( )b*ec+',e: 1 4

%ea&n'n( )b*ec+',e: 6

QUIZ C 1 a 6=2#,(,,,J#,(,,, units. ) ##(,,, units L =2&#(,,, " c $ a " c 6=+,(,,,J#,(,,, units. ) ##(,,, units L =++(,,, =#&,(,,, 6Fi)ed costs remain unchanged throughout a relevant range of production.

=2&#(,,, fle)ible budget ; =2&,(,,, actual cost L =#(,,, F =++(,,, fle)ible budget ; = #(,,, actual cost L =4(,,, < =*(,,, < Total overhead per fle)ible budget: Fi)ed.................................................................................... Gariable 6=&,(,,,J#,(,,,. ) ##(,,,..................................... Actual overhead 6=#&4(,,, M =&5(,,,....................................... =#&,(,,, &&(,,,

=#*&(,,, 6#*!(,,,. =*(,,, <

/ost variance;total manufacturing overhead............................... %ea&n'n( )b*ec+',e: 5, 6

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QUIZ 0 1 Fet N L Finished @oods Inventory( 0ay # N M =5,,(,,, ; 2N L =45,(,,, N L =5,(,,, 2N L Finished @oods Inventory( 0ay &# L=#,,(,,, $ 6=&*,(,,, ; =+,(,,, ;=&5(,,,. M =*,(,,, ;=+,(,,, L =245(,,, % =!(,,, & 42 days M #2 days L 54 days ' 2ecrease %ea&n'n( )b*ec+',e: 5, 6 !1UTI!N T! # a( b( c * c E1F-TE T QUE TI!N F2!M TE3T(!!4 4 c 5 d

2 b 6+,(,,, units ) =#, per unit ) ,A. M 6=#,,(,,, ) 5,A. L =*#,(,,, & d

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