Question :
Short Answer Questions
The cost accountant for Sherman’s Co. prepared the : 1229618
Short Answer Questions
The cost accountant for Sherman’s Co. prepared the following monthly performance report relating to the Production Department.
103. Compute the amounts that should be included for each of the following in a flexible budget prepared at an 11,000-unit level of production:
a. Direct materials: $_____________
b. Direct labor: $_____________
c. Fixed manufacturing overhead: $_____________
104. Assume that a revised performance report is prepared for the 11,000-unit level of production using a flexible budget approach. Compute the cost variances for each of the following. Indicate whether each variance is favorable (F) or unfavorable (U).
a. Direct materials variance from flexible budget: $_____________
b. Direct labor variance from flexible budget: $_____________
c. Total manufacturing overhead variance from flexible budget: $_____________
105. Hayden Corporation budgeted its cost of finished goods manufactured at $500,000 for May. Its May 31 finished goods inventory budgeted to be twice the level of its May 1 finished goods inventory. The cost of goods sold budget for May has been set at $450,000.
Hayden’s finished goods inventory at May 31 is budgeted at: $_____________
106. Suffolk Corporation expects to incur $360,000 in expenses during June (excluding interest and taxes). Of this amount, depreciation is budgeted at $70,000, and expired prepayments are budgeted at $35,000. Suffolk’s current payables total $60,000 at June 1 and are budgeted to increase to $70,000 by June 30.
Payments on current payables budgeted for June total: $_____________
107. Weaver Corporation pays its debt service costs in full each month. April debt service costs are budgeted at $9,000. However, of this amount, only $1,000 represents a reduction of principal. The company expects to issue no new debt during the month.
What cash disbursement amount will be shown on Weaver’s debt service budget? $_____________
108. Bergen Corporation’s accounts receivable remain outstanding approximately 42 days, whereas its inventory remains in stock approximately 12 days before it is sold. It takes suppliers approximately 7 days to deliver inventory to Bergen once an order is received.
Jasper’s operating cycle is: __________ days
109. As budgeted output per the flexible budget increases, per-unit fixed costs (increase/decrease): ___________
Multiple Choice Questions
110. Which of the following statements does not correctly describe relationships within the master budget? (More than one answer may be correct.)
A. The production budgets are based in large part upon the sales forecast.
B. In many elements of the master budget, the amounts budgeted for the upcoming quarter are reviewed and subdivided into monthly budget figures.
C. The operating budgets affect the budgeted income statement, the cash budget, and the budgeted balance sheet.
D. The capital expenditures budget affects the direct materials budget.
111. During the first quarter of its operations, Morris Mfg. Co. expects to sell 50,000 units and create an ending inventory of 20,000 units. Variable manufacturing costs are budgeted at $10 per unit, and fixed manufacturing costs at $100,000 per quarter. The company’s treasurer expects that 80 percent of the variable manufacturing costs will require cash payment during the quarter and that 20 percent will be financed through accounts payable and accrued liabilities. Only 50 percent of the fixed manufacturing costs are expected to require cash payments during the quarter.
In the cash budget, payments for manufacturing costs during the quarter will total:
A. $800,000.
B. $610,000.
C. $600,000.
D. $450,000.
112. Rodgers Mfg. Co. prepares a flexible budget. The original budget forecasted sales of 100,000 units @ $20, and operating expenses of $300,000 fixed, plus $2 per unit. Production also was budgeted at 100,000 units. Actual sales and production for the period totaled 110,000 units. When the budget is adjusted to reflect these new activity levels, which of the following budgeted amounts will increase, but by less than 10 percent?
A. Sales revenue.
B. Variable manufacturing costs.
C. Fixed manufacturing costs.
D. Total operating expenses.
113. Lamberton Manufacturing Company has just completed its master budget. The budget indicates that the company’s operating cycle needs to be shortened. Thus, the company will likely attempt:
A. Stocking larger inventories.
B. Reducing cash discounts for prompt payment.
C. Tighten credit policies.
D. None of the above selections is correct.
114. Which of the following is not an element of the master budget?
A. The capital expenditures budget.
B. The production schedule.
C. The operating expense budget.
D. All of the above are elements of the master budget.
115. Which of the following is not a potential benefit of using budgets?
A. Enhanced coordination of firm activities.
B. More motivated managers.
C. More accurate external financial statements.
D. Improved interdepartmental communication.
