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Exam 7: Master Budget and Flexible Budgeting

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Question 21

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The standard annual capacity of Jones and Smith Company is 25,000 units per month.Two units can be machined in one hour.The flexible budget for factory overhead at this volume follows: In June,actual production was 22,000 units and actual factory overhead incurred was $258,000. (1)Calculate the standard application rates for fixed and variable overhead at the standard level of volume in relation to units and machine hours. (2)Calculate the amount of factory overhead allowed for the actual volume of production in June and the variance between the actual and budgeted factory overhead.

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(1)Application rates for factory overhea...

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Question 22

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Shaw Corporation has developed the following flexible budget formula for annual indirect labor cost: ​ Total costs = $9,600 + $0.50 per machine hour ​ Operating budgets for the current month are based upon 30,000 hours of planned machine time.Indirect labor costs included in this planning budget are:

A) $15,800.
B) $15,000.
C) $24,600.
D) $2,460.

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Question 23

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Information from the operating budgets of Roswell Fabricators follows: If Northwest's income tax rate is 30%,what is the budgeted net income?

Pinecroft Company manufactures one product that requires 4 hours of machining direct labor and 3 hours of assembly direct labor.The standard labor rate is $20.00 per direct labor hour in the Machining Department and $16.00 per direct labor hour in the Assembly Department.The product has forecasted sales of 3,000 units in July.The estimated finished goods inventory at July 1 is 300 units and the desired ending inventory at July 31 is 400 units. ​ (1)Prepare a production budget for the month of July. (2)Prepare a direct labor budget for the month of July.

Managers should consider all of the following in developing a sales budget except:

Lunchco Inc.produces picnic tables in a two-step process.Pretreated wood is cut in the Cutting Department and then the lumber is assembled into tables in the Assembly Department.It takes 30 minutes of direct labor time to cut the lumber and the standard hourly labor rate in the Cutting Department is $12.The tables take one hour to assemble and the standard hourly rate in the Assembly Department is $10.If Lunchco's production budget is 20,000,what is the company's direct labor budget?

Delaney Company has the following flexible budget formulas and amounts: Actual results for the month of October for the production and sale of 48,000 units were as follows: Prepare a performance report for the month of October.

Darla Draperies manufactures top of the line window treatments.A standard package involves 18 yard of decorative fabric costing $5.00 per yard.Darla has 10,000 yards of fabric on hand at the beginning of the month,but management would like to reduce inventory levels,so it would like to have 8,000 yards on hand at the end of the month. If Darla's production budget is 3,000 packages,what should the company's direct materials budget be?

Which of the following is not true regarding service department expenses?

Julia Industries produces cookware.The master budget called for production of 75,000 units this year.The budget at that level of production follows: Due to the popularity of cooking shows on television,Julia Industries now estimates sales will be 80,000 units.What is budgeted operating income at this level?

The standard capacity of a factory is 9,000 units per month.Cost and production data follow: What is the amount of overhead allowed for the actual volume of production?

Consider the flexible budget information relating to direct labor costs for Logan Ltd.: Logan's actual production was 51,000 units and the related cost was $205,500.What is the direct labor variance?

Consider the following about Taylor Corporation: Assuming Taylor Corporation uses flexible budgeting,what is the direct materials variance?

The budget that is used as a basis for preparing all other budgets is the:

Comfy Inc.uses five yards of wool in each blanket it produces.Comfy's production budget next year is 30,000 blankets.The anticipated wool inventory at January 1 is 30,000 yards,but the company desires to reduce the inventory to 20,000 yards by the end of the year.Each yard of wool costs $10.How many yards of wool should Comfy purchase?

Scheduling different levels of production each month to maintain a relatively stable inventory could lead to all but:

Budgeted inventories for the Remle Company follow: Additional budget information follows: Calculate the budgeted cost of goods sold.

Which of the following is not true about budgeting?

The normal capacity of Yule Company is 5,000 units per month.At this volume,budgeted fixed and variable factory overhead are $25,000 and $20,000,respectively.In December,actual production was 4,800 units and actual overhead incurred was $46,300. What is the factory overhead application rate at the actual level of production (rounded to the nearest penny) ?

Denny Door Company has budgeted door sales as follows: Finished goods inventory at February 28 will be 7,000 units,but the company is making an effort to reduce inventory and its new policy is that inventory at the end of the month should be 10% of the budgeted sales for the following month.How many units should Denny Door Company produce in March?