Question 1

The cash payments section of a cash budget has information from which of the following:

Accepted Answer

The answer of The cash payments section of a cash...

Question 2

Exhibit 18-7 Cedar Corporation uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows:
 Fixed overhead costs per month are:
 
-Refer to Exhibit 18-7. If Cedar prepares a flexible budget for 4,000 direct labor hours, what amount will this budget show for variable manufacturing overhead costs?

Accepted Answer

The answer of Exhibit 18-7 Cedar Corporation uses a flexible...

Question 3

If actual variable costs per unit are equal to estimated variable costs per unit and a static budget is used, fewer units produced will show:

Accepted Answer

The answer of If actual variable costs per unit are...

Question 4

Producing outside the relevant range can result in:

Accepted Answer

The answer of Producing outside the relevant range can result...

Question 5

Which of the following budgets will most likely be prepared last?

Accepted Answer

The cash budget is typically prepared last, as it relies on information from all of the other budgets (such as sales, production, and expenses) to determine the expected cash inflows and outflows for the period.

Question 6

Exhibit 18-6 The July manufacturing overhead budget of Kyoto Corporation, shown below, was constructed assuming an activity level of 48,000 direct labor hours:

- Refer to Exhibit 18-6. If management prepared a flexible budget for July using 52,000 direct labor hours, what amount would this flexible budget show for total overhead costs?

Accepted Answer

To prepare a flexible budget for 52,000 direct labor hours, we need to use the variable overhead rate and fixed overhead amount per the July manufacturing overhead budget. The variable overhead rate is calculated as $2.00 per direct labor hour ($96,000 ÷ 48,000 direct labor hours), so for 52,000 direct labor hours, the variable overhead costs would be $2.00 × 52,000 = $104,000. The fixed overhead amount remains the same at $138,800. Therefore, the total overhead costs in the flexible budget would be $104,000 + $138,800 = $242,800. Thus, the correct answer is option C.

Question 7

Exhibit 18-7 Cedar Corporation uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows:
 Fixed overhead costs per month are:
 
-Refer to Exhibit 18-7. If Cedar prepares a flexible budget for 6,000 direct labor hours, what amount will this budget show for total manufacturing overhead costs?

Accepted Answer

The answer of Exhibit 18-7 Cedar Corporation uses a flexible...

Question 8

A static budget would be appropriate for:

Accepted Answer

A static budget is appropriate for fixed manufacturing overhead costs because they do not vary with changes in production volume.

Question 9

The flexible budget:

Accepted Answer

The answer of The flexible budget:
...

Question 10

Flexible budgeting can be used with which of the following types of manufacturing costs?

Accepted Answer

Flexible budgeting can be used with all types of manufacturing costs, including direct labor, direct materials, and manufacturing overhead. This is because flexible budgeting allows for adjustments to be made based on actual activity levels, which can impact all types of manufacturing costs.

Question 11

A line of credit with a bank enables a company to:

Accepted Answer

A line of credit with a bank allows a company to borrow money on demand for short periods of time at specific interest rates. This means the company has access to funds when needed and only pays interest on the amount borrowed. It also provides flexibility as the company can borrow and repay as needed without having to reapply for a loan each time.

Question 12

A budget that allows for comparisons of actual and budgeted amounts at varying activity levels is:

Accepted Answer

A flexible budget allows for comparisons of actual and budgeted amounts at varying activity levels, as it adjusts the budgeted amounts based on the level of activity achieved. A sales budget is a specific type of budget that focuses on projecting sales revenue. A master budget includes all of the budgets for a company, including operational and financial budgets. A static budget is a fixed budget that does not adjust for changes in activity levels.

Question 13

If a company plans to sell 77,000 units of product but sells 132,000 units, the most appropriate comparison of the cost data associated with the sales can be done using a budget based on which of the following number of units?

Accepted Answer

The answer of If a company plans to sell 77,000...

Question 14

Which of the following types of budgeting procedures is the most effective for measuring performance?

Accepted Answer

Flexible budgeting is the most effective for measuring the performance as it adjusts according to the actual level of output or activity. This helps in making accurate comparisons between budgeted and actual performance and provides insights into areas where changes can be made to improve performance. Static budgeting is not effective as it does not adjust for changes in activity levels. Capital budgeting is concerned with long-term investments and does not measure performance on a day-to-day basis. Strategic budgeting is focused on achieving long-term goals and may not be useful for measuring short-term performance.

Question 15

A budget that is based on only one estimate of production or sales volume is a:

Accepted Answer

A budget that is based on only one estimate of production or sales volume is known as a static budget. It does not change regardless of the actual level of activity, which makes it inflexible and less useful for decision-making.

Question 16

Exhibit 18-6 The July manufacturing overhead budget of Kyoto Corporation, shown below, was constructed assuming an activity level of 48,000 direct labor hours:

- Refer to Exhibit 18-6. If management prepared a flexible budget for July using 54,000 direct labor hours, what amount would this flexible budget show for indirect labor?

Accepted Answer

The answer of Exhibit 18-6 The July manufacturing overhead budget...

Question 17

A department has a budgeted monthly manufacturing overhead cost of $160,000 plus $16 per direct labor hour. If a flexible budget reflects $388,000 for total manufacturing overhead cost for the month, the actual direct labor hours would be:

Accepted Answer

To find the actual direct labor hours, we need to use the formula for the flexible budget:

Total Manufacturing Overhead Cost = Fixed Manufacturing Overhead Cost + (Variable Manufacturing Overhead Rate x Actual Direct Labor Hours)

We know that the budgeted monthly manufacturing overhead cost is $160,000, and the variable manufacturing overhead rate is $16 per direct labor hour.

So, we can set up the formula like this:

$388,000 = $160,000 + ($16 x actual direct labor hours)

$228,000 = $16 x actual direct labor hours

Actual direct labor hours = $228,000 / $16

Actual direct labor hours = 14,250

Therefore, the answer is C) 14,250.

Question 18

The section of a cash budget that identifies amounts that must be borrowed is called the:

Accepted Answer

The financing section of a cash budget helps to identify the amounts that must be borrowed in order to cover any cash deficiencies. This section outlines the expected sources and uses of external financing, such as loans or investments, to close any gaps between cash inflows and outflows.

Question 19

Exhibit 18-6 The July manufacturing overhead budget of Kyoto Corporation, shown below, was constructed assuming an activity level of 48,000 direct labor hours:

- Refer to Exhibit 18-6. If management prepared a flexible budget for July using 40,000 direct labor hours, what amount would this flexible budget show for total variable costs?

Accepted Answer

The answer of Exhibit 18-6 The July manufacturing overhead budget...

Question 20

Cash budgets should EXCLUDE costs incurred for:

Accepted Answer

Cash budgets should only include cash inflows and outflows, not non-cash expenses such as depreciation. Therefore, depreciation should be excluded from the cash budget. Materials and equipment are cash outflows that should be included in the budget.

Quiz 18: Budgeting and Control

The cash payments section of a cash budget has information from which of the following:

If actual variable costs per unit are equal to estimated variable costs per unit and a static budget is used, fewer units produced will show:

Producing outside the relevant range can result in:

Which of the following budgets will most likely be prepared last?

A static budget would be appropriate for:

The flexible budget:

Flexible budgeting can be used with which of the following types of manufacturing costs?

A line of credit with a bank enables a company to:

A budget that allows for comparisons of actual and budgeted amounts at varying activity levels is:

If a company plans to sell 77,000 units of product but sells 132,000 units, the most appropriate comparison of the cost data associated with the sales can be done using a budget based on which of the following number of units?

Which of the following types of budgeting procedures is the most effective for measuring performance?

A budget that is based on only one estimate of production or sales volume is a:

A department has a budgeted monthly manufacturing overhead cost of $160,000 plus $16 per direct labor hour. If a flexible budget reflects $388,000 for total manufacturing overhead cost for the month, the actual direct labor hours would be:

The section of a cash budget that identifies amounts that must be borrowed is called the:

Cash budgets should EXCLUDE costs incurred for: