Budgeted to cost 15 per yard and stuffing 4 per pound

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budgeted to cost $15 per yard and stuffing $4 per pound. Direct labor is paid $18 per hour. Each bear takes 40 minutes to hand-finish. Variable overheads total $21 per direct labor hour. Fixed overheads amount to $25,000 per month. Eighty yards of fabric and 100 pounds of stuffing were in stock at year- end. Ten percent and 25% of next month’s stuffing and fabric needs respectively are planned for raw materials ending inventory each month. Assume that in March there was a favorable variance from the production master budget. Which factors may not have contributed to this result? A. BB spent less per labor hour than planned B. BB wasted less materials than planned C. BB spent more on fixed overhead than planned D. BB produced fewer units than planned E. c) and d) only
1 The organizational process of budgeting performs several important functions. Which is true?
1 . C. Forces planning D. Measures performance E. All of the above
Essay Questions 12 . Flexible Budgets A chair manufacturer has established the following flexible budget for the month. Units Produced and Sold 1,000 1,500 2,000 Sales $10,00 0 $15,00 0 $20,000 Variable Costs (5,000) (7,500) (10,000 ) Fixed Costs (2,000) (2,000) (2,000) Profit $3,000 $5,500 $8,000 Required: a. What is the sales price per chair? b. What is the expected profit if 1,600 chairs are made? 13 . Different Types of Budgets The Sticky Company makes a glue that is used to glue the layers of wood veneer together to make plywood. The process for making the glue has been used for many years and the customers are satisfied with the product. The Sticky Company has had very low turnover of personnel and the president and the managers have all been with the company for many years. Although the company appears very stable today, plywood prices are rising and the construction industry is beginning to switch to a cheaper product called chipboard. Chipboard uses a different glue than the glue made by the Sticky Company. Required: Given the present condition of Sticky Company, should the company
use long-term budgets, line-item budgets, budget lapsing, flexible budgets, or zero-based budgeting? 14 . Top-down versus Bottom-up Budgets Describe (a) the benefits of top-down budgeting and (b) the benefits of bottom-up budgeting. 15 . The Effect of Budgets on Organization Describe how budgets and budgeting systems help solve the organization problem. Give examples. 16 . Estimating Production Costs The Fancy Umbrella Company makes beach umbrellas. The production process requires 3 square meters of plastic sheeting and a metal pole. The plastic sheeting costs $0.50 per square meter and each metal pole costs $1.00. At the beginning of the month, the company has 5,000 square feet of plastic and 1,000 poles in raw materials inventory. The preferred raw material amount at the end of the month is 3,000 square feet of plastic sheeting and 600 poles. The company has 300 finished umbrellas in inventory at the beginning of the month and plans to have 200 finished umbrellas at the end of the month. Sales in the coming month are expected to be 5,000 umbrellas.

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