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Exam 24: Budgetary Planning

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Question 21

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A __________________ budget projects budget data for various levels of activity.

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Question 22

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The terms controllable costs and noncontrollable costs are synonymous with variable costs and fixed costs, respectively.

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Question 23

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Not-for-profit entities

Which of the following will cause an increase in ROI?

Haren Company uses a flexible budget for manufacturing overhead based on machine hours. Variable manufacturing overhead costs per machine hour are as follows: Fixed overhead costs per month are: The company believes it will normally operate in a range of 2,000 to 4,000 machine hours per month. During the month of August, 2010, the company incurs the following manufacturing overhead costs: Instructions Prepare a flexible budget report, assuming that the company used 3,000 machine hours during August.

Dobson Company recorded operating data for its shoe division for the year. How much is controllable margin for the year?

The formula for computing return on investment is controllable margin divided by average operating assets.

Doane Company uses a flexible budget for manufacturing overhead based on machine hours. Variable manufacturing overhead costs per machine hour are as follows: Fixed overhead costs per month are: The company believes it will normally operate in a range of 2,000 to 4,000 machine hours per month. Instructions Prepare a flexible manufacturing overhead budget for the expected range of activity, using increments of 1,000 machine hours.

Olathe Division of Hartley Company's operating results include: controllable margin, $200,000; sales $2,200,000; and operating assets, $800,000. The Olathe Division's ROI is 25%. Management is considering a project with sales of $100,000, variable expenses of $60,000, fixed costs of $40,000; and an asset investment of $150,000. Should management accept this new project?

Roark Productions makes a single product. Expected manufacturing costs are as follows: Instructions Determine the amount of manufacturing costs for a flexible budget level of 3,200 units per month.

Grimes Company has prepared the following monthly flexible manufacturing overhead budget for its Mixing Department: Instructions Prepare a flexible budget at the 5,000 direct labor hours of activity.

Policies regarding when a difference between actual and planned results should be investigated are generally more restrictive for noncontrollable items than for controllable items.

The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area is called

A cost center

The purpose of the departmental overhead cost report is to

Neuman Company's manufacturing overhead budget for the first quarter of 2010 contained the following data: Variable Costs Fixed Costs Actual variable costs for the first quarter were: Actual fixed costs were as expected except for property taxes which were $4,500. All costs are considered controllable by the department manager except for the supervisor's salary. Instructions Prepare a manufacturing overhead responsibility performance report for the first quarter.

Costs incurred indirectly and allocated to a responsibility level are considered to be

The denominator in the formula for calculating the return on investment includes operating and nonoperating assets.

The activity index used in preparing a flexible budget should not influence the variable costs that are being budgeted.

Houser Company's master budget reflects budgeted sales information for the month of June, 2010, as follows: During June, the company actually sold 19,500 units of Product A at an average unit price of $7.10 and 24,800 units of Product B at an average unit price of $8.90. Instructions Prepare a Sales Budget Report for the month of June for Houser Company which shows whether the company achieved its planned objectives.