Question;161.A flexible budget is appropriate for;Direct Labor Costs Manufacturing Overhead Costs;a. No No;b. Yes Yes;c. Yes No;d. No Yes;162. All;of the following statements are correct about management by;exception except it;a. enables;top management to focus on problem areas that need attention.;b. means;that management has to investigate every budget difference.;c. requires;that there must be some guidelines for identifying an exception.;d. means;that top management's review of a budget report is focused primarily;on differences between actual results and planned objectives.;163. Controllable costs for responsibility accounting purposes are those;costs that are directly influenced by;a. a;given manager within a given period of time.;b. a;change in activity.;c. production;volume.;d. sales;volume.;164. All of the following statements are;correct about controllable costs except;a. all;costs are controllable at some level of responsibility within a company.;b. all;costs are controllable by top management.;c. fewer;costs are controllable as one moves up to each higher level of;managerial responsibility.;d. costs;incurred directly by a level of responsibility are controllable at;that level.;165. Which of the;following will cause an increase in ROI?;a. An;increase in variable costs;b. An;increase in average operating assets;c. An;increase in sales;d. An;increase in controllable fixed costs;166. Costs that relate specifically to one center and are incurred for the;sole benefit of that center are;a. common;fixed costs.;b. direct;fixed costs.;c. indirect;fixed costs.;d. noncontrollable fixed costs.;167. If controllable;margin is $300,000 and the average investment center operating assets are $2,000,000;the return on investment is;a..67%.;b. 6.66%.;c. 20%.;d. 15%.BE 168Devlin Manufacturing;makes a single product. Expected manufacturing costs are as follows:Variable costs Direct;materials $6.50 per;unit Direct labor 2.40 per unit Manufacturing overhead 1.10 per unitFixed costs per month Supervisory salaries $13,600 Depreciation 5,500 Other fixed costs 2,200InstructionsDetermine the;amount of manufacturing costs for a flexible budget level of 3,200 units per;month.;BE 169Wind Productions;uses flexible budgets. Items from the budget for March in which 3,000 units;were produced and sold appear below:Direct materials;$18,000Indirect materials - variable 2,000Supervisor salaries 15,000Depreciation on factory equipment 4,000Direct labor 10,000Property taxes on factory 1,000InstructionsIf Wind prepares a flexible budget at 4,000;units, compute its total variable cost.BE 170Cyber Construction?s manufacturing costs for August when production;was 1,000 units appear below:Direct material $12;per unitDirect labor $7,500Variable overhead 6,000Factory depreciation 9,000Factory supervisory salaries 7,800Other fixed factory costs 2,500InstructionsCompute the flexible budget;manufacturing cost amount for a month when 900 units are produced.;BE 171Micro Miller;Company?s budgeted sales for April were estimated at $700,000, sales;commissions at 4% of sales, and the sales manager's salary at $80,000. Shipping;expenses were estimated at 1% of sales and miscellaneous selling expenses were;estimated at $1,000, plus 0.5% of sales.InstructionsDetermine the;budgeted selling expenses on a flexible budget for April. BE 172Point, Inc. produces men?s shirts. The following budgeted and actual;amounts are for 2013:Cost Budget;at 2,500 units Actual;Amounts at 2,800 unitsDirect materials $65,000 $75,000Direct labor 70,000;78,000Fixed overhead 35,000 34,500InstructionsPrepare a performance report for Point, Inc. for the year. BE 173Moss Corp.;reported the following items for 2013: Controllable fixed costs $ 77,000Contribution margin 122,000Interest expense 20,000Variable costs 80,000Total assets $925,000;BE 173 (Cont.)InstructionsCompute the controllable margin;for 2013.BE 174The data for;an investment center is given below. January;1, 2013 December 31, 2013Current Assets $ 400,000 $ 800,000Plant Assets 3,000,000 3,800,000The;controllable margin is $440,000.InstructionsCompute the;return on investment for the center for 2013.BE 175Data for the Deluxe Division of Park Industries;which is operated as an investment center follows:Sales $6,000,000Contribution Margin 800,000Controllable Fixed Costs 440,000Return on Investment 12%InstructionsCalculate controllable margin and average operating assets.;BE 176Sage Division?s operating;results include:Controllable;margin, $300,000;Sales;revenue, $2,400,000;Operating;assets, $1,000,000;Sage is considering a project with sales of $240,000, expenses of $168,000;and an investment of $360,000. Sage?s required rate of return is 15%.InstructionsDetermine whether Sage should accept this project.BE 177An investment center manager is considering three possible;investments. The company?s required return is 10%. The required asset;investment, controllable margins, and the ROIs of each investment are as;follows:Project Average Investment Controllable Margin ROIAA $160,000 $32,000 20.0%BB 140,000 16,000 11.4%CC 220,000 66,000 30%The investment center is currently generating an ROI of 23% based on;$1,200,000 in operating assets and a controllable margin of $276,000.InstructionsIf the manager can select only one project, determine which one is;the best choice to increase the investment center's ROI. Compute how much the;investment center?s ROI will be if the manager selects your recommendation.aBE 178The owner of Denver Toy Manufacturing;Company has recently expanded his business in order to add an additional;product line. In addition to toys, the company now sells shirts. The company;has a minimum rate of return of 11%. Toys Shirts Sales $600,000 $200,000Controllable margin 120,000 10,000Average operating assets 900,000 200,000InstructionsCompute the residual income for both;investment centers.aBE 179Floors Direct;has 4 divisions. Its hardwood flooring division?s information follows for 2013:Sales $4,000,000Controllable margin 250,000Variable costs 60,000Average operating assets 1,800,000InstructionsFloor?s required rate of return is 10%. How;much is its residual income?;EXERCISESEx. 180Clark Company's master budget reflects budgeted sales;information for the month of June, 2013, as follows: Budgeted;Quantity Budgeted Unit;Sales Price Product;A 40,000 $7 Product;B 48,000 $9During June, the company actually sold 39,000 units of Product A at;an average unit price of $7.10 and 49,600 units of Product B at an average unit;price of $8.90.InstructionsPrepare a Sales Budget Report for the month of;June for Clark Company which shows whether the company achieved its planned;objectives.Ex. 181Beal Manufacturing;Co.'s static budget at 12,000 units of production includes $72,000 for direct;labor and $12,000 for direct materials. Total fixed costs are $48,000.Instructionsa. Determine how much would;appear on Beal's flexible budget for 2013 if 18,000 units are produced and;sold.b. How would this comparison;differ if a static budget were used instead of a flexible budget for;performance evaluation?.;Ex. 182Cody Co. developed its annual manufacturing;overhead budget for its master budget for 2013 as follows:Expected annual operating capacity 120,000;Direct Labor HoursVariable;overhead costs Indirect;labor $600,000 Indirect;materials 120,000 Factory;supplies 60,000 Total;variable 780,000Fixed overhead costs Depreciation 240,000 Supervision 120,000 Property;taxes 96,000 Total;fixed 456,000Total costs $1,236,000The relevant range for monthly activity is;expected to be between 8,000 and 12,000 direct labor hours.InstructionsPrepare a;flexible budget for a monthly activity level of 8,000 and 9,000 direct labor;hours.;Ex. 183Copper Manufacturing has prepared the following;monthly flexible manufacturing overhead budget for its Mixing Department:COPPER MANUFACTURINGMonthly Flexible Manufacturing Overhead BudgetMixing DepartmentActivity level Direct;labor hours 3,000 4,000Variable costs Indirect;materials $ 3,000 $ 4,000 Indirect;labor 15,000 20,000 Factory;supplies 4,500 6,000 Total;variable 22,500 30,000Fixed costs Depreciation 20,000 20,000 Supervision 12,000 12,000 Property;taxes 15,000 15,000 Total;fixed 47,000 47,000Total costs $69,500 $77,000InstructionsPrepare a;flexible budget at the 5,000 direct labor hours of activity.;Ex. 184Berne, Inc. uses a flexible budget for;manufacturing overhead based on machine hours. Variable manufacturing overhead;costs per machine hour are as follows: Indirect;labor $5.00 Indirect;materials 2.50 Maintenance.80 Utilities.30Fixed overhead costs per month are: Supervision $800 Insurance 200 Property;taxes 300 Depreciation 900The company believes it will normally operate in;a range of 2,000 to 4,000 machine hours per month.InstructionsPrepare a flexible manufacturing;overhead budget for the expected range of activity, using increments of 1,000;machine hours.;Ex. 185Telemark;Production's manufacturing costs for July when production was 2,000 units;appears below:Direct;materials $10;per unitFactory;depreciation $16,000Variable;overhead 10,000Direct;labor 4,000Factory;supervisory salaries 11,600Other;fixed factory costs 3,000InstructionsHow much is the;flexible budget manufacturing cost amount for a month when 2,200 units are;produced?
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