Accounting for planning, controlling & decision making

Which of the following is an advantage of the budgeting process?

• Budgeting provides resource information for decision making.

• Budgeting provides a standard for performance evaluation.

• Budgeting improves communication and coordination within the organization.

• All of the above

Torino, Inc., manufactures machine parts. Torino has developed a static budget for its plant at an activity level of 10,000 direct labor hours for the month of March. The actual level of activity was 11,000 hours. The following table summarizes the static budget and the actual costs for March:

Static Budget Actual Costs

(10,000 DLH) (11,000 DLH)

Variable costs $21,000 $22,000

Fixed costs 7,800   7,700

   Total $28,800 $29,700

Which of the following describes how well the plant manager performed for the month of March?

• The manager performed a good job in controlling costs.

• The manager performed a poor job in controlling costs.

• The manager exceeded his goals.

• The manager performed the same as last month

Torino, Inc., manufactures machine parts. Torino has developed a static budget for its plant at an activity level of 10,000 direct labor hours for the month of March. The actual level of activity was 11,000 hours. The following table summarizes the static budget and the actual costs for March:

Static Budget Actual Costs

(10,000 DLH) (11,000 DLH)

Variable costs $21,000 $22,000

Fixed costs 7,800   7,700

   Total $28,800 $29,700

What is the flexible budget for March?

Torino, Inc., manufactures machine parts. Torino has developed a static budget for its plant at an activity level of 10,000 direct labor hours for the month of March. The actual level of activity was 11,000 hours. The following table summarizes the static budget and the actual costs for March:

Static Budget Actual Costs

(10,000 DLH) (11,000 DLH)

Variable costs $21,000 $22,000

Fixed costs 7,800 7,700

   Total $28,800 $29,700

What is the flexible budget variance for March?

• $-0-

• $1,200 F

• $900 U

• $1,100 F

The Human Resource office at a major banking establishment is most likely considered to be a(n)

• profit center

• revenue center

• investment center

• cost center

Chess Company provided the following information from its 2022 income statement.

Sales revenue $800,000

Cost of goods sold 400,000

Selling expenses 100,000

Administrative expenses 50,000

Other operating expenses 50,000

Interest expense 20,000

Tax expense 60,000

Calculate Chess Company’s operating income.

Chess Company provided the following information from its 2022 income statement.

Sales revenue $800,000

Cost of goods sold 400,000

Selling expenses 100,000

Administrative expenses 50,000

Other operating expenses 50,000

Interest expense 20,000

Tax expense 60,000

The average operating assets for 2022 was $ 765,000. Calculate the ROI.

Expert Industries produces two products. Product X is sold for $30/unit with variable cost/unit of $18. The company was able to sell 2,000 units of Product X last year. The second product, Product Z is sold for $25/unit with variable cost/unit of $ $16. The company was selling 5,000 units of Product Z last year.

The company's fixed costs totaled $60,000, of which $10,000 can be directly traced to Product X and $35,000 can be directly traced to Product Z.

What would be the effect on the firm's profits if Product Z is dropped?

• $10,000 increase

• $35,000 increase

• $35,000 decrease

• $10,000 decrease

Galaxy Industries manufactures 15,000 components per year. The manufacturing cost of the components consist of the following: Direct materials $150,000; Direct labor $240,000; Variable overhead $90,000; Fixed overhead $120,000.

Assume that the fixed manufacturing overhead reflects the cost of Galaxy's manufacturing facility. This facility cannot be used for any other purpose. An outside supplier has offered to sell the component to Galaxy for $34. If Galaxy Industries purchases the component from the outside supplier, the effect on income would be a ...............

• $30,000 decrease

• 30,000 increase

• $90,000 decrease

• $90,000 increase

Zandy Beverage Company plans to eliminate a branch that has a contribution margin of $50,000 and fixed costs of $75,000. Of the fixed costs, $55,000 cannot be eliminated. The effect of eliminating this branch on net income would be a(n) .....

• decrease of $25,000

• increase of $25,000

• decrease of $30,000

• increase of $30,000