AMAC Lesson 1 - Plenary

For a pizza manufacturer, organise these options into the correct cost classification category

Groups:

(a) Direct Materials

,

(b) Direct Labour

,

(c) Indirect Materials

,

(d) Indirect Labour

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Which of the following best describes a "flexed budget"

• A budget which is adjusted to correspond with the actual level of output

• A budget which assumed a certain level of output and this is compared with the actual output

• A budget that is used for capital expenditure

• A budget that is stretched beyond the normal means and expectations of the business

In the following situations, who would you contact in each situation

• Budget committee

• You want to forecast the price of raw materials in the future

• Buyer or purchasing manager

• You want to expand the business by joining a new social media platform

• Production planning manager

• You need more information about wastage rates as these look unusually high for the month

• Marketing manager

• Someone in the production department has an issue with maternity pay

• Human Resources (HR) manager

• The draft budget is ready for approval

Match the following approaches to budgeting with the type of budget below

• Incremental budgeting

• In each period, the budget starts with no account taken of the previous period

• Rolling budget

• Making small adjustments to the budget (based on previous periods) and allowing for anticipated inflation and other expected changes

• Zero based budgeting (ZBB)

• Ranking outcomes into levels which will allow the budget to be allocated to the most important departments first

• Priority based budgeting

• The budget is continually extended into the future as time goes forward. For example, a yearly budget could be extended by one month each month that goes by

Organise the following costs into the correct budget:

Groups:

(a) Cost of production

,

(b) Marketing

,

(c) Capital expenditure

,

(d) Finance

• Commission paid to staff for sales

• New IT system

• Interest charges

• Direct materials (recyclable alternative)

• Advertising campaign

• Production wages

• Provision for potential lawsuit

• Warehouse extension

When deciding on the number of production units, the correct formula is:

Budgeted sales units ​ (a)   ​ opening inventory ​ (b)   closing inventory

• minus
• add
• multiplied by

A business has already calculated the production and material usage budget.

The usage budget is: 16,000kg of sand

Opening inventory of raw materials will be: 2,000kg

Closing inventory of raw materials will need to be: 4,000kg

What is the required purchase of sand?

• 2,000kg
• 10,000kg

• 14,000kg

• 18,000kg