A static budget: Multiple Choice O is preferred over a flexible budget in the evaluation of performance. is based totally on prior year's costs. presents a clear measure of performance when planned activity differs from actual activity. is based on one anticipated activity level. is based on a range of activity.

A static budget: Multiple Choice O is preferred over a flexible budget in the evaluation of performance. is based totally on prior year's costs. presents a clear measure of performance when planned activity differs from actual activity. is based on one anticipated activity level. is based on a range of activity.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 17MC: Which budget evaluates the results of operations at the actual level of activity? capĂtal budget...

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

12)

A static budget:
Multiple Choice
is preferred over a flexible budget in the evaluation of performance.
is based totally on prior year's costs.
presents a clear measure of performance when planned activity differs from actual activity.
is based on one anticipated activity level.
is based on a range of activity.

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Which budget evaluates the results of operations at the actual level of activity? capĂtal budget cash budget flexible budget static budget
Which of the following statements is true? Multiple Choice A flexible budget is an estimate of what revenues and costs should have been given the planned level of activity for the period. A flexible budget is a comparison of actual revenues and costs to what they should have been given the planned level of activity. A flexible budget is a comparison of actual revenues and costs at the actual level of activity to the actual revenues and costs incurred at the planned level of activity. A flexible budget is an estimate of what revenues and costs should have been given the actual level of activity for the period.
Estimating the effects of changes in budget assumptions, such as determining the impact of an increase or decrease in sales, is called: Question 4 options: static budget analysis. sensitivity analysis. variance analysis, cost reduction analysis. (Ch 10) An advantage of a flexible budget is that it: Question 5 options: allows comparison of actual costs to master (static) budget costs. considers only variable costs. allows comparisons of actual costs to the costs that should have been incurred, given the level of sales. allows management freedom in meeting profitability goals.
For most organizations, a budget is the benchmark for evaluating actual performance. O True O False
Management Accounting Question (Qualitative Short Answer) a. Why is the sales forecast the starting point in budgeting? b. What is a perpetual budget? c. Which is a better basis for evaluating actual results: budgeted performance or past performance? Why? d. The materials price variance can be computed at what two different points in time? Which point is better and why? e. What effect, if any, would you expect purchasing poor-quality materials to have on direct labor variances? f. Distinguish between ideal and practical standards. g. Costs associated with the quality of conformance can be broken down into four broad groups. What are these four groups and how do they differ? h. What is likely the most effective way to reduce a company's total quality costs? i. What are the three main uses of quality cost reports?
A flexible budget ( check all that apply): a. Separates variable costs from fixed costs b. Shows reevenues and expenses for varous levels of sales volume c. Reports variable costs on a per unit basis d. Reports fixed costs on a oer unit basis
Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For August 2020, it budgeted to manufacture and sell 3,000 tires at a variable cost of $73 per tire and total fixed costs of $57,000. The budgeted selling price was $111 per tire. Actual results in August 2020 were 2,700 tires manufactured and sold at a selling price of $113 per tire. The actual total variable costs were $218,700, and the actual total fixed costs were $53,500. Read the requirements Requirement 1. Prepare a performance report with a flexible budget and a static budget Begin with the actual results, then complete the flexible budget columns and the static budget columns. Label each variance as favorable or unfavorable. (For variances with a 10 balance, make sure to enter "0" in the appropriate field. If the variance is zero, do not select a label) Units sold Revenues Variable costs Contribution margin Fixed costs Operating income Actual Results
Question: What is the purpose of a flexible budget? a) To control costs and evaluate performance b) To prepare financial statements for external reporting c) To forecast long-term strategic goals d) To allocate overhead costs
1.Using a flexible budget, actual results can be compared to what costs should have been at the actual level of activity. True or False 2.Fixed costs should not be included in a flexible budget because they do not change when the level of activity changes. True or False 3.Actual costs are determined by plugging the actual level of activity for the period into the cost formulas used in flexible budgets. True or False 4.If activity is higher than expected, total fixed costs should be higher than expected. If activity is lower than expected, total fixed costs should be lower than expected. True or False
1. Match each of the following terms with the appropriate definition. The difference between actual and budgeted revenue or cost caused by the difference between the actual number of units sold or used and the budgeted number of units. A budget prepared after an operating period is complete in order to help managers evaluate past performance; uses fixed and variable costs in determining total costs. The costs that should be incurred under normal conditions to produce a specific product or to perform a specific service. The difference between 1. Cost Variance total overhead cost that would have been expected if the actual operating 2. Volume Variance volume had been accurately predicted and 3. Price Variance the amount of overhead cost that was allocated to products using the predetermined standard overhead rate. 4. Quantity Variance 5. Standard Costs A planning budget based on a single predicted amount 6. Fixed Budget of sales or production volume; unsuitable for 7. Flexible Budget…
33)
What budgeted amounts appear on the flexible budget report? O Actual costs for the budgeted activity level. O Actual costs for the estimated activity level. O Original budgeted amounts at the static budget activity level. Budgeted amounts for the actual activity level achieved.