Rainbow Inc. recently appointed Margaret Joyce as vice president of finance and asked her to design a new budgeting system. Joyce has changed to a monthly budgeting system by dividing the company's annualbudget by twelve. Joyce then prepared monthly budgets for each department and asked the managers to submit monthly reports comparing actual to budget. A sample monthly report for Department A is shownbelow.RAINBOW INC.Monthly Report for Department AUnitsVariable production costsActual1,000Budget Variance900100FDirect material$2,800 $2,700 $100UDirect laborVariable factory overhead4,800 4,5004,250 4,050300U200UFixed costsDepreciation3,000 2,700300UTaxes1,000900110UInsurance1,5001,350150UAdministration1,100990110UMarketing1,000900100UTotal costs$19,450 $18,090 $1,360UThis monthly budget has been imposed from the top and will create behavior problems. All of the following are causes of such problems excepta. the use of a flexible budget rather than a fixed budget.Ob. top management authoritarian attitude toward the budget process.Oc. the inclusion of non-controllable costs such as depreciation.Od. the lack of consideration for factors such as seasonality.

answer is a. the use of a flexible budget rather than a fixed budget. The given monthly budget…

Answered: Rainbow Inc. recently appointed…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Hemphill Corporation uses customers served as its measure of activity. During June, the company budgeted for 20,000 customers, but actually served 19,000 customers. The company has provided the following data concerning the formulas used in its budgeting and its actual results for June:Data used in budgeting: Fixed amount per month Variable amount per customer Revenue - $4.50 Wages and salaries $23,900 $1.40 Supplies $0 $0.80 Insurance $5,700 $0.00 Miscellaneous $5,000 $0.40 Actual results for June: Revenue $85,400 Wages and Salaries $52,700 Supplies $17,500 Insurance $5,500 Miscellaneous $12,200 Calculate revenue variance, spending variance for wages and salaries, and spending variance for insurance. Label them as favorable or unfavorable. Please show your workings
Gig Harbor Boating is the wholesale distributor of a small recreational catamaran sailboat. Management has prepared the following summary data to use in its annual budgeting process: Budgeted unit sales Selling price per unit Cost per unit Variable selling and administrative expense (per unit) Fixed selling and administrative expense (per year) Interest expense for the year 680 $ 2,060 $ 1,680 $50 $ 200,000 $22,000 Required: Prepare the company's budgeted income statement for the year. Gig Harbor Boating Budgeted Income Statement < Prev 9 of 9 Next ........
At the beginning of the period, the Cutting Department budgeted direct labor of $138,000, direct materials of $154,000 and fixed factory overhead of $14,000 for 7,300 hours of production. The department actually completed 11,700 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting? Round your final answer to the nearest dollar. Do not round interim calculations. a. $490,438 b. $482,000 c. $306,000 d. $314,438
Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates for budgeting purposes and the actual results for May as shown below: Fixed Element per Month Variable Element per Customer Served Actual Total for May Revenue $ 5,600 $ 182,000 Employee salaries and wages $ 55,000 $ 1,600 $ 110,300 Travel expenses $ 850 $ 27,200 Other expenses $ 34,000 $ 32,600 When preparing its planning budget, the company estimated it would serve 30 customers per month; however, during May the company actually served 35 customers. REQUIRED QUESTIONS:) 3. What amount of travel expenses would be included in Adger’s flexible budget for May? 1. What amount of revenue would be included in Adger’s flexible budget for May?
Bobs Consult, uses flexible budgeting for cost review purposes. The company’s master/static budget for the entire year includes $324,000 for fixed supervisory salaries for 180,000 client service hours. Supervisor salaries are expected to be incurred uniformly throughout the year (i.e., per the budget, each month is expected to have identical Supervisor salary expense). During the month of September, 15,750 client service hours were provided and supervisory salaries incurred were $28,000. A performance report for September would reflect a flexible budget variance related to supervisor salaries of: Choose one below: $350 Favorable $1,000 Favorable $0 $350 Unfavorable $1,000 Unfavorable
Several years ago, Westmont Corporation developed a comprehensive budgeting system for planning and control purposes. While departmental supervisors have been happy with the system, the factory manager has expressed considerable dissatisfaction with the information being generated by the system. A report for the company's Assembly Department for the month of March follows: Assembly DepartmentCost ReportFor the Month Ended March 31 Actual Results Planning Budget Variances Machine-hours 15,000 20,000 Variable costs: Supplies $ 11,400 $ 12,000 $ 600 F Scrap 42,000 45,000 3,000 F Indirect materials 119,000 142,500 23,500 F Fixed costs: Wages and salaries 85,900 80,000 5,900 U Equipment depreciation 110,000 110,000 0 Total cost $ 368,300 $ 389,500 $ 21,200 F After receiving a copy of this cost report, the supervisor of the Assembly Department stated, “These reports are super. It makes me feel really good to see how well things are…
Use the following information for the Problems below. (Algo) Skip to question [The following information applies to the questions displayed below.] Phoenix Company reports the following fixed budget. It is based on an expected production and sales volume of 15,500 units. PHOENIX COMPANY Fixed Budget For Year Ended December 31 Sales $ 3,100,000 Costs Direct materials 992,000 Direct labor 232,500 Sales staff commissions 62,000 Depreciation—Machinery 295,000 Supervisory salaries 198,000 Shipping 217,000 Sales staff salaries (fixed annual amount) 251,000 Administrative salaries 498,500 Depreciation—Office equipment 199,000 Income $ 155,000 Problem 23-2A (Algo) Preparing a flexible budget performance report LO P1 Phoenix Company reports the following actual results. Actual sales were 18,500 units. Sales (18,500 units) $ 3,746,250 Costs Direct materials $ 1,198,800 Direct labor 284,900 Sales staff commissions 64,750…
. Flexible budget for selling and administrative expenses for a service company Digital Solutions Inc. uses flexible budgets that are based on the following data: Sales commissions 15% of sales 18% of sales $5,000 per month plus 12% of sales $28,000 per month $12,000 per month plus 20% of sales $30,000 per month Advertising expense Miscellaneous administrative expense Office salaries expense Customer support expenses Research and development expense Prepare a flexible selling and administrative expenses budget for October for sales volumes of $400,000, $500,000, and $600,000. (Use Exhibit 4 as a model.) Digital Solutions Inc. Flexible Selling and Administrative Expenses Budget For the Month Ending October 31 Line Item Description Total sales Variable cost: Total variable cost Fixed cost: Total fixed cost Total selling and administrative expenses Amount Amount Amount $400,000 $500,000 $600,000 $ $ $ $ $
Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates for budgeting purposes and the actual results for May as shown below: Fixed Element per Month Variable Element per Customer Served Actual Total for May Revenue $ 5,600 $ 182,000 Employee salaries and wages $ 55,000 $ 1,600 $ 110,300 Travel expenses $ 850 $ 27,200 Other expenses $ 34,000 $ 32,600 When preparing its planning budget, the company estimated it would serve 30 customers per month; however, during May the company actually served 35 customers. REQUIRED QUESTIONS 12. What amount of travel expenses would be included in Adger’s planning budget for May? 8. What is Adger’s travel expenses spending variance for May? Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as…
Roger Company’ sells one product, and has provided the following variable and fixed estimates for budgetingpurposes.Variable element per unit Fixed element per monthRevenue $25Operating costs $4.75 $3,150For the month of August, it planned on selling 200 units, but actual units sold were 180 units. Actual revenuefor the month was $4,410 and actual operating costs were $3,865. a. What is the amount shown for revenue under the flexible and planning budget for August? b. What is the amount shown for total operating costs under the flexible and planning budgets for August?
Refer to the picture for the problem and template.
) Flexible Budget for Selling and Administrative Expenses for a Service Company Cloud Productivity Inc. uses flexible budgets that are based on the following data: Sales commissions 14% of sales 18% of sales $6,000 per month plus 12% of sales $30,000 per month $12,000 per month plus 20% of sales $31,000 per month Advertising expense Miscellaneous administrative expense Office salaries expense Customer support expenses Research and development expense Prepare a flexible selling and administrative expenses budget for March for sales volumes of $400,000, $500,000, and $600,000. (Use Exhibit 5 as a model.) Cloud Productivity Inc. Flexible Selling and Administrative Expenses Budget For the Month Ending March 31 $400000 Total sales Variable cost: Sales commissions Advertising expense Miscellaneous administrative expense Customer support expenses Total variable cost Fixed cost: Miscellaneous administrative expense 56,000 Total fixed cost $500000 $600000 70,000 $ Fixed cost: Miscellaneous…

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS