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Accounts Question

A flexible budget allows for adjustments in activity levels and is used to prepare production budgets including direct materials purchases, direct labor cost, and factory overhead cost. The principal components of a master budget include the production budget, sales budget, and capital expenditures budget. For McCabe Manufacturing, a flexible budget for 9,000 units of production would show variable costs of $49,500 and fixed costs of $23,000. The first budget customarily prepared as part of an entity's master budget is the sales budget.

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395 views2 pages

Accounts Question

A flexible budget allows for adjustments in activity levels and is used to prepare production budgets including direct materials purchases, direct labor cost, and factory overhead cost. The principal components of a master budget include the production budget, sales budget, and capital expenditures budget. For McCabe Manufacturing, a flexible budget for 9,000 units of production would show variable costs of $49,500 and fixed costs of $23,000. The first budget customarily prepared as part of an entity's master budget is the sales budget.

Uploaded by

Accounting Guy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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1.Which of the following budgets allow for adjustments in activity levels?

a. Static Budget

b. Continuous Budget

c. Zero-Based Budget

d. Flexible Budget

2.The production budgets are used to prepare which of the following budgets?

a. Operating expenses

b. Direct materials purchases, direct labor cost, factory overhead cost

c. Sales in dollars

d. Sales in units

3.Principal components of a master budget include which of the following:

A. Production budget

B. Sales budget

C. Capital expenditures budget

D. All of the above

4.McCabe Manufacturing Co.'s static budget at 8,000 units of production includes $40,000 for direct
labor and $4,000 for electric power. Total fixed costs are $23,000. At 9,000 units of production, a flexible
budget would show _______.
A)variable costs of $49,500 and $25,875 of fixed costs

B)variable costs of $44,000 and $23,000 of fixed costs

C)variable costs of $49,500 and $23,000 of fixed costs

D)variable and fixed costs totaling $75,375

Budgeted

Working: 40,000/8000=$5/unit

$4,000/8000=$0.5/unit

Flexible:

9000*$5=$45,000

9000*0.5=4500

Total variable cost will be $49500

And fixed cost always remains same.

5.. The first budget customarily prepared as part of an entity's master budget is the:

a. production budget

b. cash budget

c. sales budget

d. direct materials purchases

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