Answer each question with a minimum of two to three(2-3) sentences. Some questions will require substantiallymore than that to fully respond to the prompt. Be thorough whenaddressing each item and make sure you answer each part ofthe prompt.
What is a budget?
What are the (six) benefits of having a budget?
What is a master budget? Describe its components.
What is a static planning budget?
What is a flexible budget?
How does a flexible budget differ from a static planningbudget?
What are three reasons that actual results may differ from whathad been budgeted for at the beginning of a period?
How does a flexible budget account for these variances?
Answer each question with a minimum of two to three(2-3) sentences. Some questions will require substantiallymore than that to fully respond to the prompt. Be thorough whenaddressing each item and make sure you answer each part ofthe prompt.
What is a budget?
What are the (six) benefits of having a budget?
What is a master budget? Describe its components.
What is a static planning budget?
What is a flexible budget?
How does a flexible budget differ from a static planningbudget?
What are three reasons that actual results may differ from whathad been budgeted for at the beginning of a period?
How does a flexible budget account for these variances?
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Related questions
The Rotations Corporation is a manufacturer of centrifuges.Fixed and variable manufacturing overheads are allocated to eachcentrifuge using budgetedâ assembly-hours. Budgeted assembly timeis 2 hours per unit. The following table shows thebudgeted amounts and actual results related to overhead forJune 2014.
Actual | Static | |
The Rotations Corporation (June 2014) | Results | Budget |
Number of centrifuges assembled and sold | 240 | 190 |
Hours of assembly time | 312 | |
Variable manufacturing overhead cost per hour of assemblytime | $28.00 | |
Variable manufacturing overhead costs | $9,148 | |
Fixed manufacturing overhead costs | $19,990 | $18,620 |
Requirements
1. | Prepare an analysis of all variable manufacturing overhead andfixed manufacturing overhead variances. | ||||||||||||||||||||
2. | Prepare journalentries for Rotationsâ'June2014variable and fixedmanufacturing overhead costs andâ variances; write off thesevariances to cost of goods sold for the quarter ending Juneâ30,2014. | ||||||||||||||||||||
3. | How does the planning and control of variable manufacturingoverhead costs differ from the planning and control of fixedmanufacturing overheadâ costs? Requirement 1. Prepare an analysis of allvariable manufacturing overhead and fixed manufacturing overheadvariances. Begin by calculating the following amounts for the variableoverhead.
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Stevens Center is a nonprofit organization devoted its stagingplays for children. The theater has a very small | ||||||
full-time professional administrative staff. Through a specialarrangement with the actors' union, actors | ||||||
and directors rehearse without pay and are paid only for actualperformances. | ||||||
The costs from the current year's planning budget appear below.Steven Center had tentatively planned to put | ||||||
on six different productions with a total of 108 performances.For example, one of the productions was The Lion King, | ||||||
which has a six-week run with three performances on eachweekend. | ||||||
Stevens Center | ||||||
Costs from the Planning Budget | ||||||
For the Year Ended December 31 | ||||||
Budgeted number of productions | 6 | |||||
Budgeted number of performances | 108 | |||||
Actors' and directors' wages | $215,000 | |||||
Stagehands' wages | 31,900 | |||||
Ticket booth personnel and ushers' wages | 16,400 | |||||
Scenery, costumes, and props | 107,900 | |||||
Theater hall rent | 53,000 | |||||
Printed programs | 26,800 | |||||
Publicity | 12,200 | |||||
Administrative expense | 44,200 | |||||
Total | $507,400 | |||||
Some of the costs vary with the number of productions, some withthe number of performances, and | ||||||
some are fixed and depend on neither the number of productionsnor the number of performances. | ||||||
The costs of scenery, costumes, props, and publicity vary withthe number of productions. | ||||||
It doesn't make any differences how many times The Lion King isperformed, the cost of the | ||||||
scenery is the same. Likewise, the cost of publicizing a playwith posters and radio commericals is the | ||||||
same whether there are 10,20 or 30 performances of the play. Onthe other hand, the wages of | ||||||
the actors, directors, stagehands, ticket booth personnel, andushers vary with the number of | ||||||
perofrmances. The greater the number of performances, the higherthe wage costs will be. Similarily, | ||||||
the costs of renting the hall and printing the programs willvary with the number of performances. | ||||||
Administrative expenses are more difficult to pin down, but thebest estimate is that approximately | ||||||
75% of the budgeted costs are fixed, 15% depend on the number ofproductions staged, and the | ||||||
remaining 10% depend on the number of performances. | ||||||
After the beginning of the year, the board of directors of thetheater authorized expanding the | ||||||
theater's program to seven productions and a total of 168performances. Not surprisingly, actual | ||||||
costs were considerably higher than the costs from the planningbudget. (Grants from donors | ||||||
and ticket sales were also correspondingly higher, but are notshown here.) Data concerning the | ||||||
actual costs appear below: | ||||||
Stevens Center | ||||||
Costs from the Planning Budget | ||||||
For the Year Ended December 31 | ||||||
Actual number of productions | 7 | |||||
Actual number of performances | 168 | |||||
Actors' and directors' wages | $341,600 | |||||
Stagehands' wages | 49,500.00 | |||||
Ticket booth personnel and ushers' wages | 25,800.00 | |||||
Scenery, costumes, and props | 130,700.00 | |||||
Theater hall rent | 78,100.00 | |||||
Printed programs | 38,400.00 | |||||
Publicity | 15,200.00 | |||||
Administrative expense | 47,100.00 | |||||
Total | $726,400 | |||||
1. Prepare a flexible budget for the Stevens Center based on theactual activity of the year. | ||||||
2. Prepare a flexible budget performance report for the yearthat shows both spending variance | ||||||
and activity variances. | ||||||
Stevens Theater | ||||||
Flexible Budget Performance Report | ||||||
For the Year Ended December 31 | ||||||
Actual Results | Spending Variances | Flexible Budget | Activity Variances | Planning Budget | ||
Actual number of productions | 7 | |||||
Actual number of performances | 168 | |||||
Actors' and directors' wages | $341,600 | |||||
Stagehands' wages | 49,500.00 | |||||
Ticket booth personnel and ushers' wages | 25,800.00 | |||||
Scenery, costumes, and props | 130,700.00 | |||||
Theater hall rent | 78,100.00 | |||||
Printed programs | 38,400.00 | |||||
Publicity | 15,200.00 | |||||
Administrative expense | 47,100.00 | |||||
Total | $726,400 | |||||
3. If you were on the board of directors of the theater, wouldyou be pleased with how | ||||||
costs were controlled during the year? Why or why not? | ||||||
4. The cost formula provide figures for the average cost perproduction and average cost per performance. | ||||||
How accurate do you think these figures would be for predictingthe cost of a new production or of an additiional performance of aparticular production? | ||||||