Exam 16: Management Control Systems

Figure 16-3 Harald, SA., has done a cost analysis for its production of bumper stickers. The following activities and cost drivers have been developed: Activity Cost Formula Maintenance £11,000+£0.11 per machine hour Machining £25,000+£0.50 per machine hour Setups £50 per batch Purchasing £200+£45 per purchase order Following are the actual costs of producing 85,000 stickers: 5,000 machine hours; 10 batches; 20 purchase orders Maintenance £11,500 Machining 28,300 Setups 550 Purchasing 1,000 -Refer to Figure 16-3. What is the budget variance for total costs in an activity-based performance report?

Figure 16-4 Villafane, SA., has done a cost analysis for its production of decals. The following activities and cost drivers have been developed: Activity Cost Formula Design £5,000+£0.05 per machine hour Machining £25,000+£0.01 per machine hour Setups £35 per batch Purchasing £50+£15 per purchase order Following are the actual costs of producing 35,000 decals: 1,000 machine hours; 5 batches; 30 purchase orders Design £5,080 Machining ? Setups ? Purchasing £600 The following variances were given in the activity performance report: Design ? Machining £40 Setups £15 Purchasing ? -Refer to Figure 16-4. What is the activity variance for purchasing?

Figure 16-1 Armati, SA., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Armati, SA., had the following budgeted data: Unit sales for 2011 26,000 Unit production for 2011 26,000 Budgeted fixed overhead for 2011 : Supervision £800 Depreciation 2,000 Rent 100 Budgeted variable costs per unit: Direct materials £0.15 Direct labour 0.20 Supplies 0.02 Indirect labour 0.05 Power 0.02 The following actually occurred: Actual unit sales for 2011 24,000 Actual unit production for 2011 28,000 Actual fixed overhead for 2011 : Supervision £850 Depreciation 2,000 Rent 100 Actual variable costs: Direct materials £3,500 Direct labour 4,900 Supplies 530 Indirect labour 1,250 Power 470 -Refer to Figure 16-1. The total flexible budgeted costs for 2011 are

If the static budget variance for materials is £200 F and the budgeted cost for materials is £52,000, then the actual cost of materials is

Classics, SA., uses a flexible budget for overhead costs. The company expects to produce 20,000 units of the product it manufactures. Half of the units require 0.50 direct labour hours per unit. The remainder requires 0.75 direct labour hours per unit. The cost formulas for each of the four overhead items is as follows: Fixed Cost Variable Cost Power £1,000 £0.25 Maintenance £5,000 £0.40 Indirect labour £8,000 £2.00 Rent £12,000 a.Prepare an overhead budget for the expected activity level for the coming year. b.Prepare an overhead budget that reflects production that is 10 per cent higher than expected.

Figure 16-3 Harald, SA., has done a cost analysis for its production of bumper stickers. The following activities and cost drivers have been developed: Activity Cost Formula Maintenance £11,000+£0.11 per machine hour Machining £25,000+£0.50 per machine hour Setups £50 per batch Purchasing £200+£45 per purchase order Following are the actual costs of producing 85,000 stickers: 5,000 machine hours; 10 batches; 20 purchase orders Maintenance £11,500 Machining 28,300 Setups 550 Purchasing 1,000 -Refer to Figure 16-3. What is the budget variance for machining in an activity-based performance report?

Figure 16-1 Armati, SA., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Armati, SA., had the following budgeted data: Unit sales for 2011 26,000 Unit production for 2011 26,000 Budgeted fixed overhead for 2011 : Supervision £800 Depreciation 2,000 Rent 100 Budgeted variable costs per unit: Direct materials £0.15 Direct labour 0.20 Supplies 0.02 Indirect labour 0.05 Power 0.02 The following actually occurred: Actual unit sales for 2011 24,000 Actual unit production for 2011 28,000 Actual fixed overhead for 2011 : Supervision £850 Depreciation 2,000 Rent 100 Actual variable costs: Direct materials £3,500 Direct labour 4,900 Supplies 530 Indirect labour 1,250 Power 470 -Refer to Figure 16-1. The flexible budget variance for indirect labour for 2011 is

Figure 16-3 Harald, SA., has done a cost analysis for its production of bumper stickers. The following activities and cost drivers have been developed: Activity Cost Formula Maintenance £11,000+£0.11 per machine hour Machining £25,000+£0.50 per machine hour Setups £50 per batch Purchasing £200+£45 per purchase order Following are the actual costs of producing 85,000 stickers: 5,000 machine hours; 10 batches; 20 purchase orders Maintenance £11,500 Machining 28,300 Setups 550 Purchasing 1,000 -Refer to Figure 16-3. What is the budget variance for purchasing in an activity-based performance report?

Glock, SA., is looking for feedback on performance. The company compares the budget for the year with the actual costs. Glock had the following budgeted data: Budgeted variable costs per unit: Direct materials £11.00 Direct labour 15.00 Supplies 0.80 Indirect labour 1.00 Power 0.10 Budgeted fixed overhead for 2011 : Supervision £9,000 Depreciation 13,000 Rent 12,000

Which of the following is NOT a key feature of an ideal budgetary system?

The budget most appropriate for control purposes is the

Flexible budgets do NOT provide

Figure 16-1 Armati, SA., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Armati, SA., had the following budgeted data: Unit sales for 2011 26,000 Unit production for 2011 26,000 Budgeted fixed overhead for 2011 : Supervision £800 Depreciation 2,000 Rent 100 Budgeted variable costs per unit: Direct materials £0.15 Direct labour 0.20 Supplies 0.02 Indirect labour 0.05 Power 0.02 The following actually occurred: Actual unit sales for 2011 24,000 Actual unit production for 2011 28,000 Actual fixed overhead for 2011 : Supervision £850 Depreciation 2,000 Rent 100 Actual variable costs: Direct materials £3,500 Direct labour 4,900 Supplies 530 Indirect labour 1,250 Power 470 -Refer to Figure 16-1. The flexible budget variance for supervision for 2011 is

Figure 16-4 Villafane, SA., has done a cost analysis for its production of decals. The following activities and cost drivers have been developed: Activity Cost Formula Design £5,000+£0.05 per machine hour Machining £25,000+£0.01 per machine hour Setups £35 per batch Purchasing £50+£15 per purchase order Following are the actual costs of producing 35,000 decals: 1,000 machine hours; 5 batches; 30 purchase orders Design £5,080 Machining ? Setups ? Purchasing £600 The following variances were given in the activity performance report: Design ? Machining £40 Setups £15 Purchasing ? -Refer to Figure 16-4. What is the actual cost of setups?

Which of the following is not an essential element of responsibility accounting?

What results could be expected by placing pressure on management to perform at certain levels?

Figure 16-3 Harald, SA., has done a cost analysis for its production of bumper stickers. The following activities and cost drivers have been developed: Activity Cost Formula Maintenance £11,000+£0.11 per machine hour Machining £25,000+£0.50 per machine hour Setups £50 per batch Purchasing £200+£45 per purchase order Following are the actual costs of producing 85,000 stickers: 5,000 machine hours; 10 batches; 20 purchase orders Maintenance £11,500 Machining 28,300 Setups 550 Purchasing 1,000 -Refer to Figure 16-3. What is the budget variance for maintenance in an activity-based performance report?

Timothy, SA., uses a flexible budget for overhead costs. The company expects to produce 40,000 units of the product it manufactures. Each unit requires 0.40 direct labour hours. The cost formulas for each of the four overhead items (where X is measured in direct labour hours) is as follows: Cost Formula Power 0.40 Maintenance £15,000+0.60 Indirect labour £18,000+2.50 Rent £20,000 a.Prepare an overhead budget for the expected activity level for the coming year. b.Prepare an overhead budget that reflects production that is 25 per cent lower than expected.

Figure 16-2 Glenn, SA., has done a cost analysis for its production of T-shirts. The following activities and cost drivers have been developed: Activity Cost Formula Maintenance £11,000+£2 per machine hour Machining £55,000+£3 per machine hour Inspection £70,000+£500 per batch Setups £2,000 per batch Purchasing £80,000+£150 per purchase order Following are the actual costs of producing 75,000 T-shirts: 5,000 machine hours; 10 batches; 20 purchase orders Maintenance £20,000 Machining 73,000 Inspection 73,000 Setups 18,000 Purchasing 82,000 -Refer to Figure 16-2. What is the budget variance for maintenance in an activity-based performance report?

A manager of a profit centre: