Exam 16: Management Control Systems

Which cost centre listed below is evaluated with the aid of flexible budgets drawn up for the actual level of activity?

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 machining in an activity-based performance report?

When budgets are used for control,

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 for rent in 2011 is

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

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 setups in an activity-based performance report?

Which budget should be used to determine how efficiently managers controlled costs?

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 static budget for total variable costs is

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 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 actual cost of machining?

Figure 16-5 Torino, SA., manufactures machine parts. Torino has developed a static budget for its plant at an activity level of 10,000 direct labour hours for the month of March. The actual level of activity was 11,000 hours. The following table summarizes the static budget and the actual costs for March: Static Budget Actual Costs (10,000) (11,000) Variance Variable costs £21,000 £22,000 £1,000 Fixed costs 7,800 7,700 100 Total £28,800 £29,700 £900 -Refer to Figure 16-5. What is the flexible budget variance for March?

Figure 16-5 Torino, SA., manufactures machine parts. Torino has developed a static budget for its plant at an activity level of 10,000 direct labour hours for the month of March. The actual level of activity was 11,000 hours. The following table summarizes the static budget and the actual costs for March: Static Budget Actual Costs (10,000) (11,000) Variance Variable costs £21,000 £22,000 £1,000 Fixed costs 7,800 7,700 100 Total £28,800 £29,700 £900 -Refer to Figure 16-5. Which of the following describes the flexible budget variance for March?

Controllable costs are those that a manager

Which of the following departments is likely to be evaluated as a discretionary cost centre?

Figure 16-5 Torino, SA., manufactures machine parts. Torino has developed a static budget for its plant at an activity level of 10,000 direct labour hours for the month of March. The actual level of activity was 11,000 hours. The following table summarizes the static budget and the actual costs for March: Static Budget Actual Costs (10,000) (11,000) Variance Variable costs £21,000 £22,000 £1,000 Fixed costs 7,800 7,700 100 Total £28,800 £29,700 £900 -Refer to Figure 16-5. Which of the following describes how well the plant manager performed for the month of March?

Which of the following is not an objective of responsibility accounting?

Riemay, SA., has done a cost analysis for its production of sports cards. The following activities and cost drivers have been developed: Activity Cost Formula Photography £50+£35 per labour hour Printing £25,000+£0.01 per machine hour Setups £25 per batch Purchasing £25+£25 per purchase order Following are the actual costs of producing 35,000 cards: 60 labour hours; 500 machine hours; 5 batches; 30 purchase orders Photography ? Printing £25,000 Setups ? Purchasing £770 The following variances were given in the activity performance report: Photography £10 Printing ? Setups £20 Purchasing ?

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 inspection in an activity-based performance report?

Mertz, SA., has done a cost analysis for its production of flags. The following activities and cost drivers have been developed: Activity Cost Formula Maintenance £13,000+£2 per machine hour Machining £45,000+£6 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 flags: 1,000 machine hours; 15 batches; 10 purchase orders Maintenance £14,000 Machining 50,000 Inspection 70,000 Setups 32,000 Purchasing 82,000

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 total cost for 2011 is