Problem 1: Which of the following factors is NOT an advantage of preparing operating budgets?
a. It provides resource information that can be used to improve decision making.
b. It improves communication and coordination.
c. It aids in the use of resources and employees by setting a benchmark that can be used for the subsequent evaluation of performance.
d. It saves time and resources.
Problem 2: The _______________ is responsible for directing and coordinating the overall budgeting process.
a. budget committee
b. president
c. budget director
d. treasurer
Problem 3: Canceco Company produces and sells pillows. It expects to sell 10,000 pillows in the year 2007 and had 1,000 pillows in finished goods inventory at the end of 2006. Canceco would like to complete operations in the year 2007 with at least 1,250 completed pillows in inventory. There is no ending work-in-process inventory. The pillows sell for $5 each. What would be the total sales for the year 2007?
a. $50,000
b. $55,000
c. $56,250
d. $51,250
Problem 4: During June, 12,000 pounds of materials were purchased at a cost of $8 per pound. If there was an unfavorable direct materials price variance of $6,000 for June, the standard cost per pound must be
a. $8.50.
b. $8.00.
c. $7.50.
d. $7.00.
Problem 4: During August, 10,000 units were produced. The standard quantity of material allowed per unit was 10 pounds at a standard cost of $3 per pound. If there was an unfavorable usage variance of $18,750 for August, the actual quantity of materials used must be
a. 106,250 pounds.
b. 93,750 pounds.
c. 31,875 pounds.
d. 23,438 pounds.