BEC Homework 2.2

Question 1

Master budget

Answer 1

Master budget is overall budget consisting of many smaller budgets that is based on one level of production. The master budgets include the entire company

Question 2

Flexible budget

Answer 2

IT can be prepared for any production level within a relevant range. It is a series of budgets based on different activity levels within the relevant range. It is appropriate for any activity that has variable costs. They give management the opportunity to compare actual results to the budget for the activity level achieved

Question 3

Volume overhead efficiency variance

Answer 3

Budge table variable based on standard hours =Standard Direct labour hours allowedxStandard overhead variable rate
Budgeted Variable OH=Actual labour hoursx standard OH variable rate
(OR)
SH-AHxSR

Question 4

production volume variance

Answer 4

(Actual units produced - Budgeted units produced) x Budgeted overhead rate
AUP-BUPxBOHPU

Question 5

Material price variance

Answer 5

AP-SPxAQ

Question 6

Variable spending OH Variance

Answer 6

Budget variable -actual

Question 7

Strategic business unit SBU

Answer 7

Responsibility from highest order Investment SBU-profit-revenue-cost

Question 8

Balance score card

Answer 8

Reports management info regarding organizational performance as defined by critical success factors. These critical success factors are often classified as human resources business processes, customer satisfaction, and financial performance to demonstrate no single dimension of organizational performance can be relied upon to evaluate success.Criticalsucess factors…Financial,Internal business process, customer and human resource considrations. It integrates financial with non-financial measures. Innovation is the perpective Defined by balance score card

Question 9

ROI

Answer 9

Evaluates business performance in terms of the dimensions of revenue expense and investment the measurement all are financial

Question 10

KAIZEN

Answer 10

Kaizen is synonomous with continuous improvement but not multidimensional

Question 11

Market value added

Answer 11

Contemplates to the degree to which management actions improve stockholders value

Question 12

Investment Center

Answer 12

Investment center is most likely an independent business

Question 13

Successful responsibility accounting system

Answer 13

A reasonable separation of costs into their fixed and variable components since fixed costs are not controllable and must be eliminated from the responsibility report

Question 14

Financial and non financial measures

Answer 14

Financial and non-financial features of an organization that contribute to its success in achieving strategy are referred to as critical success factors and are normally classified as: 1. Financial solvency and return, 2. Customer satisfaction, 3. lntemal business processes, and 4. Human resource innovation.

Question 15

what all will be included in performance measures

Answer 15

A user focus
specific time horizons
exceptional items that are controllable

Question 16

Authoritattive standerds

Answer 16

Standereds imposed by management without employee input

Question 17

Participative standards

Answer 17

Standerds imposed by management with collaboration to employee input

Question 18

Ideal Standerds

Answer 18

Are based optimum condition

Question 19

Attainable standards

Answer 19

per unit budget with normal conditions

Question 20

The information in COGM Budget would directly relate to

Answer 20

Material used, Direct Labour, OH applied and finished goods

Question 21

firm develops an annual cash budget in order to

Answer 21

Avoid the oppertuity cost of noninvested excess cash and minimize the cost of interim financing. It is don’t after all budgets have been prepared. Cash budget is not for the need of internal financing. Cash budget must be completed before the forecasted balance sheet. Statement of cash flows is the last proforma statement prepared . because all the other things or budgets affects cash.

Question 22

The financial budget process include

Answer 22

cash and capitol purchase budgets and balance sheet and statement of cash flows.

Question 23

difference between Flexible budget and static budget

Answer 23

A flexible budget provides cost allowances for different level of activity. cost budget provides budget for one level of activity. Both budgets can be prepared by any level of management. Both budgets are used for planning . Both include variable nad fixed costs/

Question 24

For a company that produces more than ne product

Answer 24

sales volume variance can be divided into sales quantity and sales mix

Question 25

Learning and growth

Answer 25

Employee satisfaction and retention

Question 26

Two way material price variance

Answer 26

Actual quantity x Actual price -Actual quantity x Standard price = difference Standard quantity allowed x standard price - actual quantity used x standard price

Question 27

Controllable margin

Answer 27

controllable margin is computed as contribution margin less controllable fixed costs

Question 28

The customer perspective of a balance score card which examines a comapnys sucesss in a targeted market

Answer 28

customer. The financial perspective is concerened with the capture of the increased market share internal busiess prospects of a balanced score card is concerned with maintaining low costs. the learning and growth is tied to reward and recognition

Question 29

Flexible budget variance

Answer 29

Actual- Flexible budget actual

Question 30

Volume variance

Answer 30

Flexible budget actual- Volume variance

Question 31

Spending variance

Answer 31

Actual hours X actual rate- actual hours X standerd rate

Question 32

Fixed O/H Volume variance

Answer 32

Fixed OH Rate x actual production- Fixed overhead rate x Standard production

Question 33

Material efficiency variance can be caused by

Answer 33

actions of the purchasing department design of the product skill level of the labor force

Question 34

production volume variance is due to

Answer 34

difference in the planned level of the base used for overhead allocation and the actual level achieved. production volume variance is the variance in an absorption costing system that measures the departure from the denominator level of activity that was used to set the fixed overhead rate.

Question 35

efficiency variance

Answer 35

production volume variance is the variance in an absorption costing that measure the denominator level of activity that was used to set the fixed OH rate

Question 36

Variable overhead spending variance

Answer 36

is most controllable by plant manager and somewhat by production control

Question 37

Discretionary costs

Answer 37

are costs arising from periodic budgeting decisions by management to spend in certain areas not directly related to manufacturing

Question 38

Incurred marginal costs

Answer 38

are the sum of variable and avoidable fixed costs necessary to have one unit increase in activity

Question 39

Opportunity costs

Answer 39

is the maximum benefit foregone by using a scarce resource for a given purpose. it is the benefit provided by the next best use of that resource

Question 40

Residual income

Answer 40

is income excess of a fixed return of a invested capitol

Question 41

Least associated with target pricing

Answer 41

price stability, price justification fixed cost recovery

Question 42

costs relevant to made or buy decision include variable material variable labor

Answer 42

avoidable fixed costs