Explaining Costs That Change with Flexible Budget ActivityWhen preparing a company's flexible budget, which manufacturing cost(s) will change as the volumeincreases or decreases? Which manufacturing cost(s) will not change as the volume changes?

Budgets: Budgets are prepared for the planning and controlling purposes. Budgets facilitate…

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Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 10Q: Fill in the blanks: A flexible budget summarizes _____ and _____ for various volume levels by...

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Similar questions

What operating budget exists for manufacturing but not for a retail company?
Fill in the blanks: A flexible budget summarizes _____ and _____ for various volume levels by adjusting the _____ costs for the various levels of activities. The costs remain the same for all levels of activities.
What is the main difference between static and flexible budgets? The fixed manufacturing overhead is adjusted for units sold in the flexible budget. The variable manufacturing overhead is adjusted in the static budget. There is no difference between the budgets. The variable costs are adjusted in a flexible budget.
A flexible budget______. A. predicts estimated revenues and costs at varying levels of production B. gives actual figures for selling price C. gives actual figures for variable and fixed overhead D. is not used in overhead variance calculations
Which approach is most likely to result in employee buy-in to the budget? A. top-down approach B. bottom-up approach C. total participation approach D. basing the budget on the prior year
Why is the concept of relevant range important when preparing a flexible budget?
When would a static budget be effective in evaluating a managers performance?
Given the following information from Power Enterprises direct materials budget, how much direct materials needs to be purchased?
Which of the following is true in a bottom-up budgeting approach? Every expense needs to be justified. Supervisors tell departments their budget amount and the departments are free to work within those amounts. Departments budget their needs however they see fit. Departments determine their needs and relate them to the overall goals.
Continuous improvement is the governing principle of a lean accounting system. Following are several performance measures. Some of these measures would be associated with a traditional standard-costing accounting system, and some would be associated with a lean accounting system. a. Materials price variances b. Cycle time c. Comparison of actual product costs with target costs d. Materials quantity or efficiency variances e. Comparison of actual product costs over time (trend reports) f. Comparison of actual overhead costs, item by item, with the corresponding budgeted costs g. Comparison of product costs with competitors product costs h. Percentage of on-time deliveries i. First-time through j. Reports of value- and non-value-added costs k. Labor efficiency variances l. Days of inventory m. Downtime n. Manufacturing cycle efficiency (MCE) o. Unused (available) capacity variance p. Labor rate variance q. Using a sister plants best practices as a performance standard Required: 1. Classify each measure as lean or traditional (standard costing). If traditional, discuss the measures limitations for a lean environment. If it is a lean measure, describe how the measure supports the objectives of lean manufacturing. 2. Classify the measures into operational (nonfinancial) and financial categories. Explain why operational measures are better for control at the shop level (production floor) than financial measures. Should any financial measures be used at the operational level? 3. Suggest some additional measures that you would like to see added to the list that would be supportive of lean objectives.
Explain why mixed costs must be broken down into their fixed and variable components before a flexible budget can be developed.
Discuss the shortcomings of the traditional master budget. In what situations would the master budget perform well?

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Explaining Costs That Change with Flexible Budget Activity When preparing a company's flexible budget, which manufacturing cost(s) will change as the volume increases or decreases? Which manufacturing cost(s) will not change as the volume changes?