Problem 1: A: Which of the following best describes some of the benefits related
ID: 2526299 • Letter: P
Question
Problem 1:
A:
Which of the following best describes some of the benefits related to the preparation and use of budgets:
Business activities are better coordinated.
Managers become aware of other managers' plans.
Employees may become cost conscious and try to conserve resources.
Managers may review the organizational plan and make necessary changes more often.
All of the above.
B:
Coffee Now prepared the following budget based on 10,000 cups of coffee sold. All product costs are variable expenses. Selling expenses are based on 1% of sales and $4,000 each period. Administrative expenses are not variable.
Sales
30,000.00
Direct Materials
3,000.00
Direct Labor
2,500.00
Overhead
5,000.00
Gross Profit
19,500.00
Selling expenses
4,300.00
Administrative expenses
2,000.00
6,300.00
Net Operating Income
13,200.00
For sales and EACH cost item, identify if it is FIXED or VARIABLE or MIXED
-A.B.C.
Sales
-A.B.C.
Direct Materials
-A.B.C.
Direct Labor
-A.B.C.
Overhead
-A.B.C.
Selling Expenses
-A.B.C.
Administrative Expenses
A.
Fixed
B.
Variable
C.
Mixed
Business activities are better coordinated.
Managers become aware of other managers' plans.
Employees may become cost conscious and try to conserve resources.
Managers may review the organizational plan and make necessary changes more often.
All of the above.
Explanation / Answer
Problem 1: Answer is A. All of the above. Explanation: Budgets are used for cordinating all the functions of organisation in line with the overall management goals. Starting with sales budget, all other budgets are based on one another to achieve the dsired sales. Through which each department knows the plans of related departments. And the changes can be made for any unrelaistic target if any. Problem: B. Variable Sales B. Variable Direct Material B. Variable Direct Labouor B. Variable Overheads B. Variable Selling expense A. Fixed Admin expense