ACC 202 WORSKSHOP FOUR BUDGETS HANDOUT FOR 4.3 DROPBOX
Download Budgets Handout for 4.3 Dropbox Review the questions below. As you watch the video Budgets, take notes and answer the following questions for Dropbox submission:
Question 1. Which budget is the basis for all other budget components in the master budget? 2.
Why would a company plan to produce more product than they expect to sell? 3. What is the budget called that consists of the production budget, direct materials, direct labor, manufacturing overhead, and selling and administrative expenses budget?
4. Do you think the company will hit their budgeted sales level in any particular month or quarter? Why or why not? 5. If the company does not hit its budgeted sales level, is the budget faulty? Why or why not? 6. Is the Master Budget prepared under GAAP? Why or why not?
Review the questions below. As you watch the video Sales-Volume and Flexible-Budget Variances, take notes and answer the following questions for your Dropbox submission. Question 1. What’s a simple rule to determine whether a budget variance is favorable or unfavorable? 2. Can a variance occur in the fixed cost budget? Why or why not? 3. If labor costs increase due to hourly wage rates increasing unexpectedly, will that lead to an unfavorable variable cost variance? 4. If labor costs increase due to higher manufacturing volume than expected, will that lead to an unfavorable variable cost variance? Why or why not? 5. How can the cost accountant determine whether all of the unexpected level of profit was due to an unexpected increase in selling price? 6. Explain why a flexible budget is important to help a cost accountant take corrective action and why a static budget may not provide the same guidance.