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

Answer 1

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