Budgeting (AS Level) flashcards

Topic 9: Budgeting

Sales 900 units; opening finished goods 120; closing 150. Production?

900 + 150 − 120 = 930 units.

Usage 2,400 kg; opening materials 300 kg; closing 260 kg. Purchases?

2,400 + 260 − 300 = 2,360 kg.

Opening receivables $5,200; credit sales $61,000; closing receivables $6,400. Cash received?

5,200 + 61,000 − 6,400 = $59,800.

Sales: May $14,000, June $16,500. 25% are for cash; credit customers pay the month after sale. June receipts?

25% × 16,500 + 75% × 14,000 = 4,125 + 10,500 = $14,625.

March credit sales $30,000; 60% pay in April and take a 2% cash discount. April receipt?

30,000 × 60% = 18,000; less 2% = $17,640.

Production 640 units at 1.5 hours each, $14 an hour. Labour cost?

960 hours × $14 = $13,440.

Budgeted rent paid $7,800, of which $650 is for next year. Budgeted expense and bank figure?

Expense 7,800 − 650 = $7,150; the $650 is an other receivable; the bank figure uses the full $7,800.

Budgetary slack

Padding added by a manager to make a target easier to hit.

Incremental vs zero-based budgeting, with an example

Incremental: last period's figure adjusted ($48,000 + 5% = $50,400); quick and cheap but carries waste forward. ZBB: every item starts at nil and must be justified; slow and costly, suits discretionary costs.

Which budgets does 9615 say "will be assessed at A-level"?

The cash, sales, purchases, production and labour budgets. Budgeted statements are International AS.

Materials budget $8,200, actual $8,650. Sales budget $31,000, actual $32,400. Label the differences

Materials $450 adverse (higher cost reduces profit). Sales $1,400 favourable. Investigate the cause before acting.