13 Reed Merchandising Company expects to purchase 00000 of m

13. Reed Merchandising Company expects to purchase $00.000 of materials in July and $105,000 of materials in August. Three-quarters ot all purchases are paid for in the month of purchase, and the other one-lourth are paid for in the month foilewing the enonth of purchase. How much wil August\'s cash disbursements for materials purchases be? a. $67.500 b. S78.750 ?. $101,250 d. $105,000 14. Which of the following would net be considered an aspect of budgetary controi? a. n assists in the determination of differences between actual and planned resuits b. It provides feedback value needed by management to see whether actual operations It assists management in controlling operations. c. d. It provides a guarantee for favorable results. 15. The most useful measure for evaluating a manager\'s performance in controling revenues and costs in a profit center is margin b. contribution net income c. contribution gross prof d. controllable margin 16. A responsibility center that incurs costs (and expenses) and generales revenues is classified as a(n) a. cost center b. reverue centor c. profit center d. investment center 17. A company\' s planned activity level for next year is expected to be 100 ,000 machine hours At this level of activity, the company budgeted the following costs ariable: 25,000 5,000 ndirect materials rect labor 000 Taxes actory supplis $10,000 supervision activity would allow total A flexible budget prepared at the 90,000 machine hours level of manufacturing overhead costs of: a. $135,000 b. $180,000 c. $185,000 d. $150,000 A flexible budget a. is also called a static budget b. can be considered a series of related static budgets c. can be prepared for sales or production budgets but not operating expense budgets d. typically uses an activity index different from that used in developing the predetermined 18. overhead rate

Solution

13 August disbursement For july 22500 (90000*1/4) For august month 78750 (105000*3/4) Total disbursement 101250 Correct answer is C 14 No favorable result is gurantee in budgetry contro; So correct answer is D 15 Controllable margin So correct answer is D 16 That is called a profit center which measures cost and generates revenue So correct answer is C 17 Variable overheads rate = 150000/100000 1.5 Machine hours 90000 Variable cost 135000 Fixed cost 45000 (25000+5000+20000) Total cost for 90000 hours 180000 So correct answer is B