Kapital, Inc. has prepared the operating budget for the first quarter of the yea

Question

Kapital, Inc. has prepared the operating budget for the first quarter of the year. The company forecast sales of $45,000 in January, $55,000 in February, and $65,000 in March, Variable and fixed selling and administrative expenses are as follows: Calculate total selling and administrative expenses for the month of January. $33,700 $30,700 $27,700 $13,500 Which of the following is an example of the benchmarking function of the budgeting process? A budget demands integrated input from different business units and functions. Budgeting requires close cooperation between accountants and operational personnel. Budget figures are used to evaluate the performance of managers. The budget outlines a specific course of action for the coming period. The develop the cost of goods sold budget, it is necessary to start by calculating, the projected cost to produce each unit. True False The personnel manager projects direct labor costs. True False Developing a budget reduces coordination and communication at different levels in an organization. True False

Explanation / Answer

a the budgeting process -----A, Requires   significant coordination among the copmany's various business segments. So option A is correct. b Forecast sales in Januray                               45,000 Sales & Admin costs Power variable cost                                 9,000 Power fixed cost                                     600 Misc expenses                                 4,500 Fixed Misc expenses                                 1,200 Salaries                               11,000 Depreciation                                 1,400 Total Selling & Admin cost                               27,700 Option C is correct. c Budget figures are used to evaluate the performance of the managers    --- it is an example of benchmarking function of budgeting process. d for cost of goods sold budget , it is necessary to know the quantities   of goods to be produced first , then unit cost of goods derived based on variable and fixed cost allocation . So the statement is FALSE. e The production Manager generally projects Direct labor cost ( may require some inputs from personnel manager) . So the statement is FALSE. f Developing a budget actually increases coordination and   communication among different levels of organization so the statement is FALSE.

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