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PM Chapter 11 Questions Budgeting
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Hello dear all.
Could someone help me to solve this, please:
Click Fit Kitchens Ltd has designed a new type of kitchen cabinot and wants to calculate the total cost to includin the production budget in the past when new cabinets have been introduced the company has observed a leaming effect of 90% which usually ceases after the first 100 batches
It is estimated that the first batch of cabinets will take 6 hours to produce but thereafter the leaming effect will occur Labour costs are $30 per hour and the company expects to make 250 batches of cabinets in the coming budgetary period
Required:
Calculate the total inbour cost for making 250 batches of the new cabinets to be included in the budget for Click Fit to 2 decimal places.
Thank you in advance!
Time taken for first 100batches less time for 99batches to get for the 100th henceforth, which is 3hrs(298-295).
150batches will take 3hrs each (250-100) totalling 450hrs
The first 100batches took 298hrs, a total of 748hrs(450+298) multiplying that by 30dollars gives 22440
Corrrect me if im wrong somewhere
Is the answer 713.45 Hours and total labour cost= $21403.50 ?
Made a mistake on the functional ( Department al) one !! Got the rest correct!
revision tests really help me, I can’t thank you enough 馃檪 Thanks John
Hi John,
Thanks for the quiz.
With Q1, I do not understand why statement 1 is incorrect? ACCA’s technical article on Rolling Budgets states ‘the budget will always extend one year into the future’
Although they are most usually for a year, there is certainly no ‘rule’ that they have to be for a year.
Sir, why did Q1, the rolling budget not use the zero base approach? What approach does the rolling budget use?
It uses the incremental approach.
sir please explain me about rolling budget , i am really confused . is it used to budegt each month?
dear sir ,
please explain what is functional budget?
A budget for an individual function of the business e.g. a sales budget, a production budget, an advertising budget etc.. See the first example in our free lectures.
Thank you sir.
You are welcome 馃檪
Dear John,
could you please explain why in the 4th question functional budget is the right answer?
as for me the right answer is rolling budget
thank you
The production budget is just one budget which then will lead to the materials budget, the labour budget etc.. It is `a budget for just one function of the business, so a functional budget.
A rolling budget is a budget for the whole business that is re-done every month for the following 12 months.
Did you watch the free lectures on this before attempting the test? The lectures are a complete free course for Paper F5 and cover everything needed to be able to pass the exam well.
Dear John,
Thank you for your answer.
Yes, I watched free lectures before attempting the test. Thank you very much for them.
I think language barrier is a reasons why I did not understand.
The quiz was so amazing.
馃檪
Question 3 is little confusing for me. I thought the answer was bottom-up budgeting at the top-down means that the budgets will be imposed by the managers without the participation of the people.
Thank you
But that is what the question says – they are prepared centrally (i.e. by top management) and then imposed on the managers.
THE KEY WORD IN THIS QUESTION IS “IMPOSED” – PEOPLE ON THE TOP ARE THE ONES WHO IMPOSE THINGS – SO THE BUDGETING PROCESS IN THIS CASE STARTS FROM THERE DOWN TO THE BOTTOM
Please do not type in capital letters 馃檪
Rolling budgets are always prepared for the following 12 month period. This answer is showing as incorrect. Aren’t rolling budgets updated at the end of each month/quarter and then rolled forward 12 months with restated figures?
Is this not the same thing?
Apologies if I have mixed something up.
Although they are usually for 12 months periods, they do not have to be.
For example the could be updated every month for the following 6 months.
what if ques 1 says : rolling budgets are prepared for following 12 months.
would it be correct?
No – it wouldn’t.
As I wrote in my first reply, they do not have to be prepared for 12 months periods. They could be prepared fro 6 month periods.