Question 1
A. Responsibility accounting is a way for an organisation to:
a. ensure that the goods are delivered on time
b. use the cheapest materials possible
c. facilitates control within the organisation by putting a person in charge of each centre
d. ensures that employees do not take too many coffee breaks.
B. Who is the best person to be in charge of a responsibility centre:
a. the managing director
b. the financial accountant.
c. the management accountant
d. the manager for the centre in quesiton
C. How is the system implemented:
a. by the issuing of performance reports
b. by using the financial accounts
c. by asking the manager if everything is ok
d. by asking the employees if they think everything is ok
D. Participative budgeting is where:
a. the owner sets the budget
b. the individual managers have input when the budget is being set
c. the managing director sets the budget
d. the management accountant sets the budget
E. Participative budgeting is the better way of setting a budget:
a. true
b. false
c. it depends
F. Budgetary slack is:
a. where the budget has been incorrectly added up
b. extra amounts are added into the budget allowance by the individual managers
c. extra amounts are added into the budget allowance by the managing director
d. extra amounts are added into the budget allowance by the management accountant
Question 2
The World History Museum has an Education Department which specialises in running courses in various subjects. The courses are run on premises which the museum rents for the purpose and they are presented by freelance expert speakers. The courses are of a standard type and format and can therefore be treated alike for budgetary control purposes.
The museum currently uses fixed budgets to control expenditure. The following data shows the actual costs of the Education Department for the month of April compared with budgeted figures.
|
|
Actual
|
Budget
|
Variance
|
|
Number of courses run
|
5
|
|
6
|
-1
|
|
|
£
|
|
£
|
£
|
|
Expenditure
|
|
|
|
|
|
Speakers fees
|
2500
|
3180
|
680
|
|
Hire of premises
|
1500
|
1500
|
0
|
|
Depreciation of equipment
|
200
|
180
|
-20
|
|
Stationery
|
530
|
600
|
70
|
|
Catering
|
1500
|
1750
|
250
|
|
Insurance
|
700
|
820
|
120
|
|
Administration
|
1650
|
1620
|
-30
|
|
|
----------
|
----------
|
----------
|
|
|
8580
|
9650
|
1070
|
|
|
-----------
|
-----------
|
-----------
|
Other information
1. Depreciation of equipment is a fixed cost
2. Administration is a fixed cost
3. The budget figures for catering costs and insurance costs include a fixed element as follows:
| Catering |
£250
|
| Insurance |
£100
|
The remaining elements of those two costs are variable
4. All other costs are variable
Required:
Use the information above to produce a budgetary control statement for April, based on a flexible budget for the actual number of course run and calcuulate the revised variances based on your flexed budget.