Figure 16-1
Armati, SA The Following Actually Occurred -Refer to Figure 16-1

question 9

Multiple Choice

Figure 16-1
Armati, SA., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below:
Armati, SA., had the following budgeted data: $\begin{array}{lr}\text { Unit sales for } 2011 & 26,000 \\\text { Unit production for } 2011 & 26,000\\\\\text { Budgeted fixed overhead for } 2011 \text { : }\\\text { Supervision } & £ 800 \\\text { Depreciation } & 2,000 \\ \text { Rent } & 100\\\\\text { Budgeted variable costs per unit: }\\\text { Direct materials } & £ 0.15 \\\text { Direct labour } & 0.20 \\\text { Supplies } & 0.02 \\\text { Indirect labour } & 0.05 \\\text { Power } & 0.02\end{array}$ The following actually occurred: $\begin{array}{ll}\text { Actual unit sales for } 2011 & 24,000 \\\text { Actual unit production for } 2011 & 28,000\\\\\text { Actual fixed overhead for } 2011 \text { : }\\\text { Supervision } & £ 850 \\\text { Depreciation } & 2,000 \\\text { Rent } & 100\\\\\text { Actual variable costs: }\\\text { Direct materials } & £ 3,500 \\\text { Direct labour } & 4,900 \\\text { Supplies } & 530 \\\text { Indirect labour } & 1,250 \\\text { Power } & 470\end{array}$
-Refer to Figure 16-1. The flexible budget for direct materials cost in 2011 is

• A)£3,500.
• B)£3,600.
• C)£3,900.
• D)£4,000.

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Definitions:

Bonds Payable

Long-term liabilities representing borrowed money that a company must repay to bondholders, typically with periodic interest payments.

Long-Term Investment

Investments in securities or assets intended to be held for several years or more to generate long-term returns.

Cash Surrender Value

Cash surrender value is the amount of cash that a life insurance policyholder can receive upon the cancellation of their policy before its maturity or the insured event.

Capital Lease

A lease agreement considered to have the economic characteristics of asset ownership, thus it is recorded as an asset and liability on the balance sheet.