XY, a not-for-profit charity organization which is funded by public donations, is concerned that it is not making the best use of its available funds. It has carried out a review of its budgeting system and is considering replacing the current system with a zero-based budgeting system.
Select ALL the potential advantages AND disadvantages for the charity of a zero-based budgeting system.

• A.It discourages a questioning approach by focusing attention not only on the cost of the activity but on the benefits it provides. The charity managers will not articulate the benefits encouraging them to think clearly about the activities.
• B.The creation of decision packages and their subsequent ranking by top management is very time consuming and costly. The charity will need to assess whether the benefits of the system outweigh the costs involved.
• C.In applying traditional budgeting, 'activities' may result in functional departments rather than cross functional activities and thus distract attention from the real cost-reduction issues.
• D.Preparation of the decision packages will normally require the environment of many employees. This environment may produce useful ideas and promote job satisfaction.
• E.In an organization like a charity, the decision packages are not very disparate and difficult t compare.
• F.It avoids the complacency inherent in the traditional incremental approach where it is assumed that future activities will be very similar to current ones.

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A company has identified the trend in its sales figures through the regression equation Y = 65.9 + 3.86X, where Y is the sales revenue in thousands of dollars and X is the month number. The average seasonal variation for October is 87% Calculate the forecast sales revenue for October of Year 6.
Give your answer to the nearest $000.

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Place each activity against the correct category according to its classification in the cost hierarchy of activities.

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A flexible budget is a budget that is:

• A.changed in response to changes in the level of activity
• B.continuously updated by adding a further accounting period when the earliest accounting period has expired
• C.set prior to the control period and not subsequently changed in response to changes in activity period has expired
• D.changed in response to changes in costs

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A company produces trays of pre-prepared meals that are sold to restaurants and food retailers. Three varieties of meals are sold: economy, premium and deluxe.


Calculate, for the original budget, the budgeted fixed overhead costs, the budgeted variable overhead cost per tray and the budgeted total overheads costs.

• A.The variable cost per tray = $0.45; The fixed cost = $ 320 000
• B.The variable cost per tray = $0.75; The fixed cost = $ 490 000
• C.The variable cost per tray = $0.85; The fixed cost = $ 530 000
• D.The variable cost per tray = $0.65; The fixed cost = $ 550 000

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