Exam 21: Budgetary Control and Responsibility Accounting

Le Sud Retailers has a current return on investment of 10% and the company has established an 8% minimum rate of return for the division. The division manager has two investment projects available, for which the following estimates have been made: Project A - Annual controllable margin = $24,000, operating assets = $400,000 Project B - Annual controllable margin = $60,000, operating assets = $550,000 Which project should be funded?

For June, Gold Corp. estimated sales revenue at $600,000. It pays sales commissions that are 4% of sales. The sales manager's salary is $285,000, estimated shipping expenses total 1% of sales, and miscellaneous selling expenses are $15,000. How much are budgeted selling expenses for the month of July if sales are expected to be $540,000?

Budget reports comparing actual results with planned objectives should be prepared only once a year.

A static budget is one that is geared to one level of activity.

The manager of an investment center can improve ROI by reducing average operating assets.

Pippen Co. recorded operating data for its shoe division for the year. The company's desired return is 5%. Sales \ 1,000,000 Contribution margin 200,000 Total direct fixed costs 120,000 Average total operating assets 400,000 Which one of the following reflects the controllable margin for the year?

Which of the following are financial measures of performance? 1. Controllable margin 2. Product quality 3. Labor productivity

A flexible budget is appropriate for

Management by exception means that management will investigate areas where actual results differ from planned results if the items are material and controllable.

Dingo Division's operating results include: controllable margin of $150,000, sales totaling $1,200,000, and average operating assets of $500,000. Dingo is considering a project with sales of $100,000, expenses of $86,000, and an investment of average operating assets of $200,000. Dingo's required rate of return is 9%. Should Dingo accept this project?

Stone Industries uses flexible budgets. At normal capacity of 16,000 units, budgeted manufacturing overhead is: $48,000 variable and $270,000 fixed. If Stone had actual overhead costs of $321,000 for 18,000 units produced, what is the difference between actual and budgeted costs?

Boland Manufacturing prepared a 2016 budget for 120,000 units of product. Actual production in 2016 was 130,000 units. To be most useful, what amounts should a performance report for this company compare?

The activity index used in preparing the flexible budget

Shane Industries prepared a fixed budget of 60,000 direct labor hours, with estimated overhead costs of $300,000 for variable overhead and $90,000 for fixed overhead. Shane then prepared a flexible budget at 57,000 labor hours. How much is total overhead costs at this level of activity?

As one moves up to each higher level of managerial responsibility,

Monte, Inc. recorded operating data for its Sandtrap division for the year. Monte requires its return to be 9%. Sales \ 1,000,000 Controllable margin 180,000 Total average assets 600,000 Fixed costs 60,000 How much is ROI for the year?

A company's planned activity level for next year is expected to be 100,000 machine hours. At this level of activity, the company budgeted the manufacturing overhead costs shown: Variable Fixed Indirect materials \ 120,000 Depreciation \ 50,000 Indirect labor 160,000 Taxes 10,000 Factory supplies 20,000 Supervision 40,000 A flexible budget prepared at the 90,000 machine hours level of activity would show total manufacturing overhead costs of

The linens department of a large department store is

A profit center is

Which statement is true?