Question 1

Most direct fixed costs are not controllable by the profit center manager.

Accepted Answer

A) True 
 B)False

Question 2

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 following manufacturing overhead costs: $\begin{array}{lrlr}\text { Variable }&&\text { Fixed }\
\text { Indirect materials } & \$ 140,000 & \text { Depreciation } & \$ 60,000 \
\text { Indirect labor } & 200,000 & \text { Taxes } & 10,000 \
\text { Factory supplies } & 20,000 & \text { Supervision } & 50,000
\end{array}$ A flexible budget prepared at the 80,000 machine hours level of activity would show total manufacturing overhead costs of

Accepted Answer

A) $288,000. 
B) $360,000. 
C) $384,000. 
D) $408,000. 
A) $288,000. 
B) $360,000. 
C) $384,000. 
D) $408,000.

Question 3

Lew Co.had sales of $400,000, variable costs of $200,000, and direct fixed costs totaling $100,000.The company's operating assets total $800,000, and its required return is 10%.How much is the residual income?

Accepted Answer

A) $120,000 
B) $20,000 
C) $80,000 
D) $320,000 
A) $120,000 
B) $20,000 
C) $80,000 
D) $320,000

Question 4

In developing a flexible budget within a relevant range of activity,

Accepted Answer

A) only fixed costs are included. 
B) it is necessary to relate variable cost data to the activity index chosen. 
C) it is necessary to prepare a budget at 1,000 unit increments. 
D) variable and fixed costs are combined and are reported as a total cost. 
A) only fixed costs are included. 
B) it is necessary to relate variable cost data to the activity index chosen. 
C) it is necessary to prepare a budget at 1,000 unit increments. 
D) variable and fixed costs are combined and are reported as a total cost.

Question 5

Kathleen Corp.produced 320,000 units in 150,000 direct labor hours.Production for the period was estimated at 330,000 units and 165,000 direct labor hours.A flexible budget would compare budgeted costs and actual costs, respectively, at

Accepted Answer

A) 160,000 hours and 165,000 hours. 
B) 165,000 hours and 150,000 hours. 
C) 160,000 hours and 150,000 hours. 
D) 150,000 hours and 150,000 hours. 
A) 160,000 hours and 165,000 hours. 
B) 165,000 hours and 150,000 hours. 
C) 160,000 hours and 150,000 hours. 
D) 150,000 hours and 150,000 hours.

Question 6

Controllable margin is defined as

Accepted Answer

A) sales minus variable costs. 
B) sales minus contribution margin. 
C) contribution margin less controllable fixed costs. 
D) contribution margin less noncontrollable fixed costs. 
A) sales minus variable costs. 
B) sales minus contribution margin. 
C) contribution margin less controllable fixed costs. 
D) contribution margin less noncontrollable fixed costs.

Question 7

All of the following statements are correct about controllable costs except

Accepted Answer

A) all costs are controllable at some level of responsibility within a company. 
B) all costs are controllable by top management. 
C) fewer costs are controllable as one moves up to each higher level of managerial responsibility. 
D) costs incurred directly by a level of responsibility are controllable at that level. 
A) all costs are controllable at some level of responsibility within a company. 
B) all costs are controllable by top management. 
C) fewer costs are controllable as one moves up to each higher level of managerial responsibility. 
D) costs incurred directly by a level of responsibility are controllable at that level.

Question 8

A responsibility report should

Accepted Answer

A) be prepared in accordance with generally accepted accounting principles. 
B) show only those costs that a manager can control. 
C) only show variable costs. 
D) only be prepared at the highest level of managerial responsibility. 
A) be prepared in accordance with generally accepted accounting principles. 
B) show only those costs that a manager can control. 
C) only show variable costs. 
D) only be prepared at the highest level of managerial responsibility.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

A flexible budget can be prepared for which of the following budgets comprising the master budget?

Accepted Answer

A) Sales 
B) Overhead 
C) Direct materials 
D) All of these answers are correct. 
A) Sales 
B) Overhead 
C) Direct materials 
D) All of these answers are correct.

Question 11

The following information is available for Halle Department Stores: $\begin{array}{lr}
\text { Average operating assets } & \$ 600,000 \
\text { Controllable margin } & 60,000 \
\text { Contribution margin } & 150,000 \
\text { Minimum rate of return } & 8 \%
\end{array}$ How much is Halle's residual income?

Accepted Answer

A) $102,000 
B) $540,000 
C) $12,000 
D) $48,000 
A) $102,000 
B) $540,000 
C) $12,000 
D) $48,000

Question 12

Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets?

Accepted Answer

A) Direct materials cost 
B) Direct labor cost 
C) Variable manufacturing overhead 
D) Fixed manufacturing overhead 
A) Direct materials cost 
B) Direct labor cost 
C) Variable manufacturing overhead 
D) Fixed manufacturing overhead

Question 13

Betsy Union is the Pika Division manager and her performance is evaluated by executive management based on Division ROI.The current controllable margin for Pika Division is $46,000.Its current operating assets total $210,000.The division is considering purchasing equipment for $40,000 that will increase sales by an estimated $10,000, with annual depreciation of $10,000.If the equipment is purchased, what will happen to the return on investment for the division?

Accepted Answer

A) An increase of 0.5% 
B) A decrease of 0.5% 
C) A decrease of 3.5% 
D) It will remain unchanged. 
A) An increase of 0.5% 
B) A decrease of 0.5% 
C) A decrease of 3.5% 
D) It will remain unchanged.

Question 14

A manager of a cost center is evaluated mainly on

Accepted Answer

A) the profit that the center generates. 
B) his or her ability to control costs. 
C) the amount of investment it takes to support the cost center. 
D) the amount of revenue that can be generated. 
A) the profit that the center generates. 
B) his or her ability to control costs. 
C) the amount of investment it takes to support the cost center. 
D) the amount of revenue that can be generated.

Question 15

Of the following choices, which contain both a traceable fixed cost and a common fixed cost?

Accepted Answer

A) Profit center manager's salary and timekeeping costs for a responsibility center's employees. 
B) Company president's salary and company personnel department costs. 
C) Company personnel department costs and timekeeping costs for a responsibility center's employees. 
D) Depreciation on a responsibility center's equipment and supervisory salaries for the center. 
A) Profit center manager's salary and timekeeping costs for a responsibility center's employees. 
B) Company president's salary and company personnel department costs. 
C) Company personnel department costs and timekeeping costs for a responsibility center's employees. 
D) Depreciation on a responsibility center's equipment and supervisory salaries for the center.

Question 16

For what purpose do companies calculate residual income?

Accepted Answer

A) To determine whether decentralization is possible or not 
B) To motivate managers through possible termination 
C) To evaluate management performance 
D) To measure company profits 
A) To determine whether decentralization is possible or not 
B) To motivate managers through possible termination 
C) To evaluate management performance 
D) To measure company profits

Question 17

When budgeted and actual results are not the same amount, there is a budget

Accepted Answer

A) error. 
B) difference. 
C) anomaly. 
D) by-product. 
A) error. 
B) difference. 
C) anomaly. 
D) by-product.

Question 18

In the Dichter Co., indirect labor is budgeted for $72,000 and factory supervision is budgeted for $24,000 at normal capacity of 160,000 direct labor hours.If 180,000 direct labor hours are worked, flexible budget total for these costs is

Accepted Answer

A) $96,000. 
B) $108,000. 
C) $105,000. 
D) $99,000. 
A) $96,000. 
B) $108,000. 
C) $105,000. 
D) $99,000.

Question 19

Las Sendas, Inc.had average operating assets of $4,000,000 and sales of $2,000,000 in 2016.If the controllable margin was $600,000, the ROI was

Accepted Answer

A) 60% 
B) 50% 
C) 30% 
D) 15% 
A) 60% 
B) 50% 
C) 30% 
D) 15%

Question 20

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?

Accepted Answer

A) The actual results for 130,000 units with the original budget for 120,000 units. 
B) The actual results for 130,000 units with a new budget for 130,000 units. 
C) The actual results for 130,000 units with last year's actual results for 134,000 units. 
D) It doesn't matter. All of these choices are equally useful. 
A) The actual results for 130,000 units with the original budget for 120,000 units. 
B) The actual results for 130,000 units with a new budget for 130,000 units. 
C) The actual results for 130,000 units with last year's actual results for 134,000 units. 
D) It doesn't matter. All of these choices are equally useful.

Most direct fixed costs are not controllable by the profit center manager.

Lew Co.had sales of $400,000, variable costs of $200,000, and direct fixed costs totaling $100,000.The company's operating assets total $800,000, and its required return is 10%.How much is the residual income?

In developing a flexible budget within a relevant range of activity,

Kathleen Corp.produced 320,000 units in 150,000 direct labor hours.Production for the period was estimated at 330,000 units and 165,000 direct labor hours.A flexible budget would compare budgeted costs and actual costs, respectively, at

Controllable margin is defined as

All of the following statements are correct about controllable costs except

A responsibility report should

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

A flexible budget can be prepared for which of the following budgets comprising the master budget?

The following information is available for Halle Department Stores: Average operating assets \ 600,000 Controllable margin 60,000 Contribution margin 150,000 Minimum rate of return 8\% How much is Halle's residual income?

Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets?

A manager of a cost center is evaluated mainly on

Of the following choices, which contain both a traceable fixed cost and a common fixed cost?

For what purpose do companies calculate residual income?

When budgeted and actual results are not the same amount, there is a budget

In the Dichter Co., indirect labor is budgeted for $72,000 and factory supervision is budgeted for $24,000 at normal capacity of 160,000 direct labor hours.If 180,000 direct labor hours are worked, flexible budget total for these costs is

Las Sendas, Inc.had average operating assets of $4,000,000 and sales of $2,000,000 in 2016.If the controllable margin was $600,000, the ROI was

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?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money

Filters

Exam 10: Reporting and Analyzing Liabilities

Most direct fixed costs are not controllable by the profit center manager.

Lew Co.had sales of $400,000, variable costs of $200,000, and direct fixed costs totaling $100,000.The company's operating assets total $800,000, and its required return is 10%.How much is the residual income?

In developing a flexible budget within a relevant range of activity,

Kathleen Corp.produced 320,000 units in 150,000 direct labor hours.Production for the period was estimated at 330,000 units and 165,000 direct labor hours.A flexible budget would compare budgeted costs and actual costs, respectively, at

Controllable margin is defined as

All of the following statements are correct about controllable costs except

A responsibility report should

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

A flexible budget can be prepared for which of the following budgets comprising the master budget?

The following information is available for Halle Department Stores: Average operating assets \ 600,000 Controllable margin 60,000 Contribution margin 150,000 Minimum rate of return 8\% How much is Halle's residual income?

Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets?

A manager of a cost center is evaluated mainly on

Of the following choices, which contain both a traceable fixed cost and a common fixed cost?

For what purpose do companies calculate residual income?

When budgeted and actual results are not the same amount, there is a budget

In the Dichter Co., indirect labor is budgeted for $72,000 and factory supervision is budgeted for $24,000 at normal capacity of 160,000 direct labor hours.If 180,000 direct labor hours are worked, flexible budget total for these costs is

Las Sendas, Inc.had average operating assets of $4,000,000 and sales of $2,000,000 in 2016.If the controllable margin was $600,000, the ROI was

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?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money

Filters