Question 1

A static budget is usually appropriate in evaluating a manager's effectiveness in controlling

Accepted Answer

A) fixed manufacturing costs and fixed selling and administrative expenses. 
B) variable manufacturing costs and variable selling and administrative expenses. 
C) fixed manufacturing costs and variable selling and administrative expenses. 
D) variable manufacturing costs and fixed selling and administrative expenses. 
A) fixed manufacturing costs and fixed selling and administrative expenses. 
B) variable manufacturing costs and variable selling and administrative expenses. 
C) fixed manufacturing costs and variable selling and administrative expenses. 
D) variable manufacturing costs and fixed selling and administrative expenses.

Question 2

Kevin Jarvis Industries produced 192,000 units in 90,000 direct labor hours.Production for the period was estimated at 198,000 units and 99,000 direct labor hours.A flexible budget would compare budgeted costs and actual costs, respectively, at

Accepted Answer

A) 96,000 hours and 99,000 hours. 
B) 99,000 hours and 90,000 hours. 
C) 96,000 hours and 90,000 hours. 
D) 90,000 hours and 90,000 hours. 
A) 96,000 hours and 99,000 hours. 
B) 99,000 hours and 90,000 hours. 
C) 96,000 hours and 90,000 hours. 
D) 90,000 hours and 90,000 hours.

Question 3

A flexible budget is appropriate for $\begin{array}{lll}&\text { Direct Labor Costs }&\text { Manufacturing Overhead Costs }\
\text { a. } & \text { No } & \text { No } \
\text { b. } & \text { Yes } & \text { Yes } \
\text { c. } & \text { Yes } & \text { No } \
\text { d. } & \text { No } & \text { Yes }
\end{array}$

Accepted Answer

The answer of A flexible budget is appropriate for \(\begin{array}{lll}&\text...

Question 4

A static budget report

Accepted Answer

A) shows costs at only 2 or 3 different levels of activity. 
B) is appropriate in evaluating a manager's effectiveness in controlling variable costs. 
C) should be used when the actual level of activity is materially different from the master budget activity level. 
D) may be appropriate in evaluating a manager's effectiveness in controlling costs when the behavior of the costs in response to changes in activity is fixed. 
A) shows costs at only 2 or 3 different levels of activity. 
B) is appropriate in evaluating a manager's effectiveness in controlling variable costs. 
C) should be used when the actual level of activity is materially different from the master budget activity level. 
D) may be appropriate in evaluating a manager's effectiveness in controlling costs when the behavior of the costs in response to changes in activity is fixed.

Question 5

Given below is an excerpt from a management performance report: $\begin{array}{llll}&\text { Budget }&\text { Actual }&\text { Difference }\
\text { Contribution margin } & \$ 1,000,000 & \$ 1,050,000 & \$ 50,000 \
\text { Controllable fixed costs } & \$ 500,000 & \$ 450,000 & \$ 50,000
\end{array}$ The manager's overall performance

Accepted Answer

A) is 20% below expectations. 
B) is 20% above expectations. 
C) is equal to expectations. 
D) cannot be determined from information given. 
A) is 20% below expectations. 
B) is 20% above expectations. 
C) is equal to expectations. 
D) cannot be determined from information given.

Question 6

Power Manufacturing recorded operating data for its shoe division for the year. $\begin{array}{lr}
\text { Sales } & \$ 1,500,000 \
\text { Contribution margin } & 300,000 \
\text { Controllable fixed costs } & 180,000 \
\text { Average total operating assets } & 600,000
\end{array}$ How much is controllable margin for the year?

Accepted Answer

A) 20% 
B) 50% 
C) $300,000 
D) $120,000 
A) 20% 
B) 50% 
C) $300,000 
D) $120,000

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

A cost is considered controllable at a given level of managerial responsibility if

Accepted Answer

A) the manager has the power to incur the cost within a given time period. 
B) the cost has not exceeded the budget amount in the master budget. 
C) it is a variable cost, but it is uncontrollable if it is a fixed cost. 
D) it changes in magnitude in a flexible budget. 
A) the manager has the power to incur the cost within a given time period. 
B) the cost has not exceeded the budget amount in the master budget. 
C) it is a variable cost, but it is uncontrollable if it is a fixed cost. 
D) it changes in magnitude in a flexible budget.

Question 9

If an investment center has a $90,000 controllable margin and $1,200,000 of sales, what average operating assets are needed to have a return on investment of 10%?

Accepted Answer

A) $120,000 
B) $210,000 
C) $900,000 
D) $1,200,000 
A) $120,000 
B) $210,000 
C) $900,000 
D) $1,200,000

Question 10

On the basis of the budget reports,

Accepted Answer

A) management analyzes differences between actual and planned results. 
B) management may take corrective action. 
C) management may modify the future plans. 
D) All of these answers are correct. 
A) management analyzes differences between actual and planned results. 
B) management may take corrective action. 
C) management may modify the future plans. 
D) All of these answers are correct.

Question 11

If actual results are different from planned results, the difference must always be investigated by management to achieve effective budgetary control.

Accepted Answer

A) True 
 B)False

Question 12

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: $\begin{array}{lrlr}\text { Variable }&&\text { Fixed }\
\text { Indirect materials } & \$ 90,000 & \text { Depreciation } & \$ 37,500 \
\text { Indirect labor } & 120,000 & \text { Taxes } & 7,500 \
\text { Factory supplies } & 15,000 & \text { Supervision } & 30,000
\end{array}$ A flexible budget prepared at the 90,000 machine hours level of activity would show total manufacturing overhead costs of

Accepted Answer

A) $202,500. 
B) $270,000. 
C) $277,500. 
D) $225,000. 
A) $202,500. 
B) $270,000. 
C) $277,500. 
D) $225,000.

Question 13

If an investment center has generated a controllable margin of $150,000 and sales of $600,000, what is the return on investment for the investment center if average operating assets were $1,000,000 during the period?

Accepted Answer

A) 15% 
B) 25% 
C) 45% 
D) 60% 
A) 15% 
B) 25% 
C) 45% 
D) 60%

Question 14

If costs are not responsive to changes in activity level, then these costs can be best described as

Accepted Answer

A) mixed. 
B) flexible. 
C) variable. 
D) fixed. 
A) mixed. 
B) flexible. 
C) variable. 
D) fixed.

Question 15

Controllable margin is subtracted from controllable fixed costs to get net income for a profit center.

Accepted Answer

A) True 
 B)False

Question 16

A static budget report is appropriate for

Accepted Answer

A) only fixed manufacturing costs. 
B) only fixed selling and administrative expenses. 
C) variable selling and administrative expenses. 
D) both fixed manufacturing costs and fixed selling and administrative expenses. 
A) only fixed manufacturing costs. 
B) only fixed selling and administrative expenses. 
C) variable selling and administrative expenses. 
D) both fixed manufacturing costs and fixed selling and administrative expenses.

Question 17

More costs become controllable as one moves down to each lower level of managerial responsibility.

Accepted Answer

A) True 
 B)False

Question 18

To develop the flexible budget, management takes all of the following steps except identify the

Accepted Answer

A) activity index and the relevant range of activity. 
B) variable costs and determine the budgeted variable cost per unit. 
C) fixed costs and determine the budgeted fixed cost per unit. 
D) All of these options are steps in developing the flexible budget. 
A) activity index and the relevant range of activity. 
B) variable costs and determine the budgeted variable cost per unit. 
C) fixed costs and determine the budgeted fixed cost per unit. 
D) All of these options are steps in developing the flexible budget.

Question 19

Assume that actual sales results exceed the planned results for the second quarter.This favorable difference is greater than the unfavorable difference reported for the first quarter sales.Which of the following statements about the sales budget report on June 30 is true?

Accepted Answer

A) The year-to-date results will show a favorable difference. 
B) The year-to-date results will show an unfavorable difference. 
C) The difference for the first quarter can be ignored. 
D) The sales report is not useful if it shows a favorable and unfavorable difference for the two quarters. 
A) The year-to-date results will show a favorable difference. 
B) The year-to-date results will show an unfavorable difference. 
C) The difference for the first quarter can be ignored. 
D) The sales report is not useful if it shows a favorable and unfavorable difference for the two quarters.

Question 20

Flexible budgeting relies on the assumption that unit variable costs will remain constant within the relevant range of activity.

Accepted Answer

A) True 
 B)False

A static budget is usually appropriate in evaluating a manager's effectiveness in controlling

Kevin Jarvis Industries produced 192,000 units in 90,000 direct labor hours.Production for the period was estimated at 198,000 units and 99,000 direct labor hours.A flexible budget would compare budgeted costs and actual costs, respectively, at

A flexible budget is appropriate for Direct Labor Costs Manufacturing Overhead Costs a. No No b. Yes Yes c. Yes No d. No Yes

A static budget report

Given below is an excerpt from a management performance report: Budget Actual Difference Contribution margin \ 1,000,000 \ 1,050,000 \ 50,000 Controllable fixed costs \ 500,000 \ 450,000 \ 50,000 The manager's overall performance

Power Manufacturing recorded operating data for its shoe division for the year. Sales \ 1,500,000 Contribution margin 300,000 Controllable fixed costs 180,000 Average total operating assets 600,000 How much is controllable margin for the year?

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

A cost is considered controllable at a given level of managerial responsibility if

If an investment center has a $90,000 controllable margin and $1,200,000 of sales, what average operating assets are needed to have a return on investment of 10%?

On the basis of the budget reports,

If actual results are different from planned results, the difference must always be investigated by management to achieve effective budgetary control.

If an investment center has generated a controllable margin of $150,000 and sales of $600,000, what is the return on investment for the investment center if average operating assets were $1,000,000 during the period?

If costs are not responsive to changes in activity level, then these costs can be best described as

Controllable margin is subtracted from controllable fixed costs to get net income for a profit center.

A static budget report is appropriate for

More costs become controllable as one moves down to each lower level of managerial responsibility.

To develop the flexible budget, management takes all of the following steps except identify the

Assume that actual sales results exceed the planned results for the second quarter.This favorable difference is greater than the unfavorable difference reported for the first quarter sales.Which of the following statements about the sales budget report on June 30 is true?

Flexible budgeting relies on the assumption that unit variable costs will remain constant within the relevant range of activity.

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

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Exam 10: Reporting and Analyzing Liabilities

A static budget is usually appropriate in evaluating a manager's effectiveness in controlling

Kevin Jarvis Industries produced 192,000 units in 90,000 direct labor hours.Production for the period was estimated at 198,000 units and 99,000 direct labor hours.A flexible budget would compare budgeted costs and actual costs, respectively, at

A flexible budget is appropriate for Direct Labor Costs Manufacturing Overhead Costs a. No No b. Yes Yes c. Yes No d. No Yes

A static budget report

Given below is an excerpt from a management performance report: Budget Actual Difference Contribution margin \ 1,000,000 \ 1,050,000 \ 50,000 Controllable fixed costs \ 500,000 \ 450,000 \ 50,000 The manager's overall performance

Power Manufacturing recorded operating data for its shoe division for the year. Sales \ 1,500,000 Contribution margin 300,000 Controllable fixed costs 180,000 Average total operating assets 600,000 How much is controllable margin for the year?

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

A cost is considered controllable at a given level of managerial responsibility if

If an investment center has a $90,000 controllable margin and $1,200,000 of sales, what average operating assets are needed to have a return on investment of 10%?

On the basis of the budget reports,

If actual results are different from planned results, the difference must always be investigated by management to achieve effective budgetary control.

If an investment center has generated a controllable margin of $150,000 and sales of $600,000, what is the return on investment for the investment center if average operating assets were $1,000,000 during the period?

If costs are not responsive to changes in activity level, then these costs can be best described as

Controllable margin is subtracted from controllable fixed costs to get net income for a profit center.

A static budget report is appropriate for

More costs become controllable as one moves down to each lower level of managerial responsibility.

To develop the flexible budget, management takes all of the following steps except identify the

Assume that actual sales results exceed the planned results for the second quarter.This favorable difference is greater than the unfavorable difference reported for the first quarter sales.Which of the following statements about the sales budget report on June 30 is true?

Flexible budgeting relies on the assumption that unit variable costs will remain constant within the relevant range of activity.

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

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