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?

A) 20% B) 50% C) $300000 D) $120000 A) 20% B) 50% C) $300000 D) $120000

A company's planned activity level for next year is expected to be 100000 machine hours. At this level of activity the company budgeted the following manufacturing overhead costs: $\begin{array}{lrlr}\text { Variable }&&\text { Fixed }\\ \hline \text { Indirect materials } & \$ 90,000 & \text { Depreciation } & \$ 37,500 \\ \text { Indirect labor } & 120,000 & \text { Taxes } & 7,500 \\ \text { Factory supplies } & 15,000 & \text { Supervision } & 30,000 \end{array}$ A flexible budget prepared at the 90000 machine hours level of activity would show total manufacturing overhead costs of

A) $202500. B) $270000. C) $277500. D) $225000. A) $202500. B) $270000. C) $277500. D) $225000.

The Deluxe Division a profit center of Riley Manufacturing Company reported the following data for the first quarter of 2016: $\begin{array}{lr} \text { Sales } & \$ 9,000,000 \\ \text { Variable costs } & 6,300,000 \\ \text { Controllable direct fixed costs } & 1,200,000 \\ \text { Noncontrollable direct fixed costs } & 530,000 \\ \text { Indirect fixed costs } & 300,000 \end{array}$ Instructions (a) Prepare a performance report for the manager of the Deluxe Division. (b) What is the best measure of the manager's performance? Why? (c) How would the responsibility report differ if the division was an investment center?

(a) (b) Controllable margin is the best

Exam 24: Budgetary Control and Responsibility Accounting

The selection of levels of activity to depict a flexible budget 1) will be within the relevant range. 2) is largely a matter of expediency. 3) is governed by generally accepted accounting principles.

(Multiple Choice)

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Question 181

Budget reports provide the feedback needed by management to see whether actual operations are on course.

(True/False)

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Question 182

In general costs ____________ directly by the level of responsibility are _ whereas costs that are to the responsibility level are ____.

(Short Answer)

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Question 183

What is budgetary control?

(Multiple Choice)

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Question 184

Boland Manufacturing prepared a 2016 budget for 120000 units of product. Actual production in 2016 was 130000 units. To be most useful what amounts should a performance report for this company compare?

(Multiple Choice)

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Question 185

Which of the following is not a correct match? 1) Incurs costs 2) Generates revenue 3) Controls investment funds

(Multiple Choice)

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Question 186

Nikoto Steel Co. budgeted manufacturing costs for 50000 tons of steel are: Fixed manufacturing costs $\quad \$ 50,000$ per month Variable manufacturing costs $\quad \$ 12.00$ per ton of steel Nikoto produced 40000 tons of steel during March. How much is the flexible budget for total manufacturing costs for March?

(Multiple Choice)

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Question 187

The flexible budget report evaluates a manager's performance in two areas: (1) production and (2) costs.

(True/False)

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Question 188

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

(True/False)

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Question 189

The Pacific Division of Henson Industries reported the following data for the current year. Sales \ 4,000,000 Variable costs 2,600,000 Controllable fixed costs 800,000 Average operating assets 5,000,000 Top management is unhappy with the investment center's return on investment (ROI). It asks the manager of the Pacific Division to submit plans to improve ROI in the next year. The manager believes it is feasible to consider the following independent courses of action. 1. Increase sales by $400000 with no change in the contribution margin percentage. 2. Reduce variable costs by $120000. 3. Reduce average operating assets by 4% Instructions (a) Compute the return on investment (ROI) for the current year. (b) Using the ROI formula compute the ROI under each of the proposed courses of action. (Round to one decimal.)

(Essay)

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Question 190

The Atlantic Division of Stark Productions Company reported the following results for 2016: Sales \ 4,000,000 Variable costs 3,200,000 Controllable fixed costs 300,000 Average operating assets 2,500,000 Management is considering the following independent alternative courses of action in 2017 in order to maximize the return on investment for the division. 1. Reduce controllable fixed costs by 10% with no change in sales or variable costs. 2. Reduce average operating assets by 10% with no change in controllable margin. 3. Increase sales $500000 with no change in the contribution margin percentage. Instructions (a) Compute the return on investment for 2016. (b) Compute the expected return on investment for each of the alternative courses of action.

(Essay)

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Question 191

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?

(Multiple Choice)

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Question 192

In the performance report for cost centers

(Multiple Choice)

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Question 193

A company's planned activity level for next year is expected to be 100000 machine hours. At this level of activity the company budgeted the following manufacturing overhead costs: Variable Fixed Indirect materials \ 90,000 Depreciation \ 37,500 Indirect labor 120,000 Taxes 7,500 Factory supplies 15,000 Supervision 30,000 A flexible budget prepared at the 90000 machine hours level of activity would show total manufacturing overhead costs of

(Multiple Choice)

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Question 194

Total budgeted fixed costs appearing on a flexible budget will be the same amount as total fixed costs on the master budget.

(True/False)

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Question 195

Which of the following is not an indirect fixed cost?

(Multiple Choice)

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Question 196

The purpose of the sales budget report is to

(Multiple Choice)

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Question 197

The Deluxe Division a profit center of Riley Manufacturing Company reported the following data for the first quarter of 2016: Sales \ 9,000,000 Variable costs 6,300,000 Controllable direct fixed costs 1,200,000 Noncontrollable direct fixed costs 530,000 Indirect fixed costs 300,000 Instructions (a) Prepare a performance report for the manager of the Deluxe Division. (b) What is the best measure of the manager's performance? Why? (c) How would the responsibility report differ if the division was an investment center?

(Essay)

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Question 198

In developing a flexible budget within a relevant range of activity

(Multiple Choice)

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Question 199

Another name for the static budget is

(Multiple Choice)

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Question 200

Showing 181 - 200 of 213

Exam 24: Budgetary Control and Responsibility Accounting

The selection of levels of activity to depict a flexible budget 1) will be within the relevant range. 2) is largely a matter of expediency. 3) is governed by generally accepted accounting principles.

Budget reports provide the feedback needed by management to see whether actual operations are on course.

In general costs ____________________ directly by the level of responsibility are _______________ whereas costs that are ____________________ to the responsibility level are __________________.

What is budgetary control?

Boland Manufacturing prepared a 2016 budget for 120000 units of product. Actual production in 2016 was 130000 units. To be most useful what amounts should a performance report for this company compare?

Which of the following is not a correct match? 1) Incurs costs 2) Generates revenue 3) Controls investment funds

The flexible budget report evaluates a manager's performance in two areas: (1) production and (2) costs.

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

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?

In the performance report for cost centers

Total budgeted fixed costs appearing on a flexible budget will be the same amount as total fixed costs on the master budget.

Which of the following is not an indirect fixed cost?

The purpose of the sales budget report is to

In developing a flexible budget within a relevant range of activity

Another name for the static budget is

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

Filters

In general costs ____________ directly by the level of responsibility are _ whereas costs that are to the responsibility level are ____.