Exam 24: Budgetary Control and Responsibility Accounting

The Real Estate Products Division of McKenzie Co. is operated as a profit center. Sales for the division were budgeted for 2016 at $1250000. The only variable costs budgeted for the division were cost of goods sold ($610000) and selling and administrative ($80000). Fixed costs were budgeted at $130000 for cost of goods sold $120000 for selling and administrative and $95000 for noncontrollable fixed costs. Actual results for these items were: Sales \ 1,175,000 Cost of goods sold Variable 545,000 Fixed 140,000 Selling and administrative Variable 82,000 Fixed 100,000 Noncontrollable fixed 105,000 Instructions (a) Prepare a responsibility report for the Real Estate Products Division for 2016. (b) Assume the division is an investment center and average operating assets were $1200000. Compute ROI.

Smart Manufacturing budgeted costs for 50000 linear feet of block are: Fixed manufacturing costs $\quad\quad\$ 24,000$ per month Variable manufacturing costs $\quad\$ 16.00$ per linear foot Smart installed 40000 linear feet of block during March. How much is budgeted total manufacturing costs in March?

Cost centers profit centers and investment centers can all be classified as responsibility centers.

A department has budgeted monthly manufacturing overhead cost of $540000 plus $3 per direct labor hour. If a flexible budget report reflects $1044000 for total budgeted manufacturing cost for the month the actual level of activity achieved during the month was

A measure frequently used to evaluate the performance of the manager of an investment center is

In the Goblette Manufacturing Company indirect labor is budgeted for $108000 and factory supervision is budgeted for $36000 at normal capacity of 160000 direct labor hours. If 180000 direct labor hours are worked flexible budget total for these costs is:

Which responsibility centers generate both revenues and costs?

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

A manager of a cost center is evaluated mainly on

All of the following statements are correct about management by exception except it

What is the primary difference between a static budget and a flexible budget?

Perez Corp. reported the following: Beginning of year operating assets \ 3,200,000 End of year operating assets 3,000,000 Contribution margin 1,000,000 Sales 5,000,000 Controllable fixed costs 643,000 Its required return is 10%. Instructions Compute the company's ROI.

If an investment center has a $90000 controllable margin and $1200000 of sales what average operating assets are needed to have a return on investment of 10%?

The terms controllable costs and noncontrollable costs are synonymous with variable costs and fixed costs respectively.

The activity index used in preparing the flexible budget

A static budget report is appropriate for

Sydney Inc. uses flexible budgets. At normal capacity of 16000 units budgeted manufacturing overhead is $128000 variable and $360000 fixed. If Sydney had actual overhead costs of $500000 for 18000 units produced what is the difference between actual and budgeted costs?

The denominator in the formula for calculating the return on investment includes operating and nonoperating assets.

Certain budget reports are prepared monthly whereas others are prepared more frequently depending on the activities being monitored.

A master budget is most useful in evaluating a manager's performance in controlling costs.