Question 1

Management by exception

Accepted Answer

A)  is most effective at top levels of management. 
B)  can be implemented at each level of responsibility within an organization. 
C)  can only be applied when comparing actual results with the master budget. 
D)  is the opposite of goal congruence. 
A)  is most effective at top levels of management. 
B)  can be implemented at each level of responsibility within an organization. 
C)  can only be applied when comparing actual results with the master budget. 
D)  is the opposite of goal congruence. B

Question 2

The Fulmar Division of Jayne Manufacturing had an ROI of 25% when sales were $3 million and controllable margin was $600,000. What were the average operating assets?

Accepted Answer

A)  $150,000 
B)  $750,000 
C)  $2,400,000 
D)  $12,000 
A)  $150,000 
B)  $750,000 
C)  $2,400,000 
D)  $12,000 C

Question 3

Top management's reaction to a difference between budgeted and actual sales often depends on

Accepted Answer

A)  whether the difference is favorable or unfavorable. 
B)  whether management anticipated the difference. 
C)  the materiality of the difference. 
D)  the personality of the top managers. 
A)  whether the difference is favorable or unfavorable. 
B)  whether management anticipated the difference. 
C)  the materiality of the difference. 
D)  the personality of the top managers. C

Question 4

In the performance report for cost centers,

Accepted Answer

A)  controllable and noncontrollable costs are reported. 
B)  fixed costs are not reported. 
C)  no distinction is made between fixed and variable costs. 
D)  only materials and controllable costs are reported. 
A)  controllable and noncontrollable costs are reported. 
B)  fixed costs are not reported. 
C)  no distinction is made between fixed and variable costs. 
D)  only materials and controllable costs are reported.

Question 5

The activity index used in preparing the flexible budget

Accepted Answer

A)  is prescribed by generally accepted accounting principles. 
B)  is only applicable to fixed manufacturing costs. 
C)  is the same for all departments. 
D)  should significantly influence the costs that are being budgeted. 
A)  is prescribed by generally accepted accounting principles. 
B)  is only applicable to fixed manufacturing costs. 
C)  is the same for all departments. 
D)  should significantly influence the costs that are being budgeted.

Question 6

Boland Manufacturing prepared a 2019 budget for 120,000 units of product. Actual production in 2019 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.

Question 7

Trails and Paths, Inc. had average operating assets of $6,000,000 and sales of $3,000,000 in 2016. If the controllable margin was $600,000, the ROI was

Accepted Answer

A)  50% 
B)  40% 
C)  20% 
D)  10% 
A)  50% 
B)  40% 
C)  20% 
D)  10%

Question 8

In a responsibility accounting reporting system, as one moves up each level of responsibility in an organization, the responsibility reports become more summarized and show less detailed information.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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 11

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 12

Top management can control

Accepted Answer

A)  only controllable costs. 
B)  only noncontrollable costs. 
C)  all costs. 
D)  some noncontrollable costs and all controllable costs. 
A)  only controllable costs. 
B)  only noncontrollable costs. 
C)  all costs. 
D)  some noncontrollable costs and all controllable costs.

Question 13

Not-for-profit entities

Accepted Answer

A)  do not use responsibility accounting. 
B)  utilize responsibility accounting in trying to maximize net income. 
C)  utilize responsibility accounting in trying to minimize the cost of providing services. 
D)  have only noncontrollable costs. 
A)  do not use responsibility accounting. 
B)  utilize responsibility accounting in trying to maximize net income. 
C)  utilize responsibility accounting in trying to minimize the cost of providing services. 
D)  have only noncontrollable costs.

Question 14

A formula used in developing a flexible budget is: Total budgeted cost = fixed cost + (total variable cost per unit × activity level).

Accepted Answer

A) True 
 B)False

Question 15

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 16

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 17

Which of the following is not an indirect fixed cost?

Accepted Answer

A)  Company president's salary 
B)  Depreciation on the company building housing several profit centers 
C)  Company personnel department costs 
D)  Profit center supervisory salaries 
A)  Company president's salary 
B)  Depreciation on the company building housing several profit centers 
C)  Company personnel department costs 
D)  Profit center supervisory salaries

Question 18

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 19

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 20

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

Accepted Answer

A) True 
 B)False

Management by exception

The Fulmar Division of Jayne Manufacturing had an ROI of 25% when sales were $3 million and controllable margin was $600,000. What were the average operating assets?

Top management's reaction to a difference between budgeted and actual sales often depends on

In the performance report for cost centers,

The activity index used in preparing the flexible budget

Boland Manufacturing prepared a 2019 budget for 120,000 units of product. Actual production in 2019 was 130,000 units. To be most useful, what amounts should a performance report for this company compare?

Trails and Paths, Inc. had average operating assets of $6,000,000 and sales of $3,000,000 in 2016. If the controllable margin was $600,000, the ROI was

In a responsibility accounting reporting system, as one moves up each level of responsibility in an organization, the responsibility reports become more summarized and show less detailed information.

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

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?

All of the following statements are correct about controllable costs except

Top management can control

Not-for-profit entities

A formula used in developing a flexible budget is: Total budgeted cost = fixed cost + (total variable cost per unit × activity level).

A responsibility report should

Controllable margin is defined as

Which of the following is not an indirect fixed cost?

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

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

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

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Planning

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 10: Budgetary Control and Responsibility Accounting

Management by exception

The Fulmar Division of Jayne Manufacturing had an ROI of 25% when sales were $3 million and controllable margin was $600,000. What were the average operating assets?

Top management's reaction to a difference between budgeted and actual sales often depends on

In the performance report for cost centers,

The activity index used in preparing the flexible budget

Boland Manufacturing prepared a 2019 budget for 120,000 units of product. Actual production in 2019 was 130,000 units. To be most useful, what amounts should a performance report for this company compare?

Trails and Paths, Inc. had average operating assets of $6,000,000 and sales of $3,000,000 in 2016. If the controllable margin was $600,000, the ROI was

In a responsibility accounting reporting system, as one moves up each level of responsibility in an organization, the responsibility reports become more summarized and show less detailed information.

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

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?

All of the following statements are correct about controllable costs except

Top management can control

Not-for-profit entities

A formula used in developing a flexible budget is: Total budgeted cost = fixed cost + (total variable cost per unit × activity level).

A responsibility report should

Controllable margin is defined as

Which of the following is not an indirect fixed cost?

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

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

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

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Pricing

Budgetary Planning

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Statement of Cash Flows

Financial Statement Analysis

Filters