Question 1

Which of the following are financial measures of performance?
1.	Controllable margin
2.	Product quality
3.	Labor productivity

Accepted Answer

A) 	1 
B) 	2 
C) 	3 
D) 	1 and 3 
A) 	1 
B) 	2 
C) 	3 
D) 	1 and 3

Question 2

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 3

Policies regarding when a difference between actual and planned results should be investigated are generally more restrictive for noncontrollable items than for controllable items.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Residual income and ROI are used as performance evaluation methods for profit center performance

Accepted Answer

A) True 
 B)False

Question 6

A static budget is appropriate in evaluating a manager's performance if

Accepted Answer

A)  actual activity closely approximates the master budget activity. 
B)  actual activity is less than the master budget activity. 
C)  the company prepares reports on an annual basis. 
D)  the company is a not-for-profit organization. 
A)  actual activity closely approximates the master budget activity. 
B)  actual activity is less than the master budget activity. 
C)  the company prepares reports on an annual basis. 
D)  the company is a not-for-profit organization.

Question 7

Best Shingle's budgeted manufacturing costs for 50,000 squares of shingles are: Fixed manufacturing costs $\quad\quad\$ 12,000$
Variable manufacturing costs $\quad\$ 16.00$ per square Best produced 40,000 squares of shingles during March. How much are budgeted total manufacturing costs in March?

Accepted Answer

A)  $640,000 
B)  $812,000 
C)  $800,000 
D)  $652,000 
A)  $640,000 
B)  $812,000 
C)  $800,000 
D)  $652,000

Question 8

What budgeted amounts appear on the flexible budget?

Accepted Answer

A)  Original budgeted amounts at the static budget activity level 
B)  Actual costs for the budgeted activity level 
C)  Budgeted amounts for the actual activity level achieved 
D)  Actual costs for the estimated activity level 
A)  Original budgeted amounts at the static budget activity level 
B)  Actual costs for the budgeted activity level 
C)  Budgeted amounts for the actual activity level achieved 
D)  Actual costs for the estimated activity level

Question 9

A profit center is

Accepted Answer

A)  a responsibility center that always reports a profit. 
B)  a responsibility center that incurs costs and generates revenues. 
C)  evaluated by the rate of return earned on the investment allocated to the center. 
D)  referred to as a loss center when operations do not meet the company's objectives. 
A)  a responsibility center that always reports a profit. 
B)  a responsibility center that incurs costs and generates revenues. 
C)  evaluated by the rate of return earned on the investment allocated to the center. 
D)  referred to as a loss center when operations do not meet the company's objectives.

Question 10

In computing ROI, land held for future use

Accepted Answer

A)  will hurt the performance measurement of an investment center's manager. 
B)  is important in evaluating the performance of a profit center manager. 
C)  is included in the calculation of operating assets. 
D)  is considered a nonoperating asset. 
A)  will hurt the performance measurement of an investment center's manager. 
B)  is important in evaluating the performance of a profit center manager. 
C)  is included in the calculation of operating assets. 
D)  is considered a nonoperating asset.

Question 11

At zero direct labor hours in a flexible budget graph, the total budgeted cost line intersects the vertical axis at $30,000. At 15,000 direct labor hours, a horizontal line drawn from the total budgeted cost line intersects the vertical axis at $90,000. Fixed and variable costs may be expressed as:

Accepted Answer

A)  $30,000 fixed plus $4 per direct labor hour variable. 
B)  $30,000 fixed plus $6 per direct labor hour variable. 
C)  $60,000 fixed plus $2 per direct labor hour variable. 
D)  $60,000 fixed plus $4 per direct labor hour variable. 
A)  $30,000 fixed plus $4 per direct labor hour variable. 
B)  $30,000 fixed plus $6 per direct labor hour variable. 
C)  $60,000 fixed plus $2 per direct labor hour variable. 
D)  $60,000 fixed plus $4 per direct labor hour variable.

Question 12

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 13

An investment center generated a contribution margin of $400,000, fixed costs of $200,000 and sales of $2,000,000. The center's average operating assets were $800,000. How much is the return on investment?

Accepted Answer

A)  25% 
B)  175% 
C)  50% 
D)  75% 
A)  25% 
B)  175% 
C)  50% 
D)  75%

Question 14

Return on investment is calculated by dividing

Accepted Answer

A)  contribution margin by sales. 
B)  controllable margin by sales. 
C)  contribution margin by average operating assets. 
D)  controllable margin by average operating assets. 
A)  contribution margin by sales. 
B)  controllable margin by sales. 
C)  contribution margin by average operating assets. 
D)  controllable margin by average operating assets.

Question 15

Flexible budgets are widely used in production and service departments.

Accepted Answer

A) True 
 B)False

Question 16

Management by exception

Accepted Answer

A)  causes managers to be buried under voluminous paperwork. 
B)  means that all differences will be investigated. 
C)  means that only unfavorable differences will be investigated. 
D)  means that material differences will be investigated. 
A)  causes managers to be buried under voluminous paperwork. 
B)  means that all differences will be investigated. 
C)  means that only unfavorable differences will be investigated. 
D)  means that material differences will be investigated.

Question 17

Which statement is true?

Accepted Answer

A)  An investment center is responsible for revenues and expenses, as well as earning a return on assets. 
B)  An investment center is only responsible for its investments. 
C)  An investment center is only responsible for revenues and expenses. 
D)  A profit center is evaluated using contribution margin, while an investment center is evaluated using ROI. 
A)  An investment center is responsible for revenues and expenses, as well as earning a return on assets. 
B)  An investment center is only responsible for its investments. 
C)  An investment center is only responsible for revenues and expenses. 
D)  A profit center is evaluated using contribution margin, while an investment center is evaluated using ROI.

Question 18

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 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Which of the following are financial measures of performance? 1. Controllable margin 2. Product quality 3. Labor productivity

A static budget report is appropriate for

Policies regarding when a difference between actual and planned results should be investigated are generally more restrictive for noncontrollable items than for controllable items.

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%?

Residual income and ROI are used as performance evaluation methods for profit center performance

A static budget is appropriate in evaluating a manager's performance if

Best Shingle's budgeted manufacturing costs for 50,000 squares of shingles are: Fixed manufacturing costs $\quad\quad\$ 12,000$ Variable manufacturing costs $\quad\$ 16.00$ per square Best produced 40,000 squares of shingles during March. How much are budgeted total manufacturing costs in March?

What budgeted amounts appear on the flexible budget?

A profit center is

In computing ROI, land held for future use

At zero direct labor hours in a flexible budget graph, the total budgeted cost line intersects the vertical axis at $30,000. At 15,000 direct labor hours, a horizontal line drawn from the total budgeted cost line intersects the vertical axis at $90,000. Fixed and variable costs may be expressed as:

A manager of a cost center is evaluated mainly on

An investment center generated a contribution margin of $400,000, fixed costs of $200,000 and sales of $2,000,000. The center's average operating assets were $800,000. How much is the return on investment?

Return on investment is calculated by dividing

Flexible budgets are widely used in production and service departments.

Management by exception

Which statement is true?

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?

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

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

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

Which of the following are financial measures of performance? 1. Controllable margin 2. Product quality 3. Labor productivity

A static budget report is appropriate for

Policies regarding when a difference between actual and planned results should be investigated are generally more restrictive for noncontrollable items than for controllable items.

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%?

Residual income and ROI are used as performance evaluation methods for profit center performance

A static budget is appropriate in evaluating a manager's performance if

What budgeted amounts appear on the flexible budget?

A profit center is

In computing ROI, land held for future use

At zero direct labor hours in a flexible budget graph, the total budgeted cost line intersects the vertical axis at $30,000. At 15,000 direct labor hours, a horizontal line drawn from the total budgeted cost line intersects the vertical axis at $90,000. Fixed and variable costs may be expressed as:

A manager of a cost center is evaluated mainly on

An investment center generated a contribution margin of $400,000, fixed costs of $200,000 and sales of $2,000,000. The center's average operating assets were $800,000. How much is the return on investment?

Return on investment is calculated by dividing

Flexible budgets are widely used in production and service departments.

Management by exception

Which statement is true?

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?

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

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

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