Exam 10: Budgetary Control and Responsibility Accounting

The current controllable margin for Henry Division is $93,000. Its current operating assets are $300,000. The division is considering purchasing equipment for $90,000 that will increase annual controllable margin by an estimated $15,000. If the equipment is purchased, what will happen to the return on investment for Henry Division?

In developing a flexible budget within a relevant range of activity,

Controllable margin is most useful for

Smart Manufacturing budgeted costs for 50,000 linear feet of block are: Fixed manufacturing costs $\quad \$ 24,000$ per month Variable manufacturing costs $\quad \$ 16.00$ per linear foot Smart installed 40,000 linear feet of block during March. How much is budgeted total manufacturing costs in March?

The formula for computing return on investment is controllable margin divided by average operating assets.

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: 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 90,000 machine hours level of activity would show total manufacturing overhead costs of

A distinction should be made between controllable and noncontrollable costs when reporting information under responsibility accounting.

Stone Industries uses flexible budgets. At normal capacity of 16,000 units, budgeted manufacturing overhead is: $48,000 variable and $270,000 fixed. If Stone had actual overhead costs of $321,000 for 18,000 units produced, what is the difference between actual and budgeted costs?

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

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

A flexible budget is prepared before the master budget.

Management by exception means that management will investigate areas where actual results differ from planned results if the items are material and controllable.

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

If controllable margin is $300,000 and the average investment center operating assets are $2,000,000, the return on investment is

A flexible budget

Lew Co. had sales of $400,000, variable costs of $200,000, and direct fixed costs totaling $100,000. The company's operating assets total $800,000, and its required return is 10%. How much is the residual income?

Which of the following valuations of operating assets is not readily available from the accounting records?

The best measure of the performance of the manager of a profit center is the

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

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:. Variable Fixed Indirect materials \ 140,000 Depreciation \ 60,000 Indirect labor 200,000 Taxes 10,000 Factory supplies 20,000 Supervision 50,000 A flexible budget prepared at the 80,000 machine hours level of activity would show total manufacturing overhead costs of