Exam 10: Budgetary Control and Responsibility Accounting

A flexible budget can be prepared for each of the types of budgets included in the master budget.

When evaluating residual income, the calculation tells management what percentage return was generated by the particular division being evaluated.

Given below is an excerpt from a management performance report: Budget Actual Difference Contribution margin \ 1,000,000 \ 1,050,000 \ 50,000 Controllable fixed costs \ 500,000 \ 450,000 \ 50,000 The manager's overall performance

The linens department of a large department store is

The master budget of Windy Co. shows that the planned activity level for next year is expected to be 50,000 machine hours. At this level of activity, the following manufacturing overhead costs are expected: Indirect labor \ 720,000 Machine supplies 180,000 Indirect materials 210,000 Depreciation on factory building 150,000 Total manufacturing overhead \ 1,260,000 A flexible budget for a level of activity of 60,000 machine hours would show total manufacturing overhead costs of

A cost center

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

A cost center incurs costs and generates revenues and cost center managers are evaluated on the profitability of their centers.

Of the following choices, which contain both a traceable fixed cost and a common fixed cost?

A static budget is most useful for evaluating a manager's performance in controlling variable costs.

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 \ 120,000 Depreciation \ 50,000 Indirect labor 160,000 Taxes 10,000 Factory supplies 20,000 Supervision 40,000 A flexible budget prepared at the 90,000 machine hours level of activity would show total manufacturing overhead costs of

If costs are not responsive to changes in activity level, then these costs can be best described as

A major element in budgetary control is

If actual results are different from planned results, the difference must always be investigated by management to achieve effective budgetary control.

A flexible budget depicted graphically

A static budget is changed only when actual activity is different from the level of activity expected.

Shane Industries prepared a fixed budget of 60,000 direct labor hours, with estimated overhead costs of $300,000 for variable overhead and $90,000 for fixed overhead. Shane then prepared a flexible budget at 57,000 labor hours. How much is total overhead costs at this level of activity?

A flexible budget report will show both actual and budget cost based on the actual activity level achieved.

A static budget is one that is geared to one level of activity.

A flexible budget is a series of static budgets at different levels of activities.