Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Neuman Company's manufacturing overhead budget for the first quarter of 2010 contained the following data:
Variable Costs
Fixed Costs   
Actual variable costs for the first quarter were:   
Actual fixed costs were as expected except for property taxes which were $4,500. All costs are considered controllable by the department manager except for the supervisor's salary.
Instructions
Prepare a manufacturing overhead responsibility performance report for the first quarter.

Accepted Answer

The answer of Neuman Company's manufacturing overhead budget for the...

Question 3

Houser Company's master budget reflects budgeted sales information for the month of June, 2010, as follows:   
During June, the company actually sold 19,500 units of Product A at an average unit price of $7.10 and 24,800 units of Product B at an average unit price of $8.90.
Instructions
Prepare a Sales Budget Report for the month of June for Houser Company which shows whether the company achieved its planned objectives.

Accepted Answer

The answer of Houser Company's master budget reflects budgeted sales...

Question 4

Grimes Company has prepared the following monthly flexible manufacturing overhead budget for its Mixing Department:   
Instructions
Prepare a flexible budget at the 5,000 direct labor hours of activity.

Accepted Answer

The answer of Grimes Company has prepared the following monthly...

Question 5

A __________________ budget projects budget data for various levels of activity.

Accepted Answer

The answer of A __________________ budget projects budget data for...

Question 6

Doane Company uses a flexible budget for manufacturing overhead based on machine hours. Variable manufacturing overhead costs per machine hour are as follows:   
Fixed overhead costs per month are:   
The company believes it will normally operate in a range of 2,000 to 4,000 machine hours per month.
Instructions
Prepare a flexible manufacturing overhead budget for the expected range of activity, using increments of 1,000 machine hours.

Accepted Answer

The answer of Doane Company uses a flexible budget for...

Question 7

Roark Productions makes a single product. Expected manufacturing costs are as follows:   
Instructions
Determine the amount of manufacturing costs for a flexible budget level of 3,200 units per month.

Accepted Answer

3,200 × ($6.50 + $2.

Question 8

Which of the following will cause an increase in ROI?

Accepted Answer

A)  An increase in variable costs 
B)  An increase in average operating assets 
C)  An increase in sales 
D)  An increase in controllable fixed costs 
A)  An increase in variable costs 
B)  An increase in average operating assets 
C)  An increase in sales 
D)  An increase in controllable fixed costs

Question 9

The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area is called

Accepted Answer

A)  static reporting. 
B)  flexible accounting. 
C)  responsibility accounting. 
D)  master budgeting. 
A)  static reporting. 
B)  flexible accounting. 
C)  responsibility accounting. 
D)  master budgeting.

Question 10

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 11

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

Accepted Answer

A) True 
 B)False

Question 12

Haren Company uses a flexible budget for manufacturing overhead based on machine hours. Variable manufacturing overhead costs per machine hour are as follows:   
Fixed overhead costs per month are:   
The company believes it will normally operate in a range of 2,000 to 4,000 machine hours per month. During the month of August, 2010, the company incurs the following manufacturing overhead costs:   
Instructions
Prepare a flexible budget report, assuming that the company used 3,000 machine hours during August.

Accepted Answer

The answer of Haren Company uses a flexible budget for...

Question 13

The purpose of the departmental overhead cost report is to

Accepted Answer

A)  control indirect labor costs. 
B)  control selling expense. 
C)  determine the efficient use of materials. 
D)  control overhead costs. 
A)  control indirect labor costs. 
B)  control selling expense. 
C)  determine the efficient use of materials. 
D)  control overhead costs.

Question 14

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 15

Dobson Company recorded operating data for its shoe division for the year.   How much is controllable margin for the year?

Accepted Answer

A)  20% 
B)  50% 
C)  $150,000 
D)  $60,000 
A)  20% 
B)  50% 
C)  $150,000 
D)  $60,000

Question 16

Olathe Division of Hartley Company's operating results include: controllable margin, $200,000; sales $2,200,000; and operating assets, $800,000. The Olathe Division's ROI is 25%. Management is considering a project with sales of $100,000, variable expenses of $60,000, fixed costs of $40,000; and an asset investment of $150,000. Should management accept this new project?

Accepted Answer

A)  No, since ROI will be lowered. 
B)  Yes, since ROI will increase. 
C)  Yes, since additional sales always mean more customers. 
D)  No, since a loss will be incurred. 
A)  No, since ROI will be lowered. 
B)  Yes, since ROI will increase. 
C)  Yes, since additional sales always mean more customers. 
D)  No, since a loss will be incurred.

Question 17

Costs incurred indirectly and allocated to a responsibility level are considered to be

Accepted Answer

A)  nonmaterial. 
B)  mixed. 
C)  controllable. 
D)  noncontrollable. 
A)  nonmaterial. 
B)  mixed. 
C)  controllable. 
D)  noncontrollable.

Question 18

A cost center

Accepted Answer

A)  only incurs costs and does not directly generate revenues. 
B)  incurs costs and generates revenues. 
C)  is a responsibility center of a company which incurs losses. 
D)  is a responsibility center which generates profits and evaluates the investment cost of earning the profit. 
A)  only incurs costs and does not directly generate revenues. 
B)  incurs costs and generates revenues. 
C)  is a responsibility center of a company which incurs losses. 
D)  is a responsibility center which generates profits and evaluates the investment cost of earning the profit.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

The activity index used in preparing a flexible budget should not influence the variable costs that are being budgeted.

Accepted Answer

A) True 
 B)False

Exam 24: Budgetary Planning

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

Grimes Company has prepared the following monthly flexible manufacturing overhead budget for its Mixing Department: Instructions Prepare a flexible budget at the 5,000 direct labor hours of activity.

A __________________ budget projects budget data for various levels of activity.

Roark Productions makes a single product. Expected manufacturing costs are as follows: Instructions Determine the amount of manufacturing costs for a flexible budget level of 3,200 units per month.

Which of the following will cause an increase in ROI?

The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area is called

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

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

The purpose of the departmental overhead cost report is to

Not-for-profit entities

Dobson Company recorded operating data for its shoe division for the year. How much is controllable margin for the year?

Costs incurred indirectly and allocated to a responsibility level are considered to be

A cost center

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

The activity index used in preparing a flexible budget should not influence the variable costs that are being budgeted.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

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