Question 1

A static budget report is appropriate for

Accepted Answer

A)  fixed manufacturing costs. 
B)  fixed selling and administrative expenses. 
C)  variable selling and administrative expenses. 
D)  both fixed manufacturing costs and fixed selling and administrative expenses. 
A)  fixed manufacturing costs. 
B)  fixed selling and administrative expenses. 
C)  variable selling and administrative expenses. 
D)  both fixed manufacturing costs and fixed selling and administrative expenses.

Question 2

In the Klugman Company, indirect labor is budgeted for $54,000 and factory supervision is budgeted for $18,000 at normal capacity of 80,000 direct labor hours. If 90,000 direct labor hours are worked, flexible budget total for these costs is:

Accepted Answer

A)  $72,000. 
B)  $81,000. 
C)  $78,750. 
D)  $74,250. 
A)  $72,000. 
B)  $81,000. 
C)  $78,750. 
D)  $74,250.

Question 3

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:   A flexible budget prepared at the 90,000 machine hours level of activity would show total manufacturing overhead costs of

Accepted Answer

A)  $270,000. 
B)  $360,000. 
C)  $370,000. 
D)  $300,000. 
A)  $270,000. 
B)  $360,000. 
C)  $370,000. 
D)  $300,000.

Question 4

The terms "direct fixed costs" and "indirect fixed costs" are synonymous with "traceable costs" and "common costs," respectively.

Accepted Answer

A) True 
 B)False

Question 5

Wilson Company uses flexible budgets. At normal capacity of 8,000 units, budgeted manufacturing overhead is: $32,000 variable and $90,000 fixed. If Wilson had actual overhead costs of $125,000 for 9,000 units produced, what is the difference between actual and budgeted costs?

Accepted Answer

A)  $1,000 unfavorable. 
B)  $1,000 favorable. 
C)  $3,000 unfavorable. 
D)  $4,000 favorable. 
A)  $1,000 unfavorable. 
B)  $1,000 favorable. 
C)  $3,000 unfavorable. 
D)  $4,000 favorable.

Question 6

A distinguishing characteristic of an investment center is that

Accepted Answer

A)  revenues are generated by selling and buying stocks and bonds. 
B)  interest revenue is the major source of revenues. 
C)  the profitability of the center is related to the funds invested in the center. 
D)  it is a responsibility center which only generates revenues. 
A)  revenues are generated by selling and buying stocks and bonds. 
B)  interest revenue is the major source of revenues. 
C)  the profitability of the center is related to the funds invested in the center. 
D)  it is a responsibility center which only generates revenues.

Question 7

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 8

Costs that relate specifically to one center and are incurred for the sole benefit of that center are

Accepted Answer

A)  common fixed costs. 
B)  direct fixed costs. 
C)  indirect fixed costs. 
D)  noncontrollable fixed costs. 
A)  common fixed costs. 
B)  direct fixed costs. 
C)  indirect fixed costs. 
D)  noncontrollable fixed costs.

Question 9

A cost is __________________ at a given level of managerial responsibility if a manager has the authority to incur the cost in a given time period.

Accepted Answer

The answer of A cost is __________________ at a given...

Question 10

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.

Question 11

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 12

Henson Company developed its annual manufacturing overhead budget for its master budget for 2010 as follows:   
The relevant range for monthly activity is expected to be between 8,000 and 12,000 direct labor hours.
Instructions
Prepare a flexible budget for a monthly activity level of 8,000 and 9,000 direct labor hours.

Accepted Answer

The answer of Henson Company developed its annual manufacturing overhead...

Question 13

Which of the following will not result in an unfavorable controllable margin difference?

Accepted Answer

A)  Sales exceeding budget; costs under budget 
B)  Sales exceeding budget; costs over budget 
C)  Sales under budget; costs under budget 
D)  Sales under budget; costs over budget 
A)  Sales exceeding budget; costs under budget 
B)  Sales exceeding budget; costs over budget 
C)  Sales under budget; costs under budget 
D)  Sales under budget; costs over budget

Question 14

The flexible budget

Accepted Answer

A)  is prepared before the master budget. 
B)  is relevant both within and outside the relevant range. 
C)  eliminates the need for a master budget. 
D)  is a series of static budgets at different levels of activity. 
A)  is prepared before the master budget. 
B)  is relevant both within and outside the relevant range. 
C)  eliminates the need for a master budget. 
D)  is a series of static budgets at different levels of activity.

Question 15

Flexible budgets are widely used in production and service departments.

Accepted Answer

A) True 
 B)False

Question 16

A flexible budget depicted graphically

Accepted Answer

A)  is identical to a CVP graph. 
B)  differs from a CVP graph in the way that fixed costs are shown. 
C)  differs from a CVP graph in the way that variable costs are shown. 
D)  differs from a CVP graph in that sales revenue is not shown. 
A)  is identical to a CVP graph. 
B)  differs from a CVP graph in the way that fixed costs are shown. 
C)  differs from a CVP graph in the way that variable costs are shown. 
D)  differs from a CVP graph in that sales revenue is not shown.

Question 17

The manager of an investment center can improve ROI by reducing average operating assets.

Accepted Answer

A) True 
 B)False

Question 18

Greenlee Corporation's manufacturing costs for July when production was 1,000 units appears below:   
Instructions
How much is the flexible budget manufacturing cost amount for a month when 1,100 units are produced?

Accepted Answer

The answer of Greenlee Corporation's manufacturing costs for July when...

Question 19

Sales results that are evaluated by a static budget might show
1) favorable differences that are not justified.
2) unfavorable differences that are not justified.

Accepted Answer

A)  1 
B)  2 
C)  both 1 and 2. 
D)  neither 1 nor 2. 
A)  1 
B)  2 
C)  both 1 and 2. 
D)  neither 1 nor 2.

Question 20

As one moves up to each higher level of managerial responsibility,

Accepted Answer

A)  fewer costs are controllable. 
B)  the responsibility for cost incurrence diminishes. 
C)  a greater number of costs are controllable. 
D)  performance evaluation becomes less important. 
A)  fewer costs are controllable. 
B)  the responsibility for cost incurrence diminishes. 
C)  a greater number of costs are controllable. 
D)  performance evaluation becomes less important.

Exam 24: Budgetary Planning

A static budget report is appropriate for

In the Klugman Company, indirect labor is budgeted for $54,000 and factory supervision is budgeted for $18,000 at normal capacity of 80,000 direct labor hours. If 90,000 direct labor hours are worked, flexible budget total for these costs is:

The terms "direct fixed costs" and "indirect fixed costs" are synonymous with "traceable costs" and "common costs," respectively.

Wilson Company uses flexible budgets. At normal capacity of 8,000 units, budgeted manufacturing overhead is: $32,000 variable and $90,000 fixed. If Wilson had actual overhead costs of $125,000 for 9,000 units produced, what is the difference between actual and budgeted costs?

A distinguishing characteristic of an investment center is that

A manager of a cost center is evaluated mainly on

Costs that relate specifically to one center and are incurred for the sole benefit of that center are

A cost is __________________ at a given level of managerial responsibility if a manager has the authority to incur the cost in a given time period.

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

In computing ROI, land held for future use

Which of the following will not result in an unfavorable controllable margin difference?

The flexible budget

Flexible budgets are widely used in production and service departments.

A flexible budget depicted graphically

The manager of an investment center can improve ROI by reducing average operating assets.

Greenlee Corporation's manufacturing costs for July when production was 1,000 units appears below: Instructions How much is the flexible budget manufacturing cost amount for a month when 1,100 units are produced?

Sales results that are evaluated by a static budget might show 1) favorable differences that are not justified. 2) unfavorable differences that are not justified.

As one moves up to each higher level of managerial responsibility,

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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