Question 1

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

Accepted Answer

A) True 
 B)False  False

Question 2

A static budget

Accepted Answer

A) should not be prepared in a company. 
B) is useful in evaluating a manager's performance by comparing actual variable costs and planned variable costs. 
C) shows planned results at the original budgeted activity level. 
D) is changed only if the actual level of activity is different than originally budgeted. 
A) should not be prepared in a company. 
B) is useful in evaluating a manager's performance by comparing actual variable costs and planned variable costs. 
C) shows planned results at the original budgeted activity level. 
D) is changed only if the actual level of activity is different than originally budgeted. C

Question 3

Stone Industries uses flexible budgets.At normal capacity of 16000 units budgeted manufacturing overhead is: $48000 variable and $270000 fixed.If Stone had actual overhead costs of $321000 for 18000 units produced what is the difference between actual and budgeted costs?

Accepted Answer

A) $3000 unfavorable 
B) $3000 favorable 
C) $9000 unfavorable 
D) $12000 favorable 
A) $3000 unfavorable 
B) $3000 favorable 
C) $9000 unfavorable 
D) $12000 favorable B

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Kathleen Corp.produced 320000 units in 150000 direct labor hours.Production for the period was estimated at 330000 units and 165000 direct labor hours.A flexible budget would compare budgeted costs and actual costs respectively at

Accepted Answer

A) 160000 hours and 165000 hours. 
B) 165000 hours and 150000 hours. 
C) 160000 hours and 150000 hours. 
D) 150000 hours and 150000 hours. 
A) 160000 hours and 165000 hours. 
B) 165000 hours and 150000 hours. 
C) 160000 hours and 150000 hours. 
D) 150000 hours and 150000 hours.

Question 6

At 18000 direct labor hours the flexible budget for indirect materials is $36000.If $37400 are incurred at 18400 direct labor hours the flexible budget report should show the following difference for indirect materials:

Accepted Answer

A) $1400 unfavorable. 
B) $1400 favorable. 
C) $600 favorable. 
D) $600 unfavorable. 
A) $1400 unfavorable. 
B) $1400 favorable. 
C) $600 favorable. 
D) $600 unfavorable.

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

On the basis of the budget reports

Accepted Answer

A) management analyzes differences between actual and planned results. 
B) management may take corrective action. 
C) management may modify the future plans. 
D) All of these answers are correct. 
A) management analyzes differences between actual and planned results. 
B) management may take corrective action. 
C) management may modify the future plans. 
D) All of these answers are correct.

Question 9

A static budget is appropriate for

Accepted Answer

A) variable overhead costs. 
B) direct materials costs. 
C) fixed overhead costs. 
D) None of these answers are correct. 
A) variable overhead costs. 
B) direct materials costs. 
C) fixed overhead costs. 
D) None of these answers are correct.

Question 10

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 11

A static budget report

Accepted Answer

A) shows costs at only 2 or 3 different levels of activity. 
B) is appropriate in evaluating a manager's effectiveness in controlling variable costs. 
C) should be used when the actual level of activity is materially different from the master budget activity level. 
D) may be appropriate in evaluating a manager's effectiveness in controlling costs when the behavior of the costs in response to changes in activity is fixed. 
A) shows costs at only 2 or 3 different levels of activity. 
B) is appropriate in evaluating a manager's effectiveness in controlling variable costs. 
C) should be used when the actual level of activity is materially different from the master budget activity level. 
D) may be appropriate in evaluating a manager's effectiveness in controlling costs when the behavior of the costs in response to changes in activity is fixed.

Question 12

Given below is an excerpt from a management performance report: $\begin{array}{lccc} 
&\underline{ \text { Budget } }&\underline{\text { Actual }}&\underline{ \text { Difference }} \
\text { Contribution margin } & \$ 1,000,000 & \$ 1,050,000 & \$ 50,000 \
\text { Controllable fixed costs } & \$ 500,000 & \$ 450,000 & \$ 50,000
\end{array}$
 The manager's overall performance

Accepted Answer

A) is 20% below expectations. 
B) is 20% above expectations. 
C) is equal to expectations. 
D) cannot be determined from information given. 
A) is 20% below expectations. 
B) is 20% above expectations. 
C) is equal to expectations. 
D) cannot be determined from information given.

Question 13

A major element in budgetary control is

Accepted Answer

A) the preparation of long-term plans. 
B) the comparison of actual results with planned objectives. 
C) the valuation of inventories. 
D) approval of the budget by the stockholders. 
A) the preparation of long-term plans. 
B) the comparison of actual results with planned objectives. 
C) the valuation of inventories. 
D) approval of the budget by the stockholders.

Question 14

Within the relevant range of activity the behavior of total costs is assumed to be

Accepted Answer

A) linear and upward sloping. 
B) linear and downward sloping. 
C) curvilinear and upward sloping. 
D) linear to a point and then level off. 
A) linear and upward sloping. 
B) linear and downward sloping. 
C) curvilinear and upward sloping. 
D) linear to a point and then level off.

Question 15

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 16

Flexible budgeting relies on the assumption that unit variable costs will remain constant within the relevant range of activity.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

A static budget is an effective means to evaluate a manager's ability to control costs regardless of the actual activity level.

Accepted Answer

A) True 
 B)False

Question 19

When budgeted and actual results are not the same amount there is a budget

Accepted Answer

A) error. 
B) difference. 
C) anomaly. 
D) by-product. 
A) error. 
B) difference. 
C) anomaly. 
D) by-product.

Question 20

Flexible budgets are widely used in production and service departments.

Accepted Answer

A) True 
 B)False

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

A static budget

Stone Industries uses flexible budgets.At normal capacity of 16000 units budgeted manufacturing overhead is: $48000 variable and $270000 fixed.If Stone had actual overhead costs of $321000 for 18000 units produced what is the difference between actual and budgeted costs?

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

Kathleen Corp.produced 320000 units in 150000 direct labor hours.Production for the period was estimated at 330000 units and 165000 direct labor hours.A flexible budget would compare budgeted costs and actual costs respectively at

At 18000 direct labor hours the flexible budget for indirect materials is $36000.If $37400 are incurred at 18400 direct labor hours the flexible budget report should show the following difference for indirect materials:

A manager of a cost center is evaluated mainly on

On the basis of the budget reports

A static budget is appropriate for

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?

A static budget report

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

A major element in budgetary control is

Within the relevant range of activity the behavior of total costs is assumed to be

A profit center is

Flexible budgeting relies on the assumption that unit variable costs will remain constant within the relevant range of activity.

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

A static budget is an effective means to evaluate a manager's ability to control costs regardless of the actual activity level.

When budgeted and actual results are not the same amount there is a budget

Flexible budgets are widely used in production and service departments.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters

Exam 15: Planning for Capital Investments

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

A static budget

Stone Industries uses flexible budgets.At normal capacity of 16000 units budgeted manufacturing overhead is: $48000 variable and $270000 fixed.If Stone had actual overhead costs of $321000 for 18000 units produced what is the difference between actual and budgeted costs?

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

Kathleen Corp.produced 320000 units in 150000 direct labor hours.Production for the period was estimated at 330000 units and 165000 direct labor hours.A flexible budget would compare budgeted costs and actual costs respectively at

At 18000 direct labor hours the flexible budget for indirect materials is $36000.If $37400 are incurred at 18400 direct labor hours the flexible budget report should show the following difference for indirect materials:

A manager of a cost center is evaluated mainly on

On the basis of the budget reports

A static budget is appropriate for

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?

A static budget report

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

A major element in budgetary control is

Within the relevant range of activity the behavior of total costs is assumed to be

A profit center is

Flexible budgeting relies on the assumption that unit variable costs will remain constant within the relevant range of activity.

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

A static budget is an effective means to evaluate a manager's ability to control costs regardless of the actual activity level.

When budgeted and actual results are not the same amount there is a budget

Flexible budgets are widely used in production and service departments.

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities and Stockholders Equity

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters