Question 1

Activity-based costing analysis takes a long-run perspective and treats all activity costs as variable costs.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is the fundamental purpose of responsibility accounting?

Accepted Answer

A)  to penalize managers for inefficiency 
B)  to gather information that will enable future improvement 
C)  to create an efficient and centralized organization 
D)  to evaluate the performance of managers 
A)  to penalize managers for inefficiency 
B)  to gather information that will enable future improvement 
C)  to create an efficient and centralized organization 
D)  to evaluate the performance of managers

Question 3

Sherry and John Enterprises are using the kaizen approach to budgeting for 2018. The budgeted income statement for January 2018 is as follows:
 
Under the kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 3% per month.
What is budgeted gross margin for March 2018?

Accepted Answer

A)  $413,996 
B)  $426,800 
C)  $466,796 
D)  $476,642 
A)  $413,996 
B)  $426,800 
C)  $466,796 
D)  $476,642

Question 4

The following information pertains to the January operating budget for Casey Corporation.
-Budgeted sales for January $203,000 and February $101,000.
-Collections for sales are 60% in the month of sale and 40% the next month.
-Gross margin is 25% of sales.
-Administrative costs are $20,000 each month.
-Beginning accounts receivable is $28,000.
-Beginning inventory is $19,000.
-Beginning accounts payable is $75,000. (All from inventory purchases.)
-Purchases are paid in full the following month.
-Desired ending inventory is 20% of next month's cost of goods sold (COGS).
For January, budgeted net income is ________.

Accepted Answer

A)  $50,750 
B)  $30,750 
C)  $101,800 
D)  $61,200 
A)  $50,750 
B)  $30,750 
C)  $101,800 
D)  $61,200

Question 5

A packaging department is most likely a profit center.

Accepted Answer

A) True 
 B)False

Question 6

Nantucket Industries manufactures and sells two models of watches, Prime and Luxuria. It expects to sell 4,000 units of Prime and 1,100 units of Luxuria in 2019.The following estimates are given for 2019:
 
Nantucket had an inventory of 230 units of Prime and 125 units of Luxuria at the end of 2018. It has decided that as a measure to counter stock outages it will maintain ending inventory of 360 units of Prime and 210 units of Luxuria.
Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $15. There were 100 units of Crimpson in stock at the end of 2018.The management does not want to have any stock of Crimpson at the end of 2019.
What is the amount budgeted for purchase of Crimpson in 2019?

Accepted Answer

A)  $61,950 
B)  $16,275 
C)  $17,775 
D)  $16,500 
A)  $61,950 
B)  $16,275 
C)  $17,775 
D)  $16,500

Question 7

Most ethical issues related to budgetary decisions are clear cut because at no point should pressure for performance influence budgetary decisions.

Accepted Answer

A) True 
 B)False

Question 8

Wallace Company provides the following data for next year:
 
The gross profit rate is 30% of sales. Inventory at the end of December is $30,600 and target ending inventory levels are 10% of next month's sales, stated at cost.
What is the amount of purchases budgeted for February?

Accepted Answer

A)  $36,180 
B)  $77,700 
C)  $79,310 
D)  $97,580 
A)  $36,180 
B)  $77,700 
C)  $79,310 
D)  $97,580

Question 9

Furniture, Inc., estimates the following number of mattress sales for the first four months of 2019:
 
Finished goods inventory at the end of December is 7,000 units. Target ending finished goods inventory is 20% of the next month's sales.
How many mattresses need to be produced in January 2019?

Accepted Answer

A)  27,800 mattresses 
B)  30,160 mattresses 
C)  41,800 mattresses 
D)  44,160 mattresses 
A)  27,800 mattresses 
B)  30,160 mattresses 
C)  41,800 mattresses 
D)  44,160 mattresses

Question 10

A budget is an end product of negotiations among senior and subordinate mangers because ________.

Accepted Answer

A)  budgeting is their mutual responsibility 
B)  senior managers alone cannot spare the time required for the budgeting process 
C)  senior managers are responsible for providing information on competitors performance and subordinate managers are responsible for information on external market conditions 
D)  senior managers want very challenging targets, while subordinates may want targets that are relatively easier to achieve. 
A)  budgeting is their mutual responsibility 
B)  senior managers alone cannot spare the time required for the budgeting process 
C)  senior managers are responsible for providing information on competitors performance and subordinate managers are responsible for information on external market conditions 
D)  senior managers want very challenging targets, while subordinates may want targets that are relatively easier to achieve.

Question 11

After a budget is agreed upon and finalized by the management team, the amounts should NOT be changed for any reason.

Accepted Answer

A) True 
 B)False

Question 12

Discuss the importance of the sales forecast and items that influence its accuracy.

Accepted Answer

All other budgets are based on informati

Question 13

First Class, Inc., expects to sell 28,000 pool cues for $14 each. Direct materials costs are $3, direct manufacturing labor is $5, and manufacturing overhead is $0.82 per pool cue. The following inventory levels apply to 2019:
 
How many pool cues need to be produced in 2019?

Accepted Answer

A)  30,800 cues 
B)  29,300 cues 
C)  29,500 cues 
D)  26,500 cues 
A)  30,800 cues 
B)  29,300 cues 
C)  29,500 cues 
D)  26,500 cues

Question 14

Computer-based systems, such as ERP systems, cannot perform calculations for financial planning models.

Accepted Answer

A) True 
 B)False

Question 15

Some companies are budgeting annual carbon emissions of their operations after considering an annual global emissions budget, a share for individual sectors of the economy, and what a reasonable annual allocation would be for the company.

Accepted Answer

A) True 
 B)False

Question 16

Budgets should ________.

Accepted Answer

A)  not be so rigid that if conditions change, adjustments in spending can be made 
B)  be administered rigidly 
C)  only be developed for short periods of time such as quarters 
D)  include only variable costs 
A)  not be so rigid that if conditions change, adjustments in spending can be made 
B)  be administered rigidly 
C)  only be developed for short periods of time such as quarters 
D)  include only variable costs

Question 17

Violet Sales Corp, reports the year-end information from 2019 as follows:
 
Violet is developing the 2019 budget. In 2019 the company would like to increase selling prices by 3.5%, and as a result expects a decrease in sales volume of 14%. All other operating expenses are expected to remain constant. Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost.
What is budgeted sales for 2019? (Round interim calculations to the nearest cent and the final answer to the nearest dollar.)

Accepted Answer

A)  $293,940 
B)  $252,788 
C)  $335,092 
D)  $284,001 
A)  $293,940 
B)  $252,788 
C)  $335,092 
D)  $284,001

Question 18

Which of the following is a reason why budgets in multinational companies are not used to evaluate the firm's performance relative to its budgets?

Accepted Answer

A)  Evaluations based on budgets can be meaningless due to factors such as exchange rate risk and other volatility. 
B)  Evaluations based on budgets are not possible because of cultural differences in the budgeting approach. 
C)  Evaluations based on relative regional performance are considered more meaningful as compared to evaluations against budgets. 
D)  Evaluations based on budgets are harder when managers use sophisticated techniques to minimize foreign currency exposure. 
A)  Evaluations based on budgets can be meaningless due to factors such as exchange rate risk and other volatility. 
B)  Evaluations based on budgets are not possible because of cultural differences in the budgeting approach. 
C)  Evaluations based on relative regional performance are considered more meaningful as compared to evaluations against budgets. 
D)  Evaluations based on budgets are harder when managers use sophisticated techniques to minimize foreign currency exposure.

Question 19

To determine the predicted results, such as the change in budgeted operating income if there was a decrease in the selling price of a product by 5% and an increase in material costs of 3%.

Accepted Answer

A) True 
 B)False

Question 20

Steve Corporation is using the kaizen approach to budgeting for 2018. The budgeted income statement for January 2018 is as follows:
   
Under the kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month.
Required:
Prepare a kaizen-based budgeted income statement for March of 2018.

Accepted Answer

The answer of Steve Corporation is using the kaizen approach...

Activity-based costing analysis takes a long-run perspective and treats all activity costs as variable costs.

Which of the following is the fundamental purpose of responsibility accounting?

A packaging department is most likely a profit center.

Most ethical issues related to budgetary decisions are clear cut because at no point should pressure for performance influence budgetary decisions.

Wallace Company provides the following data for next year: The gross profit rate is 30% of sales. Inventory at the end of December is $30,600 and target ending inventory levels are 10% of next month's sales, stated at cost. What is the amount of purchases budgeted for February?

Furniture, Inc., estimates the following number of mattress sales for the first four months of 2019: Finished goods inventory at the end of December is 7,000 units. Target ending finished goods inventory is 20% of the next month's sales. How many mattresses need to be produced in January 2019?

A budget is an end product of negotiations among senior and subordinate mangers because ________.

After a budget is agreed upon and finalized by the management team, the amounts should NOT be changed for any reason.

Discuss the importance of the sales forecast and items that influence its accuracy.

First Class, Inc., expects to sell 28,000 pool cues for $14 each. Direct materials costs are $3, direct manufacturing labor is $5, and manufacturing overhead is $0.82 per pool cue. The following inventory levels apply to 2019: How many pool cues need to be produced in 2019?

Computer-based systems, such as ERP systems, cannot perform calculations for financial planning models.

Some companies are budgeting annual carbon emissions of their operations after considering an annual global emissions budget, a share for individual sectors of the economy, and what a reasonable annual allocation would be for the company.

Budgets should ________.

Which of the following is a reason why budgets in multinational companies are not used to evaluate the firm's performance relative to its budgets?

To determine the predicted results, such as the change in budgeted operating income if there was a decrease in the selling price of a product by 5% and an increase in material costs of 3%.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

Exam 6: Master Budget and Responsibility Accounting

Activity-based costing analysis takes a long-run perspective and treats all activity costs as variable costs.

Which of the following is the fundamental purpose of responsibility accounting?

A packaging department is most likely a profit center.

Most ethical issues related to budgetary decisions are clear cut because at no point should pressure for performance influence budgetary decisions.

Wallace Company provides the following data for next year: The gross profit rate is 30% of sales. Inventory at the end of December is $30,600 and target ending inventory levels are 10% of next month's sales, stated at cost. What is the amount of purchases budgeted for February?

Furniture, Inc., estimates the following number of mattress sales for the first four months of 2019: Finished goods inventory at the end of December is 7,000 units. Target ending finished goods inventory is 20% of the next month's sales. How many mattresses need to be produced in January 2019?

A budget is an end product of negotiations among senior and subordinate mangers because ________.

After a budget is agreed upon and finalized by the management team, the amounts should NOT be changed for any reason.

Discuss the importance of the sales forecast and items that influence its accuracy.

First Class, Inc., expects to sell 28,000 pool cues for $14 each. Direct materials costs are $3, direct manufacturing labor is $5, and manufacturing overhead is $0.82 per pool cue. The following inventory levels apply to 2019: How many pool cues need to be produced in 2019?

Computer-based systems, such as ERP systems, cannot perform calculations for financial planning models.

Some companies are budgeting annual carbon emissions of their operations after considering an annual global emissions budget, a share for individual sectors of the economy, and what a reasonable annual allocation would be for the company.

Budgets should ________.

Which of the following is a reason why budgets in multinational companies are not used to evaluate the firm's performance relative to its budgets?

To determine the predicted results, such as the change in budgeted operating income if there was a decrease in the selling price of a product by 5% and an increase in material costs of 3%.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Flexible Budgets, Direct-Cost Variances, and Management Control

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, Just-in-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters