Question 1

Describe some of the drawbacks of using the operating budget as a control device.

Accepted Answer

When the operating budget is used as a c

Question 2

If we increase the selling price of our product, we should probably expect an increase in the number of these products sold.

Accepted Answer

A) True 
 B)False

Question 3

Activity-based budgeting and kaizen budgeting are really equivalent in meaning.

Accepted Answer

A) True 
 B)False

Question 4

The cash budget is a schedule of expected cash receipts and disbursements that:

Accepted Answer

A) requires an aging of accounts receivable and accounts payable 
B) is a self-liquidating cycle 
C) is prepared immediately after the sales forecast 
D) predicts the effect on the cash position at given levels of operations 
A) requires an aging of accounts receivable and accounts payable 
B) is a self-liquidating cycle 
C) is prepared immediately after the sales forecast 
D) predicts the effect on the cash position at given levels of operations

Question 5

To create greater commitment to the budget, lower-level managers should participate in creating the budget.

Accepted Answer

A) True 
 B)False

Question 6

The Japanese use the term kaizen when referring to:

Accepted Answer

A) scarce resources 
B) pro forma financial statements 
C) continuous improvement 
D) the sales forecast 
A) scarce resources 
B) pro forma financial statements 
C) continuous improvement 
D) the sales forecast

Question 7

To reduce budgetary slack management may:

Accepted Answer

A) incorporate stretch or challenge targets 
B) use external benchmark performance measures 
C) award bonuses for achieving budgeted amounts 
D) reduce projected cost targets by 10% across all areas 
A) incorporate stretch or challenge targets 
B) use external benchmark performance measures 
C) award bonuses for achieving budgeted amounts 
D) reduce projected cost targets by 10% across all areas

Question 8

A budget can help implement:

Accepted Answer

A) strategic planning 
B) long-run planning 
C) short-run planning 
D) All of these answers are correct. 
A) strategic planning 
B) long-run planning 
C) short-run planning 
D) All of these answers are correct.

Question 9

The regional sales office manager of a national firm is most likely responsible for a(n):

Accepted Answer

A) revenue center 
B) investment center 
C) cost center 
D) profit center 
A) revenue center 
B) investment center 
C) cost center 
D) profit center

Question 10

Budgeted financial statements are called pro forma statements.

Accepted Answer

A) True 
 B)False

Question 11

Management will most likely behave the same way if a department is structured as a cost center or if the same department is structured as a profit center.

Accepted Answer

A) True 
 B)False

Question 12

What is budget slack? What are the pros and cons of building slack into the budget from the point of view of (a)an employee and (b)a senior manager?

Accepted Answer

Budget slack occurs when subordinates (a

Question 13

Budgets can play both planning and control roles for management.

Accepted Answer

A) True 
 B)False

Question 14

A budget

Accepted Answer

A) is the quantitative expression of a proposed plan of action. 
B) aids in coordinating what needs to be done. 
C) includes both financial and nonfinancial aspects. 
D) All of these answers are correct. 
A) is the quantitative expression of a proposed plan of action. 
B) aids in coordinating what needs to be done. 
C) includes both financial and nonfinancial aspects. 
D) All of these answers are correct.

Question 15

Variances between actual and budgeted amounts can be used to:

Accepted Answer

A) alert managers to potential problems and available opportunities 
B) inform managers about how well the company has implemented its strategies 
C) signal that company strategies are ineffective 
D) All of these answers are correct. 
A) alert managers to potential problems and available opportunities 
B) inform managers about how well the company has implemented its strategies 
C) signal that company strategies are ineffective 
D) All of these answers are correct.

Question 16

A responsibility accounting system could:

Accepted Answer

A) exclude all uncontrollable costs 
B) exclude controllable costs 
C) segregate uncontrollable costs from controllable costs 
D) Both A and C are correct. 
A) exclude all uncontrollable costs 
B) exclude controllable costs 
C) segregate uncontrollable costs from controllable costs 
D) Both A and C are correct.

Question 17

Coordination is meshing and balancing all aspects of production or service and all
departments in a company in the best way for the company to meet its goals.

Accepted Answer

A) True 
 B)False

Question 18

When the operating budget is used as a control device, managers are less likely to be motivated to budget higher sales than actually anticipated.

Accepted Answer

A) True 
 B)False

Question 19

Favata Company has the following information:
   In addition, the cost of goods sold rate is 70% and the desired inventory level is 30% of next month's cost of sales.
Required:
Prepare a purchases budget for July through September.

Accepted Answer

The answer of Favata Company has the following information:
 ...

Question 20

Kaizen budgeting involves:

Accepted Answer

A) large cost reductions 
B) management directed improvements 
C) continual small cost reductions 
D) continual small revenue increases 
A) large cost reductions 
B) management directed improvements 
C) continual small cost reductions 
D) continual small revenue increases

Exam 6: Master Budget and Responsibility Accounting

Describe some of the drawbacks of using the operating budget as a control device.

If we increase the selling price of our product, we should probably expect an increase in the number of these products sold.

Activity-based budgeting and kaizen budgeting are really equivalent in meaning.

The cash budget is a schedule of expected cash receipts and disbursements that:

To create greater commitment to the budget, lower-level managers should participate in creating the budget.

The Japanese use the term kaizen when referring to:

To reduce budgetary slack management may:

A budget can help implement:

The regional sales office manager of a national firm is most likely responsible for a(n):

Budgeted financial statements are called pro forma statements.

Management will most likely behave the same way if a department is structured as a cost center or if the same department is structured as a profit center.

What is budget slack? What are the pros and cons of building slack into the budget from the point of view of (a)an employee and (b)a senior manager?

Budgets can play both planning and control roles for management.

A budget

Variances between actual and budgeted amounts can be used to:

A responsibility accounting system could:

Coordination is meshing and balancing all aspects of production or service and all departments in a company in the best way for the company to meet its goals.

When the operating budget is used as a control device, managers are less likely to be motivated to budget higher sales than actually anticipated.

Favata Company has the following information: In addition, the cost of goods sold rate is 70% and the desired inventory level is 30% of next month's cost of sales. Required: Prepare a purchases budget for July through September.

Kaizen budgeting involves:

The Accountants Role in the Organization

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

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

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, Time, and the Theory of Constraints

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

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