Question 1

The sales forecast should be primarily based on:

Accepted Answer

A) statistical analysis. 
B) input from sales managers and sales representatives 
C) production capacity 
D) input from the board of directors 
A) statistical analysis. 
B) input from sales managers and sales representatives 
C) production capacity 
D) input from the board of directors

Question 2

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 3

Explain what is meant by sensitivity analysis in budgeting, and discuss how managers might use sensitivity analysis in practice.

Accepted Answer

Sensitivity analysis is a "what-if" tech

Question 4

The cash budget and the budgeted income statement are necessary to prepare the budgeted balance sheet and budgeted statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 5

Shamokin Manufacturing produces two products, Big and Bigger. Shamokin expects to sell 20,000 units of Big and 10,000 units of Bigger. Shamokin plans on having an ending inventory of 4,000 units of Big and 2,000 units of Bigger. Currently, Shamokin has 1,000 units of Big in its inventory and 800 units of Bigger. Each product requires two labor operations: molding and polishing. Product Big requires one hour of molding time and one hour of polishing time. Product Bigger requires one hour of molding time and two hours of polishing time. The direct labor rate for molders is $20 per molding hour, and the direct labor rate for polishers is $25 per polishing hour.
Required:
Prepare a direct labor budget in hours and dollars for each product.

Accepted Answer

Desired Pr

Question 6

A rolling budget is the same as a continuous budget.

Accepted Answer

A) True 
 B)False

Question 7

Most computer-based financial planning models have difficulty incorporating sensitivity (what-if)analysis.

Accepted Answer

A) True 
 B)False

Question 8

Controllability may be difficult to pinpoint because of all the following EXCEPT:

Accepted Answer

A) some costs depend on market conditions 
B) current managers may have inherited inefficiencies of a previous manager 
C) the current use of stretch or challenge targets 
D) few costs are under the sole influence of one manager 
A) some costs depend on market conditions 
B) current managers may have inherited inefficiencies of a previous manager 
C) the current use of stretch or challenge targets 
D) few costs are under the sole influence of one manager

Question 9

Companies implementing kaizen budgeting believe that employees who actually do the job have the best knowledge of how the job can be done better.

Accepted Answer

A) True 
 B)False

Question 10

A responsibility center is a part, segment, or subunit of an organization, whose manager is accountable for a specified set of activities.

Accepted Answer

A) True 
 B)False

Question 11

Kaizen budgeting allows for budgeting of small incremental increases in costs each budgeting period to allow for the effects of normal inflation.

Accepted Answer

A) True 
 B)False

Question 12

Individual budgeted amounts included in the manufacturing overhead costs budget are based on input from:

Accepted Answer

A) operating personnel 
B) costs incurred in prior years 
C) cost changes expected in the future 
D) All of these answers are correct. 
A) operating personnel 
B) costs incurred in prior years 
C) cost changes expected in the future 
D) All of these answers are correct.

Question 13

Budgeting helps management anticipate and adjust for trouble spots in advance.

Accepted Answer

A) True 
 B)False

Question 14

A budget is the quantitative expression of a proposed plan of action by management
for a specified period.

Accepted Answer

A) True 
 B)False

Question 15

Kaizen budgeting incorporates continuous improvement into budgeted amounts.

Accepted Answer

A) True 
 B)False

Question 16

Research shows that challenging budgets improve employee performance because employees view falling short of budgeted numbers as a failure.

Accepted Answer

A) True 
 B)False

Question 17

Each manager, regardless of level, is in charge of a responsibility center.

Accepted Answer

A) True 
 B)False

Question 18

Direct material purchases equal:

Accepted Answer

A) production needs 
B) production needs plus target ending inventories 
C) production needs plus beginning inventories 
D) production needs plus target ending inventories less beginning inventories 
A) production needs 
B) production needs plus target ending inventories 
C) production needs plus beginning inventories 
D) production needs plus target ending inventories less beginning inventories

Question 19

In a cost center, a manager is responsible for investments, revenues, and costs.

Accepted Answer

A) True 
 B)False

Question 20

Answer the following questions using the information below:
The following information pertains to Hepburn Company:
    
-What is the ending cash balance for March?

Accepted Answer

A) ($50,000) 
B) $6,000 
C) $5,600 
D) $6,600 
A) ($50,000) 
B) $6,000 
C) $5,600 
D) $6,600

Exam 6: Master Budget and Responsibility Accounting

The sales forecast should be primarily based on:

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

Explain what is meant by sensitivity analysis in budgeting, and discuss how managers might use sensitivity analysis in practice.

The cash budget and the budgeted income statement are necessary to prepare the budgeted balance sheet and budgeted statement of cash flows.

A rolling budget is the same as a continuous budget.

Most computer-based financial planning models have difficulty incorporating sensitivity (what-if)analysis.

Controllability may be difficult to pinpoint because of all the following EXCEPT:

Companies implementing kaizen budgeting believe that employees who actually do the job have the best knowledge of how the job can be done better.

A responsibility center is a part, segment, or subunit of an organization, whose manager is accountable for a specified set of activities.

Kaizen budgeting allows for budgeting of small incremental increases in costs each budgeting period to allow for the effects of normal inflation.

Individual budgeted amounts included in the manufacturing overhead costs budget are based on input from:

Budgeting helps management anticipate and adjust for trouble spots in advance.

A budget is the quantitative expression of a proposed plan of action by management for a specified period.

Kaizen budgeting incorporates continuous improvement into budgeted amounts.

Research shows that challenging budgets improve employee performance because employees view falling short of budgeted numbers as a failure.

Each manager, regardless of level, is in charge of a responsibility center.

Direct material purchases equal:

In a cost center, a manager is responsible for investments, revenues, and costs.

Answer the following questions using the information below: The following information pertains to Hepburn Company: -What is the ending cash balance for March?

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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