Question 1

Operating decisions primarily deal with:

Accepted Answer

A) the use of scarce resources 
B) how to obtain funds to acquire resources 
C) acquiring equipment and buildings 
D) satisfying stockholders 
A) the use of scarce resources 
B) how to obtain funds to acquire resources 
C) acquiring equipment and buildings 
D) satisfying stockholders

Question 2

The order to follow when preparing the operating budget is:

Accepted Answer

A) revenues budget, production budget, and direct manufacturing labor costs budget 
B) costs of goods sold budget, production budget, and cash budget 
C) revenues budget, manufacturing overhead costs budget, and production budget 
D) cash expenditures budget, revenues budget, and production budget. 
A) revenues budget, production budget, and direct manufacturing labor costs budget 
B) costs of goods sold budget, production budget, and cash budget 
C) revenues budget, manufacturing overhead costs budget, and production budget 
D) cash expenditures budget, revenues budget, and production budget.

Question 3

Answer the following questions using the information below:
Wallace Company provides the following data for next year:
   The gross profit rate is 40% of sales. Inventory at the end of December is $21,600 and target ending inventory levels are 30% of next month's sales, stated at cost.
-Purchases budgeted for January total:

Accepted Answer

A) $130,800 
B) $72,000 
C) $69,840 
D) $74,160 
A) $130,800 
B) $72,000 
C) $69,840 
D) $74,160

Question 4

Russell Company has the following projected account balances for June 30, 2011:
   Required:
a. Prepare a budgeted income statement for June 2011
b. Prepare a budgeted balance sheet as of June 30, 2011.

Accepted Answer

a. Russell Company
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Question 5

The operating budget process generally concludes with the preparation of the:

Accepted Answer

A) production budget 
B) distribution budget 
C) research and development budget 
D) budgeted income statement 
A) production budget 
B) distribution budget 
C) research and development budget 
D) budgeted income statement

Question 6

Kaizen budgeting is driven by:

Accepted Answer

A) management 
B) employees 
C) stockholders 
D) creditors 
A) management 
B) employees 
C) stockholders 
D) creditors

Question 7

Kaizen budgeting does NOT make sense for cost centers.

Accepted Answer

A) True 
 B)False

Question 8

Financial analysts use the projected cash flow statement to do all of the following EXCEPT:

Accepted Answer

A) plan for when excess cash is generated 
B) plan for short-term cash investments 
C) project cash shortages and plan a strategy to deal with the shortages 
D) project depreciation expense 
A) plan for when excess cash is generated 
B) plan for short-term cash investments 
C) project cash shortages and plan a strategy to deal with the shortages 
D) project depreciation expense

Question 9

A manager of a profit center is responsible for all of the following EXCEPT:

Accepted Answer

A) sales revenue 
B) the cost of merchandise purchased for resale 
C) expanding into new geographic areas 
D) selling and marketing costs 
A) sales revenue 
B) the cost of merchandise purchased for resale 
C) expanding into new geographic areas 
D) selling and marketing costs

Question 10

Perry Company has the following information:
   In addition, the gross profit rate is 40% and the desired inventory level is 30% of next month's cost of sales.
Required:
Prepare a purchases budget for April through June.

Accepted Answer

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

Question 11

When administered wisely, budgets promote communication and coordination among the various subunits of the organization.

Accepted Answer

A) True 
 B)False

Question 12

Operating budgets include all of the following EXCEPT:

Accepted Answer

A) the revenues budget 
B) the budgeted income statement 
C) the administrative costs budget 
D) the budgeted balance sheet 
A) the revenues budget 
B) the budgeted income statement 
C) the administrative costs budget 
D) the budgeted balance sheet

Question 13

Answer the following questions using the information below:
The following information pertains to the January operating budget for Casey Corporation, a retailer:
  
-For January, budgeted gross margin is:

Accepted Answer

A) $100,000 
B) $140,000 
C) $60,000 
D) $50,000 
A) $100,000 
B) $140,000 
C) $60,000 
D) $50,000

Question 14

Budgets should:

Accepted Answer

A) be flexible 
B) be administered rigidly 
C) only be developed for short periods of time 
D) include only variable costs 
A) be flexible 
B) be administered rigidly 
C) only be developed for short periods of time 
D) include only variable costs

Question 15

Challenging budgets tend to:

Accepted Answer

A) decrease line-management participation in attaining corporate goals 
B) increase failure 
C) increase anxiety without motivation 
D) motivate improved performance 
A) decrease line-management participation in attaining corporate goals 
B) increase failure 
C) increase anxiety without motivation 
D) motivate improved performance

Question 16

A limitation of comparing a company's performance against actual results of last year is that:

Accepted Answer

A) it includes adjustments for future conditions 
B) feedback is no longer a possibility 
C) past results can contain inefficiencies of the past year 
D) the budgeting time period is set at one year 
A) it includes adjustments for future conditions 
B) feedback is no longer a possibility 
C) past results can contain inefficiencies of the past year 
D) the budgeting time period is set at one year

Question 17

The revenues budget should be based on the production budget.

Accepted Answer

A) True 
 B)False

Question 18

A maintenance manager 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 19

Budgetary slack provides management with a hedge against planned adverse circumstances.

Accepted Answer

A) True 
 B)False

Question 20

Responsibility accounting:

Accepted Answer

A) is a system that measures the plans, budgets, actions, and actual results of a responsibility center 
B) is an arrangement of lines of responsibility within the organization 
C) explicitly incorporates continuous improvement anticipated during the budget period 
D) examines how a result will change if the original plan is not achieved 
A) is a system that measures the plans, budgets, actions, and actual results of a responsibility center 
B) is an arrangement of lines of responsibility within the organization 
C) explicitly incorporates continuous improvement anticipated during the budget period 
D) examines how a result will change if the original plan is not achieved

Exam 6: Master Budget and Responsibility Accounting

Operating decisions primarily deal with:

The order to follow when preparing the operating budget is:

Russell Company has the following projected account balances for June 30, 2011: Required: a. Prepare a budgeted income statement for June 2011 b. Prepare a budgeted balance sheet as of June 30, 2011.

The operating budget process generally concludes with the preparation of the:

Kaizen budgeting is driven by:

Kaizen budgeting does NOT make sense for cost centers.

Financial analysts use the projected cash flow statement to do all of the following EXCEPT:

A manager of a profit center is responsible for all of the following EXCEPT:

Perry Company has the following information: In addition, the gross profit rate is 40% and the desired inventory level is 30% of next month's cost of sales. Required: Prepare a purchases budget for April through June.

When administered wisely, budgets promote communication and coordination among the various subunits of the organization.

Operating budgets include all of the following EXCEPT:

Answer the following questions using the information below: The following information pertains to the January operating budget for Casey Corporation, a retailer: -For January, budgeted gross margin is:

Budgets should:

Challenging budgets tend to:

A limitation of comparing a company's performance against actual results of last year is that:

The revenues budget should be based on the production budget.

A maintenance manager is most likely responsible for a(n):

Budgetary slack provides management with a hedge against planned adverse circumstances.

Responsibility accounting:

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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