Question 1

If we decrease the selling price of our product, we can always expect a decrease in total revenue.

Accepted Answer

A) True 
 B)False

Question 2

Answer the following questions using the information below:
Furniture, Inc., estimates the following number of mattress sales for the first four months of 2012:
   Finished goods inventory at the end of December is 3,000 units. Target ending finished goods inventory is 30% of the next month's sales.
-How many mattresses need to be produced in January 2012?

Accepted Answer

A) 8,800 mattresses 
B) 11,200 mattresses 
C) 13,000 mattresses 
D) 14,200 mattresses 
A) 8,800 mattresses 
B) 11,200 mattresses 
C) 13,000 mattresses 
D) 14,200 mattresses

Question 3

Budgeted production equals:

Accepted Answer

A) beginning finished goods inventory + budgeted unit sales - targeted ending finished goods inventory 
B) targeted ending finished goods inventory + beginning finished goods inventory - budgeted unit sales 
C) budgeted unit sales + targeted ending finished goods inventory - beginning finished goods inventory 
D) budgeted unit sales + targeted ending finished goods inventory + beginning finished goods inventory 
A) beginning finished goods inventory + budgeted unit sales - targeted ending finished goods inventory 
B) targeted ending finished goods inventory + beginning finished goods inventory - budgeted unit sales 
C) budgeted unit sales + targeted ending finished goods inventory - beginning finished goods inventory 
D) budgeted unit sales + targeted ending finished goods inventory + beginning finished goods inventory

Question 4

A regional manager of a restaurant chain in charge of finding additional locations for expansion 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 5

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

Accepted Answer

A) True 
 B)False

Question 6

Financing 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) preparing financial statements for stockholders 
A) the use of scarce resources 
B) how to obtain funds to acquire resources 
C) acquiring equipment and buildings 
D) preparing financial statements for stockholders

Question 7

The manufacturing labor budget depends on wage rates, production methods, and hiring plans.

Accepted Answer

A) True 
 B)False

Question 8

Answer the following questions using the information below:
Elton, Inc., expects to sell 6,000 ceramic vases for $40 each. Direct materials costs are $4, direct manufacturing labor is $20, and manufacturing overhead is $6 per vase. The following inventory levels apply to 2011:
  
-On the 2012 budgeted income statement, what amount will be reported for sales?

Accepted Answer

A) $244,000 
B) $236,000 
C) $280,000 
D) $240,000 
A) $244,000 
B) $236,000 
C) $280,000 
D) $240,000

Question 9

Responsibility accounting focuses on control, NOT on information and knowledge.

Accepted Answer

A) True 
 B)False

Question 10

Answer the following questions using the information below:
Elton, Inc., expects to sell 6,000 ceramic vases for $40 each. Direct materials costs are $4, direct manufacturing labor is $20, and manufacturing overhead is $6 per vase. The following inventory levels apply to 2011:
  
-On the 2012 budgeted income statement, what amount will be reported for cost of goods sold?

Accepted Answer

A) $183,000 
B) $210,000 
C) $180,000 
D) $177,000 
A) $183,000 
B) $210,000 
C) $180,000 
D) $177,000

Question 11

If initial budgets prove UNACCEPTABLE, planners achieve the most benefit from:

Accepted Answer

A) planning again in light of feedback and current conditions 
B) deciding not to budget this year 
C) accepting an unbalanced budget 
D) using last year's budget 
A) planning again in light of feedback and current conditions 
B) deciding not to budget this year 
C) accepting an unbalanced budget 
D) using last year's budget

Question 12

Answer the following questions using the information below:
Kramer Enterprises reports year-end information from 2010 as follows:
       Kramer is developing the 2011 budget. In 2011 the company would like to increase selling prices by 8%, and as a result expects a decrease in sales volume of 10%. All other operating expenses are expected to remain constant. Assume that COGS is a variable cost and that operating expenses are a fixed cost.
-What is budgeted sales for 2011?

Accepted Answer

A) $1,036,800 
B) $1,066,666 
C) $933,120 
D) $864,000 
A) $1,036,800 
B) $1,066,666 
C) $933,120 
D) $864,000

Question 13

Operating budgets and financial budgets:

Accepted Answer

A) combined form the master budget 
B) are prepared before the master budget 
C) are prepared after the master budget 
D) have nothing to do with the master budget 
A) combined form the master budget 
B) are prepared before the master budget 
C) are prepared after the master budget 
D) have nothing to do with the master budget

Question 14

A budget:

Accepted Answer

A) is the quantitative expression of a proposed plan of action by management 
B) is an aid to coordinate what needs to be done 
C) generally includes both financial and nonfinancial aspects of the plan 
D) All of the above are correct. 
A) is the quantitative expression of a proposed plan of action by management 
B) is an aid to coordinate what needs to be done 
C) generally includes both financial and nonfinancial aspects of the plan 
D) All of the above are correct.

Question 15

Lower-level managers will not actively participate in the budget process if they perceive upper management does NOT believe in the process.

Accepted Answer

A) True 
 B)False

Question 16

Rolling budgets help management to:

Accepted Answer

A) better review the past calendar year 
B) deal with a 5-year time frame 
C) focus on the upcoming budget period 
D) rigidly administer the budget 
A) better review the past calendar year 
B) deal with a 5-year time frame 
C) focus on the upcoming budget period 
D) rigidly administer the budget

Question 17

Performance reports of responsibility centers may include uncontrollable items to influence behavior that is in alignment with corporate strategy.

Accepted Answer

A) True 
 B)False

Question 18

Budgeting for a multinational company is made more complex due to the possibility of exchange rate fluctuations.

Accepted Answer

A) True 
 B)False

Question 19

Budgeting provides all of the following EXCEPT:

Accepted Answer

A) a means to communicate the organization's short-term goals to its members 
B) support for the management functions of planning and coordination 
C) a means to anticipate problems 
D) an ethical framework for decision making 
A) a means to communicate the organization's short-term goals to its members 
B) support for the management functions of planning and coordination 
C) a means to anticipate problems 
D) an ethical framework for decision making

Question 20

Describe operating and financial budgets and give at least two examples of each discussed in the textbook.

Accepted Answer

Operating budgets specify the expected o

If we decrease the selling price of our product, we can always expect a decrease in total revenue.

Budgeted production equals:

A regional manager of a restaurant chain in charge of finding additional locations for expansion is most likely responsible for a(n):

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

Financing decisions primarily deal with:

The manufacturing labor budget depends on wage rates, production methods, and hiring plans.

Responsibility accounting focuses on control, NOT on information and knowledge.

If initial budgets prove UNACCEPTABLE, planners achieve the most benefit from:

Operating budgets and financial budgets:

A budget:

Lower-level managers will not actively participate in the budget process if they perceive upper management does NOT believe in the process.

Rolling budgets help management to:

Performance reports of responsibility centers may include uncontrollable items to influence behavior that is in alignment with corporate strategy.

Budgeting for a multinational company is made more complex due to the possibility of exchange rate fluctuations.

Budgeting provides all of the following EXCEPT:

Describe operating and financial budgets and give at least two examples of each discussed in the textbook.

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

Filters

Exam 6: Master Budget and Responsibility Accounting

If we decrease the selling price of our product, we can always expect a decrease in total revenue.

Budgeted production equals:

A regional manager of a restaurant chain in charge of finding additional locations for expansion is most likely responsible for a(n):

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

Financing decisions primarily deal with:

The manufacturing labor budget depends on wage rates, production methods, and hiring plans.

Responsibility accounting focuses on control, NOT on information and knowledge.

If initial budgets prove UNACCEPTABLE, planners achieve the most benefit from:

Operating budgets and financial budgets:

A budget:

Lower-level managers will not actively participate in the budget process if they perceive upper management does NOT believe in the process.

Rolling budgets help management to:

Performance reports of responsibility centers may include uncontrollable items to influence behavior that is in alignment with corporate strategy.

Budgeting for a multinational company is made more complex due to the possibility of exchange rate fluctuations.

Budgeting provides all of the following EXCEPT:

Describe operating and financial budgets and give at least two examples of each discussed in the textbook.

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

Filters