Exam 16: Management Control Systems

Which of the following is NOT a potential disadvantage of participative budgeting?

Figure 16-1 Armati, SA., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Armati, SA., had the following budgeted data: Unit sales for 2011 26,000 Unit production for 2011 26,000 Budgeted fixed overhead for 2011 : Supervision £800 Depreciation 2,000 Rent 100 Budgeted variable costs per unit: Direct materials £0.15 Direct labour 0.20 Supplies 0.02 Indirect labour 0.05 Power 0.02 The following actually occurred: Actual unit sales for 2011 24,000 Actual unit production for 2011 28,000 Actual fixed overhead for 2011 : Supervision £850 Depreciation 2,000 Rent 100 Actual variable costs: Direct materials £3,500 Direct labour 4,900 Supplies 530 Indirect labour 1,250 Power 470 -Refer to Figure 16-1. The static budget variance for supplies is

Figure 16-1 Armati, SA., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Armati, SA., had the following budgeted data: Unit sales for 2011 26,000 Unit production for 2011 26,000 Budgeted fixed overhead for 2011 : Supervision £800 Depreciation 2,000 Rent 100 Budgeted variable costs per unit: Direct materials £0.15 Direct labour 0.20 Supplies 0.02 Indirect labour 0.05 Power 0.02 The following actually occurred: Actual unit sales for 2011 24,000 Actual unit production for 2011 28,000 Actual fixed overhead for 2011 : Supervision £850 Depreciation 2,000 Rent 100 Actual variable costs: Direct materials £3,500 Direct labour 4,900 Supplies 530 Indirect labour 1,250 Power 470 -Refer to Figure 16-1. The static budget variance for total fixed overhead is

The static budget variance for materials is £200 F and the budgeted cost for materials is £52,000. If the budgeted volume is 13,000 and the actual volume is 13,500, then the flexible budget variance is

An example of a negative incentive is

Figure 16-1 Armati, SA., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Armati, SA., had the following budgeted data: Unit sales for 2011 26,000 Unit production for 2011 26,000 Budgeted fixed overhead for 2011 : Supervision £800 Depreciation 2,000 Rent 100 Budgeted variable costs per unit: Direct materials £0.15 Direct labour 0.20 Supplies 0.02 Indirect labour 0.05 Power 0.02 The following actually occurred: Actual unit sales for 2011 24,000 Actual unit production for 2011 28,000 Actual fixed overhead for 2011 : Supervision £850 Depreciation 2,000 Rent 100 Actual variable costs: Direct materials £3,500 Direct labour 4,900 Supplies 530 Indirect labour 1,250 Power 470 -Refer to Figure 16-1. The static budget variance for direct materials is

Figure 16-1 Armati, SA., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Armati, SA., had the following budgeted data: Unit sales for 2011 26,000 Unit production for 2011 26,000 Budgeted fixed overhead for 2011 : Supervision £800 Depreciation 2,000 Rent 100 Budgeted variable costs per unit: Direct materials £0.15 Direct labour 0.20 Supplies 0.02 Indirect labour 0.05 Power 0.02 The following actually occurred: Actual unit sales for 2011 24,000 Actual unit production for 2011 28,000 Actual fixed overhead for 2011 : Supervision £850 Depreciation 2,000 Rent 100 Actual variable costs: Direct materials £3,500 Direct labour 4,900 Supplies 530 Indirect labour 1,250 Power 470 -Refer to Figure 16-1. The static budget variance for rent is

Which of the following is NOT an advantage of participative budgeting?

Figure 16-1 Armati, SA., is looking for feedback on company performance. The company compares the budget for the year with the actual costs. Data have been collected below: Armati, SA., had the following budgeted data: Unit sales for 2011 26,000 Unit production for 2011 26,000 Budgeted fixed overhead for 2011 : Supervision £800 Depreciation 2,000 Rent 100 Budgeted variable costs per unit: Direct materials £0.15 Direct labour 0.20 Supplies 0.02 Indirect labour 0.05 Power 0.02 The following actually occurred: Actual unit sales for 2011 24,000 Actual unit production for 2011 28,000 Actual fixed overhead for 2011 : Supervision £850 Depreciation 2,000 Rent 100 Actual variable costs: Direct materials £3,500 Direct labour 4,900 Supplies 530 Indirect labour 1,250 Power 470 -Refer to Figure 16-1. The flexible budget for direct materials cost in 2011 is

If production was budgeted at 400 units and the actual production was 420 units, what would be the flexible budget variance for materials if the actual cost of materials was £4,150 and the budgeted cost per unit is £10?

Figure 16-3 Harald, SA., has done a cost analysis for its production of bumper stickers. The following activities and cost drivers have been developed: Activity Cost Formula Maintenance £11,000+£0.11 per machine hour Machining £25,000+£0.50 per machine hour Setups £50 per batch Purchasing £200+£45 per purchase order Following are the actual costs of producing 85,000 stickers: 5,000 machine hours; 10 batches; 20 purchase orders Maintenance £11,500 Machining 28,300 Setups 550 Purchasing 1,000 -Refer to Figure 16-3. What is the budget variance for setups in an activity-based performance report?

Which of the following departments would NOT be classified as a profit centre?

Which of the following facets of a responsibility accounting system is most likely to lead employees to distrust the entire budgeting and performance evaluation system?

Figure 16-2 Glenn, SA., has done a cost analysis for its production of T-shirts. The following activities and cost drivers have been developed: Activity Cost Formula Maintenance £11,000+£2 per machine hour Machining £55,000+£3 per machine hour Inspection £70,000+£500 per batch Setups £2,000 per batch Purchasing £80,000+£150 per purchase order Following are the actual costs of producing 75,000 T-shirts: 5,000 machine hours; 10 batches; 20 purchase orders Maintenance £20,000 Machining 73,000 Inspection 73,000 Setups 18,000 Purchasing 82,000 -Refer to Figure 16-2. What is the budget variance for purchasing in an activity-based performance report?

If production was budgeted at 400 units and the actual production was 420 units, what would be the static budget variance for materials if the actual cost of materials was £4,150 and the budgeted cost per unit is £10?

Goal congruence means

Figure 16-5 Torino, SA., manufactures machine parts. Torino has developed a static budget for its plant at an activity level of 10,000 direct labour hours for the month of March. The actual level of activity was 11,000 hours. The following table summarizes the static budget and the actual costs for March: Static Budget Actual Costs (10,000) (11,000) Variance Variable costs £21,000 £22,000 £1,000 Fixed costs 7,800 7,700 100 Total £28,800 £29,700 £900 -Refer to Figure 16-5. What is the flexible budget for March?

Figure 16-4 Villafane, SA., has done a cost analysis for its production of decals. The following activities and cost drivers have been developed: Activity Cost Formula Design £5,000+£0.05 per machine hour Machining £25,000+£0.01 per machine hour Setups £35 per batch Purchasing £50+£15 per purchase order Following are the actual costs of producing 35,000 decals: 1,000 machine hours; 5 batches; 30 purchase orders Design £5,080 Machining ? Setups ? Purchasing £600 The following variances were given in the activity performance report: Design ? Machining £40 Setups £15 Purchasing ? -Refer to Figure 16-4. What is the activity variance for design?

Which of the following must be addressed if budgets are to be used in performance evaluation?

Participative budgeting offers which of the following advantages?