Question 1

Which type of centre is the housekeeping department of a manufacturing company?

Accepted Answer

A) a segment 
B) a profit centre 
C) a cost centre 
D) an investment centre 
A) a segment 
B) a profit centre 
C) a cost centre 
D) an investment centre C

Question 2

Which one of the following valuations of operating assets is NOT readily available from the accounting records?

Accepted Answer

A) cost 
B) book value 
C) market value 
D) both cost and market value 
A) cost 
B) book value 
C) market value 
D) both cost and market value C

Question 3

Which one of the following decreases the controllability of a particular cost?

Accepted Answer

A) moving up to higher levels of managerial responsibility 
B) an increase in the responsibility for costs incurred 
C) a greater number of costs in a manager's division 
D) moving down to lower levels of management 
A) moving up to higher levels of managerial responsibility 
B) an increase in the responsibility for costs incurred 
C) a greater number of costs in a manager's division 
D) moving down to lower levels of management D

Question 4

Which one of the following is a reason that a company may have significant deviations from budgeted performance?

Accepted Answer

A) Actual results were compared to flexible budget amounts instead of static budget amounts. 
B) The budget was approved by the budget committee. 
C) Economic conditions may have changed since the plan was developed. 
D) A company has substantial variable costs. 
A) Actual results were compared to flexible budget amounts instead of static budget amounts. 
B) The budget was approved by the budget committee. 
C) Economic conditions may have changed since the plan was developed. 
D) A company has substantial variable costs.

Question 5

Perot Manufacturing reported the following items for 2020: $\begin{array} { l l } 
\text { Income tax expense } & \$ 40,000 \
\text { Contributian margin } & 125,000 \
\text { Contrallable fixed costs } & 30,000 \
\text { Interest expense } & 10,000 \
\text { Total operating assets } & 475,000
\end{array}$ How much is controllable margin?

Accepted Answer

A) $125,000 
B) $95,000 
C) $85,000 
D) $45,000 
A) $125,000 
B) $95,000 
C) $85,000 
D) $45,000

Question 6

Which one of the following is a distinguishing characteristic of an investment centre?

Accepted Answer

A) It includes significant uncontrollable fixed costs. 
B) Performance can be evaluated with both profitability and return on utilizing assets. 
C) This type of responsibility centre only generates revenues. 
D) Revenues are rarely generated by selling products. 
A) It includes significant uncontrollable fixed costs. 
B) Performance can be evaluated with both profitability and return on utilizing assets. 
C) This type of responsibility centre only generates revenues. 
D) Revenues are rarely generated by selling products.

Question 7

Which one of the following statements about a profit centre responsibility report is correct?

Accepted Answer

A) It shows budgeted and actual controllable revenues and costs. 
B) Non-controllable fixed costs are reported. 
C) It provides the same information as a cost centre responsibility report. 
D) All fixed costs are deducted from controllable margin. 
A) It shows budgeted and actual controllable revenues and costs. 
B) Non-controllable fixed costs are reported. 
C) It provides the same information as a cost centre responsibility report. 
D) All fixed costs are deducted from controllable margin.

Question 8

What effects do increases in plant assets have on ROI?

Accepted Answer

A) an increase in controllable margin which increases ROI 
B) a reduction of ROI 
C) an increase in ROI 
D) Unable to determine without the dollar amount of controllable margin known. 
A) an increase in controllable margin which increases ROI 
B) a reduction of ROI 
C) an increase in ROI 
D) Unable to determine without the dollar amount of controllable margin known.

Question 9

Which one of the following statements describes a budget report?

Accepted Answer

A) It is the preparation of long-term plans. 
B) It is a comparison of actual results with planned objectives. 
C) It includes the valuation of inventories. 
D) It is voted on and approved by the stockholders. 
A) It is the preparation of long-term plans. 
B) It is a comparison of actual results with planned objectives. 
C) It includes the valuation of inventories. 
D) It is voted on and approved by the stockholders.

Question 10

Ed is the manager of the Montreal location of Books Galore.Which one of the following would most likely be an uncontrollable cost for Ed?

Accepted Answer

A) workers' compensation insurance expense for his cashiers 
B) installation of a corporate-wide satellite dish system for book signings by selected authors 
C) costs of printing signs for local promotions 
D) colour selection of logo merchandise 
A) workers' compensation insurance expense for his cashiers 
B) installation of a corporate-wide satellite dish system for book signings by selected authors 
C) costs of printing signs for local promotions 
D) colour selection of logo merchandise

Question 11

What should be the reaction of upper level managers when a difference between budgeted and actual sales exists?

Accepted Answer

A) The difference should be investigated if it is unfavourable. 
B) The difference should be ignored since economic conditions affect sales and cannot be controlled by the company's managers. 
C) It depends on whether the difference is material or not. 
D) It depends on management personalities. 
A) The difference should be investigated if it is unfavourable. 
B) The difference should be ignored since economic conditions affect sales and cannot be controlled by the company's managers. 
C) It depends on whether the difference is material or not. 
D) It depends on management personalities.

Question 12

A flexible budget

Accepted Answer

A) is not based on the master budget. 
B) is widely used in production departments, and least used in service departments. 
C) report will compare actual costs with the budgeted costs at the actual activity level achieved. 
D) cannot be prepared for each of the types of budgets included in the master budget. 
A) is not based on the master budget. 
B) is widely used in production departments, and least used in service departments. 
C) report will compare actual costs with the budgeted costs at the actual activity level achieved. 
D) cannot be prepared for each of the types of budgets included in the master budget.

Question 13

Flexible budgets imply

Accepted Answer

A) that sales managers can have a wide latitude in modifying prices during the year. 
B) that a firm will have different levels of activity and costs during a year. 
C) the budget process may not be accurate at the beginning of the budget year. 
D) each manager is free to change the budget as the year progresses. 
A) that sales managers can have a wide latitude in modifying prices during the year. 
B) that a firm will have different levels of activity and costs during a year. 
C) the budget process may not be accurate at the beginning of the budget year. 
D) each manager is free to change the budget as the year progresses.

Question 14

Responsibility centres in a decentralized organization

Accepted Answer

A) do not include cost centres. 
B) do not include profit centres. 
C) only include investment centres. 
D) include cost, profit, and investment centres. 
A) do not include cost centres. 
B) do not include profit centres. 
C) only include investment centres. 
D) include cost, profit, and investment centres.

Question 15

A department has budgeted monthly fixed manufacturing overhead cost of $40,000 plus $5 per direct labour hour.The flexible budget report reflects $120,000 for total budgeted manufacturing cost for the month.What is the budgeted level of activity to be achieved during the month?

Accepted Answer

A) 32,000 direct labour hours 
B) 24,000 direct labour hours 
C) 16,000 direct labour hours 
D) cannot be determined 
A) 32,000 direct labour hours 
B) 24,000 direct labour hours 
C) 16,000 direct labour hours 
D) cannot be determined

Question 16

Use the following information to answer questions 
EKPN Company prepared the following data in its static budget based on 150,000 machine hours:
 $$\begin{array} { l l } 
\text { Direct Materials } &  \$ 4 5 0 , 0 0 0 \
\text { Direct Labour } & 2 2 5 , 0 0 0 \
\text { Variable Overhead } & 1,125,000 \
\text { Fixed Overhead } & \mathbf { 2 } , 100,000
\end{array}$$ $$\begin{array} { l l } 
\text { Actual Results: } & \
\text { Machine Hours } & 160,000 \text { hours } \
\text { Direct Materials } & \$ 475,000 \
\text { Direct Labaur } &  2 4 5 , 000 \
\text { Variable Overhead } & 1,150,000 \
\text { Fixed Overhead } & \mathbf { 2 } , 110,000
\end{array}$$
-What is the budgeted fixed overhead at the actual level of activity?

Accepted Answer

A) $2,100,000 
B) $2,110,000 
C) $2,240,000 
D) $3,260,000 
A) $2,100,000 
B) $2,110,000 
C) $2,240,000 
D) $3,260,000

Question 17

Which one of the following statements is true concerning a flexible budget?

Accepted Answer

A) It is prepared once the actual activity level is determined. 
B) It is relevant both within and outside the relevant range. 
C) It replaces a master budget. 
D) It is one of the financial budgets. 
A) It is prepared once the actual activity level is determined. 
B) It is relevant both within and outside the relevant range. 
C) It replaces a master budget. 
D) It is one of the financial budgets.

Question 18

Which statement is true concerning the selection of the level of activity used in the flexible budget?

Accepted Answer

A) The activity level should be the same as actually achieved. 
B) The activity level should be the same as found in the master budget. 
C) Any activity level can be used in the flexible budget. 
D) The activity level should be the level which maximizes profit. 
A) The activity level should be the same as actually achieved. 
B) The activity level should be the same as found in the master budget. 
C) Any activity level can be used in the flexible budget. 
D) The activity level should be the level which maximizes profit.

Question 19

EKPN Company recorded the following operating data: $$\begin{array} { l l } 
\text { Sales } & \$ 1,250,000 \
\text { Contribution margin } & 485,000 \
\text { Total direct fixed costs } & 400,300 \
\text { Total operating assets Jan. 1, 2020 } & 750,000 \
\text { Total operating assets Dec. 31, 2020 } & 790,000 \
\text { EKPN Compary's desired return } & 12 \%
\end{array}$$ What is EKPN Company's average operating assets for 2020?

Accepted Answer

A) $770,000 
B) $750,000 
C) $790,000 
D) $150,000 
A) $770,000 
B) $750,000 
C) $790,000 
D) $150,000

Question 20

A formula used in developing a flexible budget is: Total budgeted cost = fixed cost + (total variable cost ÷ activity level).

Accepted Answer

A) True 
 B)False

Which type of centre is the housekeeping department of a manufacturing company?

Which one of the following valuations of operating assets is NOT readily available from the accounting records?

Which one of the following decreases the controllability of a particular cost?

Which one of the following is a reason that a company may have significant deviations from budgeted performance?

Perot Manufacturing reported the following items for 2020: Income tax expense \ 40,000 Contributian margin 125,000 Contrallable fixed costs 30,000 Interest expense 10,000 Total operating assets 475,000 How much is controllable margin?

Which one of the following is a distinguishing characteristic of an investment centre?

Which one of the following statements about a profit centre responsibility report is correct?

What effects do increases in plant assets have on ROI?

Which one of the following statements describes a budget report?

Ed is the manager of the Montreal location of Books Galore.Which one of the following would most likely be an uncontrollable cost for Ed?

What should be the reaction of upper level managers when a difference between budgeted and actual sales exists?

A flexible budget

Flexible budgets imply

Responsibility centres in a decentralized organization

A department has budgeted monthly fixed manufacturing overhead cost of $40,000 plus $5 per direct labour hour.The flexible budget report reflects $120,000 for total budgeted manufacturing cost for the month.What is the budgeted level of activity to be achieved during the month?

Which one of the following statements is true concerning a flexible budget?

Which statement is true concerning the selection of the level of activity used in the flexible budget?

A formula used in developing a flexible budget is: Total budgeted cost = fixed cost + (total variable cost ÷ activity level).

Managerial Accounting

Managerial Cost Concepts and Cost Behaviour Analysis

Job Order Costing

Process Costing

Activity-Based-Costing

Cost-Volume-Profit

Incremental Analysis

Alternative Inventory Costing Methods: a Decision-Making Perspective

Pricing

Budgetary Planning

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters

Exam 11: Budgetary Control and Responsibility Accounting

Which type of centre is the housekeeping department of a manufacturing company?

Which one of the following valuations of operating assets is NOT readily available from the accounting records?

Which one of the following decreases the controllability of a particular cost?

Which one of the following is a reason that a company may have significant deviations from budgeted performance?

Perot Manufacturing reported the following items for 2020: Income tax expense \ 40,000 Contributian margin 125,000 Contrallable fixed costs 30,000 Interest expense 10,000 Total operating assets 475,000 How much is controllable margin?

Which one of the following is a distinguishing characteristic of an investment centre?

Which one of the following statements about a profit centre responsibility report is correct?

What effects do increases in plant assets have on ROI?

Which one of the following statements describes a budget report?

Ed is the manager of the Montreal location of Books Galore.Which one of the following would most likely be an uncontrollable cost for Ed?

What should be the reaction of upper level managers when a difference between budgeted and actual sales exists?

A flexible budget

Flexible budgets imply

Responsibility centres in a decentralized organization

A department has budgeted monthly fixed manufacturing overhead cost of $40,000 plus $5 per direct labour hour.The flexible budget report reflects $120,000 for total budgeted manufacturing cost for the month.What is the budgeted level of activity to be achieved during the month?

Which one of the following statements is true concerning a flexible budget?

Which statement is true concerning the selection of the level of activity used in the flexible budget?

A formula used in developing a flexible budget is: Total budgeted cost = fixed cost + (total variable cost ÷ activity level).

Managerial Accounting

Managerial Cost Concepts and Cost Behaviour Analysis

Job Order Costing

Process Costing

Activity-Based-Costing

Cost-Volume-Profit

Incremental Analysis

Alternative Inventory Costing Methods: a Decision-Making Perspective

Pricing

Budgetary Planning

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Filters