Question 1

Which one of the following is another name for the static budget?

Accepted Answer

A) flexible budget 
B) operating budget 
C) permanent budget 
D) master budget 
A) flexible budget 
B) operating budget 
C) permanent budget 
D) master budget

Question 2

What is the primary difference between a static budget and a flexible budget?

Accepted Answer

A) The static budget contains only fixed costs, while the flexible budget contains only variable costs. 
B) The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels. 
C) The static budget is constructed using input from only upper level management, while a flexible budget obtains input from all levels of management. 
D) The static budget is prepared only for units produced, while a flexible budget reflects the number of units sold. 
A) The static budget contains only fixed costs, while the flexible budget contains only variable costs. 
B) The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels. 
C) The static budget is constructed using input from only upper level management, while a flexible budget obtains input from all levels of management. 
D) The static budget is prepared only for units produced, while a flexible budget reflects the number of units sold.

Question 3

What is the preparation of reports for each level of responsibility in the company's organization chart called?

Accepted Answer

A) static reporting 
B) responsibility reporting 
C) exception reporting 
D) master budgeting analysis 
A) static reporting 
B) responsibility reporting 
C) exception reporting 
D) master budgeting analysis

Question 4

Nextel Communications uses management by exception.Which differences between planned and actual results will it investigate?

Accepted Answer

A) those that are material and non-controllable 
B) those that are controllable and non-controllable 
C) those that are material and controllable 
D) All differences should be investigated. 
A) those that are material and non-controllable 
B) those that are controllable and non-controllable 
C) those that are material and controllable 
D) All differences should be investigated.

Question 5

For which of the following is an investment centre manager responsible?

Accepted Answer

A) invested assets, sales, and costs 
B) sales, profits, and invested assets 
C) sales, invested assets, and assets 
D) revenues and costs 
A) invested assets, sales, and costs 
B) sales, profits, and invested assets 
C) sales, invested assets, and assets 
D) revenues and costs

Question 6

Which one of the following is a performance indicator for an investment centre, but NOT for a profit centre?

Accepted Answer

A) controllable margin 
B) asset utilization effectiveness 
C) revenues 
D) controllable costs 
A) controllable margin 
B) asset utilization effectiveness 
C) revenues 
D) controllable costs

Question 7

What is another name for an indirect fixed cost?

Accepted Answer

A) a traceable fixed cost 
B) a controllable fixed cost 
C) a segment fixed cost 
D) a common fixed cost 
A) a traceable fixed cost 
B) a controllable fixed cost 
C) a segment fixed cost 
D) a common fixed cost

Question 8

Which of the following will most likely result in a favourable controllable margin difference?

Accepted Answer

A) sales exceeding budget; costs under budget 
B) sales exceeding budget; costs over budget 
C) sales under budget; costs under budget 
D) sales under budget; costs over budget 
A) sales exceeding budget; costs under budget 
B) sales exceeding budget; costs over budget 
C) sales under budget; costs under budget 
D) sales under budget; costs over budget

Question 9

Cost centre managers are evaluated on the profitability of their centres.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) It is prepared when managers are unsure of activity levels. 
B) It projects budget data at a pre-planned level of activity. 
C) It is useful in controlling variable and fixed costs. 
D) It shows no differences between actual and budgeted amounts because it is prepared after the actual results are determined. 
A) It is prepared when managers are unsure of activity levels. 
B) It projects budget data at a pre-planned level of activity. 
C) It is useful in controlling variable and fixed costs. 
D) It shows no differences between actual and budgeted amounts because it is prepared after the actual results are determined.

Question 11

What is a segment?

Accepted Answer

A) a non-controllable cost 
B) an area of responsibility in decentralized operations 
C) another name for a cost centre 
D) a division which contains both controllable and non-controllable costs 
A) a non-controllable cost 
B) an area of responsibility in decentralized operations 
C) another name for a cost centre 
D) a division which contains both controllable and non-controllable costs

Question 12

A manager determined that certain costs were NOT responsive to changes in activity level.What are these costs?

Accepted Answer

A) mixed 
B) flexible 
C) variable 
D) fixed 
A) mixed 
B) flexible 
C) variable 
D) fixed

Question 13

What is the purpose of a departmental overhead cost report?

Accepted Answer

A) to control corporate labour costs 
B) to allocate uncontrollable costs 
C) to determine the cause of any misuse of costs 
D) to control overhead costs 
A) to control corporate labour costs 
B) to allocate uncontrollable costs 
C) to determine the cause of any misuse of costs 
D) to control overhead costs

Question 14

When is a static budget most appropriate in evaluating a manager's performance?

Accepted Answer

A) when the actual costs incurred equal the amounts in the budget 
B) when the actual activity is less than the master budget activity 
C) when the company performed at the same activity level as the static budget level 
D) The static budget is not appropriate for evaluating managers. 
A) when the actual costs incurred equal the amounts in the budget 
B) when the actual activity is less than the master budget activity 
C) when the company performed at the same activity level as the static budget level 
D) The static budget is not appropriate for evaluating managers.

Question 15

Direct fixed costs are synonymous with common costs.

Accepted Answer

A) True 
 B)False

Question 16

Which one of the following will increase return on investment?

Accepted Answer

A) Variable costs are increased. 
B) Sales are increased. 
C) Average operating assets are increased. 
D) Fixed costs are increased. 
A) Variable costs are increased. 
B) Sales are increased. 
C) Average operating assets are increased. 
D) Fixed costs are increased.

Question 17

Which statement is true concerning a cost centre?

Accepted Answer

A) It incurs costs and generates revenues. 
B) It only exists in companies in which costs exceed revenues. 
C) It is evaluated most effectively using ROI. 
D) It is usually a production or service department. 
A) It incurs costs and generates revenues. 
B) It only exists in companies in which costs exceed revenues. 
C) It is evaluated most effectively using ROI. 
D) It is usually a production or service department.

Question 18

Which statement is true about the activity index used in preparing the flexible budget?

Accepted Answer

A) It applies only to fixed manufacturing costs. 
B) It is the same for all departments of the company. 
C) It significantly influences the variable costs that are being budgeted. 
D) It is irrelevant to total costs. 
A) It applies only to fixed manufacturing costs. 
B) It is the same for all departments of the company. 
C) It significantly influences the variable costs that are being budgeted. 
D) It is irrelevant to total costs.

Question 19

What will you expect to find on a responsibility report for a profit centre?

Accepted Answer

A) only direct costs 
B) no indirect fixed costs 
C) all fixed costs-both controllable and non-controllable 
D) controllable margin 
A) only direct costs 
B) no indirect fixed costs 
C) all fixed costs-both controllable and non-controllable 
D) controllable margin

Question 20

What centres receive responsibility reports containing budgeted and actual controllable revenues and costs?

Accepted Answer

A) investment centres 
B) profit centres 
C) cost centres 
D) investment, profit, and cost centres 
A) investment centres 
B) profit centres 
C) cost centres 
D) investment, profit, and cost centres

Which one of the following is another name for the static budget?

What is the primary difference between a static budget and a flexible budget?

What is the preparation of reports for each level of responsibility in the company's organization chart called?

Nextel Communications uses management by exception.Which differences between planned and actual results will it investigate?

For which of the following is an investment centre manager responsible?

Which one of the following is a performance indicator for an investment centre, but NOT for a profit centre?

What is another name for an indirect fixed cost?

Which of the following will most likely result in a favourable controllable margin difference?

Cost centre managers are evaluated on the profitability of their centres.

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

What is a segment?

A manager determined that certain costs were NOT responsive to changes in activity level.What are these costs?

What is the purpose of a departmental overhead cost report?

When is a static budget most appropriate in evaluating a manager's performance?

Direct fixed costs are synonymous with common costs.

Which one of the following will increase return on investment?

Which statement is true concerning a cost centre?

Which statement is true about the activity index used in preparing the flexible budget?

What will you expect to find on a responsibility report for a profit centre?

What centres receive responsibility reports containing budgeted and actual controllable revenues and costs?

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 one of the following is another name for the static budget?

What is the primary difference between a static budget and a flexible budget?

What is the preparation of reports for each level of responsibility in the company's organization chart called?

Nextel Communications uses management by exception.Which differences between planned and actual results will it investigate?

For which of the following is an investment centre manager responsible?

Which one of the following is a performance indicator for an investment centre, but NOT for a profit centre?

What is another name for an indirect fixed cost?

Which of the following will most likely result in a favourable controllable margin difference?

Cost centre managers are evaluated on the profitability of their centres.

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

What is a segment?

A manager determined that certain costs were NOT responsive to changes in activity level.What are these costs?

What is the purpose of a departmental overhead cost report?

When is a static budget most appropriate in evaluating a manager's performance?

Direct fixed costs are synonymous with common costs.

Which one of the following will increase return on investment?

Which statement is true concerning a cost centre?

Which statement is true about the activity index used in preparing the flexible budget?

What will you expect to find on a responsibility report for a profit centre?

What centres receive responsibility reports containing budgeted and actual controllable revenues and costs?

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