Question 1

A static budget is appropriate for

Accepted Answer

A) variable overhead costs. 
B) direct materials costs. 
C) fixed overhead costs. 
D) None of these. 
A) variable overhead costs. 
B) direct materials costs. 
C) fixed overhead costs. 
D) None of these. C

Question 2

Betsy Union is the Pika Division manager and her performance is evaluated by executive management based on Division ROI.The current controllable margin for Pika Division is $46,000.Its current operating assets total $210,000.The division is considering purchasing equipment for $40,000 that will increase sales by an estimated $10,000, with annual depreciation of $10,000.If the equipment is purchased, what will happen to the return on investment for the division?

Accepted Answer

A) An increase of 0.5% 
B) A decrease of 0.5% 
C) A decrease of 3.5% 
D) It will remain unchanged. 
A) An increase of 0.5% 
B) A decrease of 0.5% 
C) A decrease of 3.5% 
D) It will remain unchanged. C

Question 3

A static budget is not appropriate in evaluating a manager's effectiveness if a company has

Accepted Answer

A) substantial fixed costs. 
B) substantial variable costs. 
C) planned activity levels that match actual activity levels. 
D) no variable costs. 
A) substantial fixed costs. 
B) substantial variable costs. 
C) planned activity levels that match actual activity levels. 
D) no variable costs. B

Question 4

Given below is an excerpt from a management performance report: $\begin{array}{llll}&\text { Budget }&\text { Actual }&\text { Difference }\
\text { Contribution margin } & \$ 1,000,000 & \$ 1,050,000 & \$ 50,000 \
\text { Controllable fixed costs } & \$ 500,000 & \$ 450,000 & \$ 50,000
\end{array}$ The manager's overall performance

Accepted Answer

A) is 20% below expectations. 
B) is 20% above expectations. 
C) is equal to expectations. 
D) cannot be determined from information given. 
A) is 20% below expectations. 
B) is 20% above expectations. 
C) is equal to expectations. 
D) cannot be determined from information given.

Question 5

Which of the following is not a correct match?
1.	Incurs costs
2.	Generates revenue
3.	Controls investment funds

Accepted Answer

A) Investment Center 1, 2, 3 
B) Cost Center 1 
C) Profit Center 1, 2, 3 
D) All are correct matches. 
A) Investment Center 1, 2, 3 
B) Cost Center 1 
C) Profit Center 1, 2, 3 
D) All are correct matches.

Question 6

Most direct fixed costs are not controllable by the profit center manager.

Accepted Answer

A) True 
 B)False

Question 7

In the formula for ROI, idle plant assets are

Accepted Answer

A) included in the calculation of controllable margin. 
B) included in the calculation of operating assets. 
C) excluded in the calculation of operating assets. 
D) excluded from total assets. 
A) included in the calculation of controllable margin. 
B) included in the calculation of operating assets. 
C) excluded in the calculation of operating assets. 
D) excluded from total assets.

Question 8

Pippen Co.recorded operating data for its shoe division for the year.The company's desired return is 5%. $$\begin{array} { l r } 
\text { Sales } & \$ 1,000,000 \
\text { Contribution margin } & 200,000 \
\text { Total direct fixed costs } & 120,000 \
\text { Average total operating assets } & 400,000
\end{array}$$ Which one of the following reflects the controllable margin for the year?

Accepted Answer

A) 20% 
B) 50% 
C) $60,000 
D) $80,000 
A) 20% 
B) 50% 
C) $60,000 
D) $80,000

Question 9

The master budget of Windy Co.shows that the planned activity level for next year is expected to be 50,000 machine hours.At this level of activity, the following manufacturing overhead costs are expected: $$\begin{array} { l r } 
\text { Indirect labor } & \$ 720,000 \
\text { Machine supplies } & 180,000 \
\text { Indirect materials } & 210,000 \
\text { Depreciation on factory building } & 150,000 \
\text { Total manufacturing overhead } & \$ 1260,000
\end{array}$$ A flexible budget for a level of activity of 60,000 machine hours would show total manufacturing overhead costs of

Accepted Answer

A) $1,482,000. 
B) $1,260,000. 
C) $1,512,000. 
D) $1,362,000. 
A) $1,482,000. 
B) $1,260,000. 
C) $1,512,000. 
D) $1,362,000.

Question 10

At 18,000 direct labor hours, the flexible budget for indirect materials is $36,000.If $37,400 are incurred at 18,400 direct labor hours, the flexible budget report should show the following difference for indirect materials:

Accepted Answer

A) $1,400 unfavorable. 
B) $1,400 favorable. 
C) $600 favorable. 
D) $600 unfavorable. 
A) $1,400 unfavorable. 
B) $1,400 favorable. 
C) $600 favorable. 
D) $600 unfavorable.

Question 11

Budget reports should be prepared

Accepted Answer

A) daily. 
B) monthly. 
C) weekly. 
D) as frequently as needed. 
A) daily. 
B) monthly. 
C) weekly. 
D) as frequently as needed.

Question 12

The manager of an investment center can improve ROI by reducing average operating assets.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not a true statement?

Accepted Answer

A) All costs are controllable at some level within a company. 
B) Responsibility accounting applies to both profit and not-for-profit entities. 
C) Fewer costs are controllable as one moves up to each higher level of managerial responsibility. 
D) The term segment is sometimes used to identify areas of responsibility in decentralized operations. 
A) All costs are controllable at some level within a company. 
B) Responsibility accounting applies to both profit and not-for-profit entities. 
C) Fewer costs are controllable as one moves up to each higher level of managerial responsibility. 
D) The term segment is sometimes used to identify areas of responsibility in decentralized operations.

Question 14

The activity index used in preparing the flexible budget

Accepted Answer

A) is prescribed by generally accepted accounting principles. 
B) is only applicable to fixed manufacturing costs. 
C) is the same for all departments. 
D) should significantly influence the costs that are being budgeted. 
A) is prescribed by generally accepted accounting principles. 
B) is only applicable to fixed manufacturing costs. 
C) is the same for all departments. 
D) should significantly influence the costs that are being budgeted.

Question 15

The maintenance department of a manufacturing company is a(n)

Accepted Answer

A) segment. 
B) profit center. 
C) cost center. 
D) investment center. 
A) segment. 
B) profit center. 
C) cost center. 
D) investment center.

Question 16

A distinguishing characteristic of an investment center is that

Accepted Answer

A) revenues are generated by selling and buying stocks and bonds. 
B) interest revenue is the major source of revenues. 
C) the profitability of the center is related to the funds invested in the center. 
D) it is a responsibility center which only generates revenues. 
A) revenues are generated by selling and buying stocks and bonds. 
B) interest revenue is the major source of revenues. 
C) the profitability of the center is related to the funds invested in the center. 
D) it is a responsibility center which only generates revenues.

Question 17

A responsibility report for a profit center will

Accepted Answer

A) not show controllable fixed costs. 
B) not show indirect fixed costs. 
C) show noncontrollable fixed costs. 
D) not show cumulative year-to-date results. 
A) not show controllable fixed costs. 
B) not show indirect fixed costs. 
C) show noncontrollable fixed costs. 
D) not show cumulative year-to-date results.

Question 18

Which of the following are financial measures of performance?
1.	Controllable margin
2.	Product quality
3.	Labor productivity

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 1 and 3 
A) 1 
B) 2 
C) 3 
D) 1 and 3

Question 19

Budget reports comparing actual results with planned objectives should be prepared only once a year.

Accepted Answer

A) True 
 B)False

Question 20

A static budget

Accepted Answer

A) should not be prepared in a company. 
B) is useful in evaluating a manager's performance by comparing actual variable costs and planned variable costs. 
C) shows planned results at the original budgeted activity level. 
D) is changed only if the actual level of activity is different than originally budgeted. 
A) should not be prepared in a company. 
B) is useful in evaluating a manager's performance by comparing actual variable costs and planned variable costs. 
C) shows planned results at the original budgeted activity level. 
D) is changed only if the actual level of activity is different than originally budgeted.

A static budget is appropriate for

A static budget is not appropriate in evaluating a manager's effectiveness if a company has

Given below is an excerpt from a management performance report: Budget Actual Difference Contribution margin \ 1,000,000 \ 1,050,000 \ 50,000 Controllable fixed costs \ 500,000 \ 450,000 \ 50,000 The manager's overall performance

Which of the following is not a correct match? 1. Incurs costs 2. Generates revenue 3. Controls investment funds

Most direct fixed costs are not controllable by the profit center manager.

In the formula for ROI, idle plant assets are

Pippen Co.recorded operating data for its shoe division for the year.The company's desired return is 5%. Sales \ 1,000,000 Contribution margin 200,000 Total direct fixed costs 120,000 Average total operating assets 400,000 Which one of the following reflects the controllable margin for the year?

At 18,000 direct labor hours, the flexible budget for indirect materials is $36,000.If $37,400 are incurred at 18,400 direct labor hours, the flexible budget report should show the following difference for indirect materials:

Budget reports should be prepared

The manager of an investment center can improve ROI by reducing average operating assets.

Which of the following is not a true statement?

The activity index used in preparing the flexible budget

The maintenance department of a manufacturing company is a(n)

A distinguishing characteristic of an investment center is that

A responsibility report for a profit center will

Which of the following are financial measures of performance? 1. Controllable margin 2. Product quality 3. Labor productivity

Budget reports comparing actual results with planned objectives should be prepared only once a year.

A static budget

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money and Present Value Calculations

Filters

Exam 10: Reporting and Analyzing Liabilities

A static budget is appropriate for

A static budget is not appropriate in evaluating a manager's effectiveness if a company has

Given below is an excerpt from a management performance report: Budget Actual Difference Contribution margin \ 1,000,000 \ 1,050,000 \ 50,000 Controllable fixed costs \ 500,000 \ 450,000 \ 50,000 The manager's overall performance

Which of the following is not a correct match? 1. Incurs costs 2. Generates revenue 3. Controls investment funds

Most direct fixed costs are not controllable by the profit center manager.

In the formula for ROI, idle plant assets are

Pippen Co.recorded operating data for its shoe division for the year.The company's desired return is 5%. Sales \ 1,000,000 Contribution margin 200,000 Total direct fixed costs 120,000 Average total operating assets 400,000 Which one of the following reflects the controllable margin for the year?

At 18,000 direct labor hours, the flexible budget for indirect materials is $36,000.If $37,400 are incurred at 18,400 direct labor hours, the flexible budget report should show the following difference for indirect materials:

Budget reports should be prepared

The manager of an investment center can improve ROI by reducing average operating assets.

Which of the following is not a true statement?

The activity index used in preparing the flexible budget

The maintenance department of a manufacturing company is a(n)

A distinguishing characteristic of an investment center is that

A responsibility report for a profit center will

Which of the following are financial measures of performance? 1. Controllable margin 2. Product quality 3. Labor productivity

Budget reports comparing actual results with planned objectives should be prepared only once a year.

A static budget

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money and Present Value Calculations

Filters