Question 1

In computing ROI, land held for future use

Accepted Answer

A) will hurt the performance measurement of an investment center's manager. 
B) is important in evaluating the performance of a profit center manager. 
C) is included in the calculation of operating assets. 
D) is considered a nonoperating asset. 
A) will hurt the performance measurement of an investment center's manager. 
B) is important in evaluating the performance of a profit center manager. 
C) is included in the calculation of operating assets. 
D) is considered a nonoperating asset.

Question 2

Griffin Corp.is evaluating its Piquette division, an investment center.The division has a $60,000 controllable margin and $400,000 of sales.How much will Griffin's average operating assets be when its return on investment is 10%?

Accepted Answer

A) $600,000 
B) $660,000 
C) $400,000 
D) $340,000 
A) $600,000 
B) $660,000 
C) $400,000 
D) $340,000

Question 3

A company's planned activity level for next year is expected to be 100,000 machine hours.At this level of activity, the company budgeted the following manufacturing overhead costs: $\begin{array}{lrlr}
\text { Variable }&&\text { Fixed }\
\hline \text { Indirect materials } & \$ 120,000 & \text { Depreciation } & \$ 50,000 \
\text { Indirect labor } & 160,000 & \text { Taxes } & 10,000 \
\text { Factory supplies } & 20,000 & \text { Supervision } & 40,000
\end{array}$ A flexible budget prepared at the 90,000 machine hours level of activity would show total manufacturing overhead costs of

Accepted Answer

A) $270,000. 
B) $360,000. 
C) $370,000. 
D) $300,000. 
A) $270,000. 
B) $360,000. 
C) $370,000. 
D) $300,000.

Question 4

A flexible budget is prepared before the master budget.

Accepted Answer

A) True 
 B)False

Question 5

A measure frequently used to evaluate the performance of the manager of an investment center is

Accepted Answer

A) the amount of profit generated. 
B) the rate of return on funds invested in the center. 
C) the percentage increase in profit over the previous year. 
D) departmental gross profit. 
A) the amount of profit generated. 
B) the rate of return on funds invested in the center. 
C) the percentage increase in profit over the previous year. 
D) departmental gross profit.

Question 6

In developing a flexible budget within a relevant range of activity,

Accepted Answer

A) only fixed costs are included. 
B) it is necessary to relate variable cost data to the activity index chosen. 
C) it is necessary to prepare a budget at 1,000 unit increments. 
D) variable and fixed costs are combined and are reported as a total cost. 
A) only fixed costs are included. 
B) it is necessary to relate variable cost data to the activity index chosen. 
C) it is necessary to prepare a budget at 1,000 unit increments. 
D) variable and fixed costs are combined and are reported as a total cost.

Question 7

Shane Industries prepared a fixed budget of 60,000 direct labor hours, with estimated overhead costs of $300,000 for variable overhead and $90,000 for fixed overhead.Shane then prepared a flexible budget at 57,000 labor hours.How much is total overhead costs at this level of activity?

Accepted Answer

A) $285,000 
B) $375,000 
C) $370,500 
D) $390,000 
A) $285,000 
B) $375,000 
C) $370,500 
D) $390,000

Question 8

A cost center

Accepted Answer

A) only incurs costs and does not directly generate revenues. 
B) incurs costs and generates revenues. 
C) is a responsibility center of a company which incurs losses. 
D) is a responsibility center which generates profits and evaluates the investment cost of earning the profit. 
A) only incurs costs and does not directly generate revenues. 
B) incurs costs and generates revenues. 
C) is a responsibility center of a company which incurs losses. 
D) is a responsibility center which generates profits and evaluates the investment cost of earning the profit.

Question 9

A static budget is an effective means to evaluate a manager's ability to control costs, regardless of the actual activity level.

Accepted Answer

A) True 
 B)False

Question 10

Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets?

Accepted Answer

A) Direct materials cost 
B) Direct labor cost 
C) Variable manufacturing overhead 
D) Fixed manufacturing overhead 
A) Direct materials cost 
B) Direct labor cost 
C) Variable manufacturing overhead 
D) Fixed manufacturing overhead

Question 11

A manager of a cost center is evaluated mainly on

Accepted Answer

A) the profit that the center generates. 
B) his or her ability to control costs. 
C) the amount of investment it takes to support the cost center. 
D) the amount of revenue that can be generated. 
A) the profit that the center generates. 
B) his or her ability to control costs. 
C) the amount of investment it takes to support the cost center. 
D) the amount of revenue that can be generated.

Question 12

Kevin Jarvis Industries produced 192,000 units in 90,000 direct labor hours.Production for the period was estimated at 198,000 units and 99,000 direct labor hours.A flexible budget would compare budgeted costs and actual costs, respectively, at

Accepted Answer

A) 96,000 hours and 99,000 hours. 
B) 99,000 hours and 90,000 hours. 
C) 96,000 hours and 90,000 hours. 
D) 90,000 hours and 90,000 hours. 
A) 96,000 hours and 99,000 hours. 
B) 99,000 hours and 90,000 hours. 
C) 96,000 hours and 90,000 hours. 
D) 90,000 hours and 90,000 hours.

Question 13

In a responsibility accounting reporting system, as one moves up each level of responsibility in an organization, the responsibility reports become more summarized and show less detailed information.

Accepted Answer

A) True 
 B)False

Question 14

The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area is called

Accepted Answer

A) static reporting. 
B) flexible accounting. 
C) responsibility accounting. 
D) master budgeting. 
A) static reporting. 
B) flexible accounting. 
C) responsibility accounting. 
D) master budgeting.

Question 15

The best measure of the performance of the manager of a profit center is the

Accepted Answer

A) rate of return on investment. 
B) success in meeting budgeted goals for controllable costs. 
C) amount of controllable margin generated by the profit center. 
D) amount of contribution margin generated by the profit center. 
A) rate of return on investment. 
B) success in meeting budgeted goals for controllable costs. 
C) amount of controllable margin generated by the profit center. 
D) amount of contribution margin generated by the profit center.

Question 16

The current controllable margin for Henry Division is $93,000.Its current operating assets are $300,000.The division is considering purchasing equipment for $90,000 that will increase annual controllable margin by an estimated $15,000.If the equipment is purchased, what will happen to the return on investment for Henry Division?

Accepted Answer

A) An increase of 16.1% 
B) A decrease of 13.3% 
C) A decrease of 3.3% 
D) A decrease of 7.2% 
A) An increase of 16.1% 
B) A decrease of 13.3% 
C) A decrease of 3.3% 
D) A decrease of 7.2%

Question 17

Nikoto Steel Co.budgeted manufacturing costs for 50,000 tons of steel are: $\begin{array}{ll}
\text {Fixed manufacturing costs  }&\text {$ \$ 50,000 $ per month  }\
\text { Variable manufacturing costs}&\text { $ \$ 12.00 $ per ton of steel}\
\end{array}$
 Nikoto produced 40,000 tons of steel during March.How much is the flexible budget for total manufacturing costs for March?

Accepted Answer

A) $520,000 
B) $650,000 
C) $480,000 
D) $530,000 
A) $520,000 
B) $650,000 
C) $480,000 
D) $530,000

Question 18

More costs become controllable as one moves down to each lower level of managerial responsibility.

Accepted Answer

A) True 
 B)False

Question 19

On the basis of the budget reports,

Accepted Answer

A) management analyzes differences between actual and planned results. 
B) management may take corrective action. 
C) management may modify the future plans. 
D) All of these. 
A) management analyzes differences between actual and planned results. 
B) management may take corrective action. 
C) management may modify the future plans. 
D) All of these.

Question 20

Costs incurred indirectly and allocated to a responsibility level are considered to be

Accepted Answer

A) nonmaterial. 
B) mixed. 
C) controllable. 
D) noncontrollable. 
A) nonmaterial. 
B) mixed. 
C) controllable. 
D) noncontrollable.

In computing ROI, land held for future use

Griffin Corp.is evaluating its Piquette division, an investment center.The division has a $60,000 controllable margin and $400,000 of sales.How much will Griffin's average operating assets be when its return on investment is 10%?

A flexible budget is prepared before the master budget.

A measure frequently used to evaluate the performance of the manager of an investment center is

In developing a flexible budget within a relevant range of activity,

Shane Industries prepared a fixed budget of 60,000 direct labor hours, with estimated overhead costs of $300,000 for variable overhead and $90,000 for fixed overhead.Shane then prepared a flexible budget at 57,000 labor hours.How much is total overhead costs at this level of activity?

A cost center

A static budget is an effective means to evaluate a manager's ability to control costs, regardless of the actual activity level.

Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets?

A manager of a cost center is evaluated mainly on

Kevin Jarvis Industries produced 192,000 units in 90,000 direct labor hours.Production for the period was estimated at 198,000 units and 99,000 direct labor hours.A flexible budget would compare budgeted costs and actual costs, respectively, at

In a responsibility accounting reporting system, as one moves up each level of responsibility in an organization, the responsibility reports become more summarized and show less detailed information.

The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area is called

The best measure of the performance of the manager of a profit center is the

Nikoto Steel Co.budgeted manufacturing costs for 50,000 tons of steel are: Fixed manufacturing costs \ 50,000 per month Variable manufacturing costs \ 12.00 per ton of steel Nikoto produced 40,000 tons of steel during March.How much is the flexible budget for total manufacturing costs for March?

More costs become controllable as one moves down to each lower level of managerial responsibility.

On the basis of the budget reports,

Costs incurred indirectly and allocated to a responsibility level are considered to be

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

In computing ROI, land held for future use

Griffin Corp.is evaluating its Piquette division, an investment center.The division has a $60,000 controllable margin and $400,000 of sales.How much will Griffin's average operating assets be when its return on investment is 10%?

A flexible budget is prepared before the master budget.

A measure frequently used to evaluate the performance of the manager of an investment center is

In developing a flexible budget within a relevant range of activity,

Shane Industries prepared a fixed budget of 60,000 direct labor hours, with estimated overhead costs of $300,000 for variable overhead and $90,000 for fixed overhead.Shane then prepared a flexible budget at 57,000 labor hours.How much is total overhead costs at this level of activity?

A cost center

A static budget is an effective means to evaluate a manager's ability to control costs, regardless of the actual activity level.

Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets?

A manager of a cost center is evaluated mainly on

Kevin Jarvis Industries produced 192,000 units in 90,000 direct labor hours.Production for the period was estimated at 198,000 units and 99,000 direct labor hours.A flexible budget would compare budgeted costs and actual costs, respectively, at

In a responsibility accounting reporting system, as one moves up each level of responsibility in an organization, the responsibility reports become more summarized and show less detailed information.

The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area is called

The best measure of the performance of the manager of a profit center is the

Nikoto Steel Co.budgeted manufacturing costs for 50,000 tons of steel are: Fixed manufacturing costs \ 50,000 per month Variable manufacturing costs \ 12.00 per ton of steel Nikoto produced 40,000 tons of steel during March.How much is the flexible budget for total manufacturing costs for March?

More costs become controllable as one moves down to each lower level of managerial responsibility.

On the basis of the budget reports,

Costs incurred indirectly and allocated to a responsibility level are considered to be

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