Question 1

A static budget report is appropriate for

Accepted Answer

A) fixed manufacturing costs. 
B) fixed selling and administrative expenses. 
C) variable selling and administrative expenses. 
D) both fixed manufacturing costs and fixed selling and administrative expenses. 
A) fixed manufacturing costs. 
B) fixed selling and administrative expenses. 
C) variable selling and administrative expenses. 
D) both fixed manufacturing costs and fixed selling and administrative expenses.

Question 2

To develop the flexible budget, management takes all of the following steps except identify the

Accepted Answer

A) activity index and the relevant range of activity. 
B) variable costs and determine the budgeted variable cost per unit. 
C) fixed costs and determine the budgeted fixed cost per unit. 
D) All of these options are steps in developing the flexible budget. 
A) activity index and the relevant range of activity. 
B) variable costs and determine the budgeted variable cost per unit. 
C) fixed costs and determine the budgeted fixed cost per unit. 
D) All of these options are steps in developing the flexible budget.

Question 3

A cost center incurs costs and generates revenues and cost center managers are evaluated on the profitability of their centers.

Accepted Answer

A) True 
 B)False

Question 4

As one moves up to each higher level of managerial responsibility,

Accepted Answer

A) fewer costs are controllable. 
B) the responsibility for cost incurrence diminishes. 
C) a greater number of costs are controllable. 
D) performance evaluation becomes less important. 
A) fewer costs are controllable. 
B) the responsibility for cost incurrence diminishes. 
C) a greater number of costs are controllable. 
D) performance evaluation becomes less important.

Question 5

A profit center is

Accepted Answer

A) a responsibility center that always reports a profit. 
B) a responsibility center that incurs costs and generates revenues. 
C) evaluated by the rate of return earned on the investment allocated to the center. 
D) referred to as a loss center when operations do not meet the company's objectives. 
A) a responsibility center that always reports a profit. 
B) a responsibility center that incurs costs and generates revenues. 
C) evaluated by the rate of return earned on the investment allocated to the center. 
D) referred to as a loss center when operations do not meet the company's objectives.

Question 6

Which of the following is not an indirect fixed cost?

Accepted Answer

A) Company president's salary 
B) Depreciation on the company building housing several profit centers 
C) Company personnel department costs 
D) Profit center supervisory salaries 
A) Company president's salary 
B) Depreciation on the company building housing several profit centers 
C) Company personnel department costs 
D) Profit center supervisory salaries

Question 7

A flexible budget

Accepted Answer

A) is prepared when management cannot agree on objectives for the company. 
B) projects budget data for various levels of activity. 
C) is only useful in controlling fixed costs. 
D) cannot be used for evaluation purposes because budgeted data are adjusted to reflect actual results. 
A) is prepared when management cannot agree on objectives for the company. 
B) projects budget data for various levels of activity. 
C) is only useful in controlling fixed costs. 
D) cannot be used for evaluation purposes because budgeted data are adjusted to reflect actual results.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Naples, Inc.recorded operating data for its shoe division for the year. $$\begin{array} { l r } 
\text { Sales } & \$ 750,000 \
\text { Contribution margin } & 135,000 \
\text { Total fixed costs } & 90,000 \
\text { Average total operating assets } & 300,000
\end{array}$$ How much is ROI for the year if management is able to identify a way to improve the contribution margin by $30,000, assuming fixed costs are held constant?

Accepted Answer

A) 25% 
B) 18% 
C) 45% 
D) 12% 
A) 25% 
B) 18% 
C) 45% 
D) 12%

Question 10

Which statement is true?

Accepted Answer

A) An investment center is responsible for revenues and expenses, as well as earning a return on assets. 
B) An investment center is only responsible for its investments. 
C) An investment center is only responsible for revenues and expenses. 
D) A profit center is evaluated using contribution margin, while an investment center is evaluated using ROI. 
A) An investment center is responsible for revenues and expenses, as well as earning a return on assets. 
B) An investment center is only responsible for its investments. 
C) An investment center is only responsible for revenues and expenses. 
D) A profit center is evaluated using contribution margin, while an investment center is evaluated using ROI.

Question 11

Stone Industries uses flexible budgets.At normal capacity of 16,000 units, budgeted manufacturing overhead is: $48,000 variable and $270,000 fixed.If Stone had actual overhead costs of $321,000 for 18,000 units produced, what is the difference between actual and budgeted costs?

Accepted Answer

A) $3,000 unfavorable 
B) $3,000 favorable 
C) $9,000 unfavorable 
D) $12,000 favorable 
A) $3,000 unfavorable 
B) $3,000 favorable 
C) $9,000 unfavorable 
D) $12,000 favorable

Question 12

The linens department of a large department store is

Accepted Answer

A) not a responsibility center. 
B) a profit center. 
C) a cost center. 
D) an investment center. 
A) not a responsibility center. 
B) a profit center. 
C) a cost center. 
D) an investment center.

Question 13

In the Dichter Co., indirect labor is budgeted for $72,000 and factory supervision is budgeted for $24,000 at normal capacity of 160,000 direct labor hours.If 180,000 direct labor hours are worked, flexible budget total for these costs is

Accepted Answer

A) $96,000. 
B) $108,000. 
C) $105,000. 
D) $99,000. 
A) $96,000. 
B) $108,000. 
C) $105,000. 
D) $99,000.

Question 14

The denominator in the formula for calculating the return on investment includes operating and nonoperating assets.

Accepted Answer

A) True 
 B)False

Question 15

A static budget is most useful for evaluating a manager's performance in controlling variable costs.

Accepted Answer

A) True 
 B)False

Question 16

A distinction should be made between controllable and noncontrollable costs when reporting information under responsibility accounting.

Accepted Answer

A) True 
 B)False

Question 17

The flexible budget

Accepted Answer

A) is prepared before the master budget. 
B) is relevant both within and outside the relevant range. 
C) eliminates the need for a master budget. 
D) is a series of static budgets at different levels of activity. 
A) is prepared before the master budget. 
B) is relevant both within and outside the relevant range. 
C) eliminates the need for a master budget. 
D) is a series of static budgets at different levels of activity.

Question 18

Chambers, Inc.uses flexible budgets.At normal capacity of 16,000 units, budgeted manufacturing overhead is: $64,000 variable and $180,000 fixed.If Chambers had actual overhead costs of $250,000 for 18,000 units produced, what is the difference between actual and budgeted costs?

Accepted Answer

A) $2,000 unfavorable. 
B) $2,000 favorable. 
C) $6,000 unfavorable. 
D) $8,000 favorable. 
A) $2,000 unfavorable. 
B) $2,000 favorable. 
C) $6,000 unfavorable. 
D) $8,000 favorable.

Question 19

If an investment center has generated a controllable margin of $150,000 and sales of $600,000, what is the return on investment for the investment center if average operating assets were $1,000,000 during the period?

Accepted Answer

A) 15% 
B) 25% 
C) 45% 
D) 60% 
A) 15% 
B) 25% 
C) 45% 
D) 60%

Question 20

A static budget is usually appropriate in evaluating a manager's effectiveness in controlling

Accepted Answer

A) fixed manufacturing costs and fixed selling and administrative expenses. 
B) variable manufacturing costs and variable selling and administrative expenses. 
C) fixed manufacturing costs and variable selling and administrative expenses. 
D) variable manufacturing costs and fixed selling and administrative expenses. 
A) fixed manufacturing costs and fixed selling and administrative expenses. 
B) variable manufacturing costs and variable selling and administrative expenses. 
C) fixed manufacturing costs and variable selling and administrative expenses. 
D) variable manufacturing costs and fixed selling and administrative expenses.

A static budget report is appropriate for

To develop the flexible budget, management takes all of the following steps except identify the

A cost center incurs costs and generates revenues and cost center managers are evaluated on the profitability of their centers.

As one moves up to each higher level of managerial responsibility,

A profit center is

Which of the following is not an indirect fixed cost?

A flexible budget

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

Which statement is true?

Stone Industries uses flexible budgets.At normal capacity of 16,000 units, budgeted manufacturing overhead is: $48,000 variable and $270,000 fixed.If Stone had actual overhead costs of $321,000 for 18,000 units produced, what is the difference between actual and budgeted costs?

The linens department of a large department store is

In the Dichter Co., indirect labor is budgeted for $72,000 and factory supervision is budgeted for $24,000 at normal capacity of 160,000 direct labor hours.If 180,000 direct labor hours are worked, flexible budget total for these costs is

The denominator in the formula for calculating the return on investment includes operating and nonoperating assets.

A static budget is most useful for evaluating a manager's performance in controlling variable costs.

A distinction should be made between controllable and noncontrollable costs when reporting information under responsibility accounting.

The flexible budget

Chambers, Inc.uses flexible budgets.At normal capacity of 16,000 units, budgeted manufacturing overhead is: $64,000 variable and $180,000 fixed.If Chambers had actual overhead costs of $250,000 for 18,000 units produced, what is the difference between actual and budgeted costs?

If an investment center has generated a controllable margin of $150,000 and sales of $600,000, what is the return on investment for the investment center if average operating assets were $1,000,000 during the period?

A static budget is usually appropriate in evaluating a manager's effectiveness in controlling

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

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Exam 10: Reporting and Analyzing Liabilities

A static budget report is appropriate for

To develop the flexible budget, management takes all of the following steps except identify the

A cost center incurs costs and generates revenues and cost center managers are evaluated on the profitability of their centers.

As one moves up to each higher level of managerial responsibility,

A profit center is

Which of the following is not an indirect fixed cost?

A flexible budget

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

Which statement is true?

Stone Industries uses flexible budgets.At normal capacity of 16,000 units, budgeted manufacturing overhead is: $48,000 variable and $270,000 fixed.If Stone had actual overhead costs of $321,000 for 18,000 units produced, what is the difference between actual and budgeted costs?

The linens department of a large department store is

In the Dichter Co., indirect labor is budgeted for $72,000 and factory supervision is budgeted for $24,000 at normal capacity of 160,000 direct labor hours.If 180,000 direct labor hours are worked, flexible budget total for these costs is

The denominator in the formula for calculating the return on investment includes operating and nonoperating assets.

A static budget is most useful for evaluating a manager's performance in controlling variable costs.

A distinction should be made between controllable and noncontrollable costs when reporting information under responsibility accounting.

The flexible budget

Chambers, Inc.uses flexible budgets.At normal capacity of 16,000 units, budgeted manufacturing overhead is: $64,000 variable and $180,000 fixed.If Chambers had actual overhead costs of $250,000 for 18,000 units produced, what is the difference between actual and budgeted costs?

If an investment center has generated a controllable margin of $150,000 and sales of $600,000, what is the return on investment for the investment center if average operating assets were $1,000,000 during the period?

A static budget is usually appropriate in evaluating a manager's effectiveness in controlling

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