Question 1

Controllable costs for responsibility accounting purposes are those costs that are directly influenced by

Accepted Answer

A) a given manager within a given period of time. 
B) a change in activity. 
C) production volume. 
D) sales volume. 
A) a given manager within a given period of time. 
B) a change in activity. 
C) production volume. 
D) sales volume.

Question 2

Management by exception

Accepted Answer

A) is most effective at top levels of management. 
B) can be implemented at each level of responsibility within an organization. 
C) can only be applied when comparing actual results with the master budget. 
D) is the opposite of goal congruence. 
A) is most effective at top levels of management. 
B) can be implemented at each level of responsibility within an organization. 
C) can only be applied when comparing actual results with the master budget. 
D) is the opposite of goal congruence.

Question 3

Under management by exception, which differences between planned and actual results should be investigated?

Accepted Answer

A) Material and noncontrollable 
B) Controllable and noncontrollable 
C) Material and controllable 
D) All differences should be investigated 
A) Material and noncontrollable 
B) Controllable and noncontrollable 
C) Material and controllable 
D) All differences should be investigated

Question 4

All of the following statements are correct about controllable costs except

Accepted Answer

A) all costs are controllable at some level of responsibility within a company. 
B) all costs are controllable by top management. 
C) fewer costs are controllable as one moves up to each higher level of managerial responsibility. 
D) costs incurred directly by a level of responsibility are controllable at that level. 
A) all costs are controllable at some level of responsibility within a company. 
B) all costs are controllable by top management. 
C) fewer costs are controllable as one moves up to each higher level of managerial responsibility. 
D) costs incurred directly by a level of responsibility are controllable at that level.

Question 5

Bogey Co.recorded operating data for its Cheap division for the year.Bogey requires its return to be 10%. $\begin{array}{lr}
\text { Sales } & \$ 1,400,000 \
\text { Controllable margin } & 160,000 \
\text { Total average assets } & 4,000,000 \
\text { Fixed costs } & 100,000
\end{array}$ What is the ROI for the year?

Accepted Answer

A) 4% 
B) 35% 
C) 6% 
D) 1.5% 
A) 4% 
B) 35% 
C) 6% 
D) 1.5%

Question 6

The denominator in the formula for return on investment calculation is

Accepted Answer

A) investment center controllable margin. 
B) dependent on the specific type of profit center. 
C) investment center average operating assets. 
D) sales for the period. 
A) investment center controllable margin. 
B) dependent on the specific type of profit center. 
C) investment center average operating assets. 
D) sales for the period.

Question 7

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: $\begin{array}{lrlr}
\text { Variable }&&\text { Fixed }\
\hline \text { Indirect materials } & \$ 140,000 & \text { Depreciation } & \$ 60,000 \
\text { Indirect labor } & 200,000 & \text { Taxes } & 10,000 \
\text { Factory supplies } & 20,000 & \text { Supervision } & 50,000
\end{array}$ A flexible budget prepared at the 80,000 machine hours level of activity would show total manufacturing overhead costs of

Accepted Answer

A) $288,000. 
B) $360,000. 
C) $384,000. 
D) $408,000. 
A) $288,000. 
B) $360,000. 
C) $384,000. 
D) $408,000.

Question 8

Kathleen Corp.produced 320,000 units in 150,000 direct labor hours.Production for the period was estimated at 330,000 units and 165,000 direct labor hours.A flexible budget would compare budgeted costs and actual costs, respectively, at

Accepted Answer

A) 160,000 hours and 165,000 hours. 
B) 165,000 hours and 150,000 hours. 
C) 160,000 hours and 150,000 hours. 
D) 150,000 hours and 150,000 hours. 
A) 160,000 hours and 165,000 hours. 
B) 165,000 hours and 150,000 hours. 
C) 160,000 hours and 150,000 hours. 
D) 150,000 hours and 150,000 hours.

Question 9

A responsibility report should

Accepted Answer

A) be prepared in accordance with generally accepted accounting principles. 
B) show only those costs that a manager can control. 
C) only show variable costs. 
D) only be prepared at the highest level of managerial responsibility. 
A) be prepared in accordance with generally accepted accounting principles. 
B) show only those costs that a manager can control. 
C) only show variable costs. 
D) only be prepared at the highest level of managerial responsibility.

Question 10

Controllable margin is most useful for

Accepted Answer

A) external financial reporting. 
B) preparing the master budget. 
C) performance evaluation of profit centers. 
D) break-even analysis. 
A) external financial reporting. 
B) preparing the master budget. 
C) performance evaluation of profit centers. 
D) break-even analysis.

Question 11

Another name for the static budget is

Accepted Answer

A) master budget. 
B) overhead budget. 
C) permanent budget. 
D) flexible budget. 
A) master budget. 
B) overhead budget. 
C) permanent budget. 
D) flexible budget.

Question 12

Benet Division of United Refinery Company's operating results include: controllable margin, $200,000; sales $2,200,000; and operating assets, $800,000.The Benet Division's ROI is 25%.Management is considering a project with sales of $100,000, variable expenses of $60,000, fixed costs of $40,000; and an asset investment of $150,000.Should management accept this new project?

Accepted Answer

A) No, since ROI will be lowered. 
B) Yes, since ROI will increase. 
C) Yes, since additional sales always mean more customers. 
D) No, since a loss will be incurred. 
A) No, since ROI will be lowered. 
B) Yes, since ROI will increase. 
C) Yes, since additional sales always mean more customers. 
D) No, since a loss will be incurred.

Question 13

A cost is considered controllable at a given level of managerial responsibility if

Accepted Answer

A) the manager has the power to incur the cost within a given time period. 
B) the cost has not exceeded the budget amount in the master budget. 
C) it is a variable cost, but it is uncontrollable if it is a fixed cost. 
D) it changes in magnitude in a flexible budget. 
A) the manager has the power to incur the cost within a given time period. 
B) the cost has not exceeded the budget amount in the master budget. 
C) it is a variable cost, but it is uncontrollable if it is a fixed cost. 
D) it changes in magnitude in a flexible budget.

Question 14

Monte, Inc.recorded operating data for its Sandtrap division for the year.Monte requires its return to be 9%. $$\begin{array} { l r } 
\text { Sales } & \$ 1,000,000 \
\text { Controllable margin } & 180,000 \
\text { Total average assets } & 600,000 \
\text { Fixed costs } & 60,000
\end{array}$$ How much is ROI for the year?

Accepted Answer

A) 10% 
B) 17% 
C) 20% 
D) 30% 
A) 10% 
B) 17% 
C) 20% 
D) 30%

Question 15

In the Goblette Manufacturing Company, indirect labor is budgeted for $108,000 and factory supervision is budgeted for $36,000 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) $144,000. 
B) $162,000. 
C) $157,500. 
D) $148,500. 
A) $144,000. 
B) $162,000. 
C) $157,500. 
D) $148,500.

Question 16

The purpose of the sales budget report is to

Accepted Answer

A) control selling expenses. 
B) determine whether income objectives are being met. 
C) determine whether sales goals are being met. 
D) control sales commissions. 
A) control selling expenses. 
B) determine whether income objectives are being met. 
C) determine whether sales goals are being met. 
D) control sales commissions.

Question 17

If controllable margin is $300,000 and the average investment center operating assets are $2,000,000, the return on investment is

Accepted Answer

A) .67%. 
B) 6.66%. 
C) 20%. 
D) 15%. 
A) .67%. 
B) 6.66%. 
C) 20%. 
D) 15%.

Question 18

Rhein Manufacturing recorded operating data for its auto accessories division for the year. $$\begin{array} { l r } 
\text { Sales } & \$ 750,000 \
\text { Contribution margin } & 150,000 \
\text { Total direct fixed costs } & 90,000 \
\text { Average total operating assets } & 400,000
\end{array}$$ 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) 45.0% 
B) 22.5% 
C) 15.0% 
D) 12.0% 
A) 45.0% 
B) 22.5% 
C) 15.0% 
D) 12.0%

Question 19

The Fulmar Division of Jayne Manufacturing had an ROI of 25% when sales were $3 million and controllable margin was $600,000.What were the average operating assets?

Accepted Answer

A) $150,000 
B) $750,000 
C) $2,400,000 
D) $12,000 
A) $150,000 
B) $750,000 
C) $2,400,000 
D) $12,000

Question 20

Flexible budgets are widely used in production and service departments.

Accepted Answer

A) True 
 B)False

Controllable costs for responsibility accounting purposes are those costs that are directly influenced by

Management by exception

Under management by exception, which differences between planned and actual results should be investigated?

All of the following statements are correct about controllable costs except

Bogey Co.recorded operating data for its Cheap division for the year.Bogey requires its return to be 10%. Sales \ 1,400,000 Controllable margin 160,000 Total average assets 4,000,000 Fixed costs 100,000 What is the ROI for the year?

The denominator in the formula for return on investment calculation is

Kathleen Corp.produced 320,000 units in 150,000 direct labor hours.Production for the period was estimated at 330,000 units and 165,000 direct labor hours.A flexible budget would compare budgeted costs and actual costs, respectively, at

A responsibility report should

Controllable margin is most useful for

Another name for the static budget is

A cost is considered controllable at a given level of managerial responsibility if

Monte, Inc.recorded operating data for its Sandtrap division for the year.Monte requires its return to be 9%. Sales \ 1,000,000 Controllable margin 180,000 Total average assets 600,000 Fixed costs 60,000 How much is ROI for the year?

In the Goblette Manufacturing Company, indirect labor is budgeted for $108,000 and factory supervision is budgeted for $36,000 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 purpose of the sales budget report is to

If controllable margin is $300,000 and the average investment center operating assets are $2,000,000, the return on investment is

The Fulmar Division of Jayne Manufacturing had an ROI of 25% when sales were $3 million and controllable margin was $600,000.What were the average operating assets?

Flexible budgets are widely used in production and service departments.

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

Controllable costs for responsibility accounting purposes are those costs that are directly influenced by

Management by exception

Under management by exception, which differences between planned and actual results should be investigated?

All of the following statements are correct about controllable costs except

Bogey Co.recorded operating data for its Cheap division for the year.Bogey requires its return to be 10%. Sales \ 1,400,000 Controllable margin 160,000 Total average assets 4,000,000 Fixed costs 100,000 What is the ROI for the year?

The denominator in the formula for return on investment calculation is

Kathleen Corp.produced 320,000 units in 150,000 direct labor hours.Production for the period was estimated at 330,000 units and 165,000 direct labor hours.A flexible budget would compare budgeted costs and actual costs, respectively, at

A responsibility report should

Controllable margin is most useful for

Another name for the static budget is

A cost is considered controllable at a given level of managerial responsibility if

Monte, Inc.recorded operating data for its Sandtrap division for the year.Monte requires its return to be 9%. Sales \ 1,000,000 Controllable margin 180,000 Total average assets 600,000 Fixed costs 60,000 How much is ROI for the year?

In the Goblette Manufacturing Company, indirect labor is budgeted for $108,000 and factory supervision is budgeted for $36,000 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 purpose of the sales budget report is to

If controllable margin is $300,000 and the average investment center operating assets are $2,000,000, the return on investment is

The Fulmar Division of Jayne Manufacturing had an ROI of 25% when sales were $3 million and controllable margin was $600,000.What were the average operating assets?

Flexible budgets are widely used in production and service departments.

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