Question 1

Certain budget reports are prepared monthly, whereas others are prepared more frequently depending on the activities being monitored.

Accepted Answer

A) True 
 B)False

Question 2

In the performance report for cost centers,

Accepted Answer

A) controllable and noncontrollable costs are reported. 
B) fixed costs are not reported. 
C) no distinction is made between fixed and variable costs. 
D) only materials and controllable costs are reported. 
A) controllable and noncontrollable costs are reported. 
B) fixed costs are not reported. 
C) no distinction is made between fixed and variable costs. 
D) only materials and controllable costs are reported.

Question 3

Las Sendas, Inc.had average operating assets of $4,000,000 and sales of $2,000,000 in 2013.If the controllable margin was $600,000, the ROI was

Accepted Answer

A) 60% 
B) 50% 
C) 30% 
D) 15% 
A) 60% 
B) 50% 
C) 30% 
D) 15%

Question 4

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: $\begin{array}{lrlr}
\text { Variable }&&\text { Fixed }\
\hline \text { Indirect materials } & \$ 90,000 & \text { Depreciation } & \$ 37,500 \
\text { Indirect labor } & 120,000 & \text { Taxes } & 7,500 \
\text { Factory supplies } & 15,000 & \text { Supervision } & 30,000
\end{array}$ A flexible budget prepared at the 90,000 machine hours level of activity would show total manufacturing overhead costs of

Accepted Answer

A) $202,500. 
B) $270,000. 
C) $277,500. 
D) $225,000. 
A) $202,500. 
B) $270,000. 
C) $277,500. 
D) $225,000.

Question 5

A static budget is appropriate in evaluating a manager's performance if

Accepted Answer

A) actual activity closely approximates the master budget activity. 
B) actual activity is less than the master budget activity. 
C) the company prepares reports on an annual basis. 
D) the company is a not-for-profit organization. 
A) actual activity closely approximates the master budget activity. 
B) actual activity is less than the master budget activity. 
C) the company prepares reports on an annual basis. 
D) the company is a not-for-profit organization.

Question 6

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 7

The selection of levels of activity to depict a flexible budget
1.	will be within the relevant range.
2.	is largely a matter of expediency.
3.	is governed by generally accepted accounting principles.

Accepted Answer

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

Question 8

Assume that actual sales results exceed the planned results for the second quarter.This favorable difference is greater than the unfavorable difference reported for the first quarter sales.Which of the following statements about the sales budget report on June 30 is true?

Accepted Answer

A) The year-to-date results will show a favorable difference. 
B) The year-to-date results will show an unfavorable difference. 
C) The difference for the first quarter can be ignored. 
D) The sales report is not useful if it shows a favorable and unfavorable difference for the two quarters. 
A) The year-to-date results will show a favorable difference. 
B) The year-to-date results will show an unfavorable difference. 
C) The difference for the first quarter can be ignored. 
D) The sales report is not useful if it shows a favorable and unfavorable difference for the two quarters.

Question 9

A static budget report

Accepted Answer

A) shows costs at only 2 or 3 different levels of activity. 
B) is appropriate in evaluating a manager's effectiveness in controlling variable costs. 
C) should be used when the actual level of activity is materially different from the master budget activity level. 
D) may be appropriate in evaluating a manager's effectiveness in controlling costs when the behavior of the costs in response to changes in activity is fixed. 
A) shows costs at only 2 or 3 different levels of activity. 
B) is appropriate in evaluating a manager's effectiveness in controlling variable costs. 
C) should be used when the actual level of activity is materially different from the master budget activity level. 
D) may be appropriate in evaluating a manager's effectiveness in controlling costs when the behavior of the costs in response to changes in activity is fixed.

Question 10

Power Manufacturing recorded operating data for its shoe division for the year. $$\begin{array} { l r } 
\text { Sales } & \$ 1,500,000 \
\text { Contribution margin } & 300,000 \
\text { Controllable fixed costs } & 180,000 \
\text { Average total operating assets } & 600,000
\end{array}$$ How much is controllable margin for the year?

Accepted Answer

A) 20% 
B) 50% 
C) $300,000 
D) $120,000 
A) 20% 
B) 50% 
C) $300,000 
D) $120,000

Question 11

A master budget is most useful in evaluating a manager's performance in controlling costs.

Accepted Answer

A) True 
 B)False

Question 12

A flexible budget depicted graphically

Accepted Answer

A) is identical to a CVP graph. 
B) differs from a CVP graph in the way that fixed costs are shown. 
C) differs from a CVP graph in the way that variable costs are shown. 
D) differs from a CVP graph in that sales revenue is not shown. 
A) is identical to a CVP graph. 
B) differs from a CVP graph in the way that fixed costs are shown. 
C) differs from a CVP graph in the way that variable costs are shown. 
D) differs from a CVP graph in that sales revenue is not shown.

Question 13

At zero direct labor hours in a flexible budget graph, the total budgeted cost line intersects the vertical axis at $30,000.At 15,000 direct labor hours, a horizontal line drawn from the total budgeted cost line intersects the vertical axis at $90,000.Fixed and variable costs may be expressed as:

Accepted Answer

A) $30,000 fixed plus $4 per direct labor hour variable. 
B) $30,000 fixed plus $6 per direct labor hour variable. 
C) $60,000 fixed plus $2 per direct labor hour variable. 
D) $60,000 fixed plus $4 per direct labor hour variable. 
A) $30,000 fixed plus $4 per direct labor hour variable. 
B) $30,000 fixed plus $6 per direct labor hour variable. 
C) $60,000 fixed plus $2 per direct labor hour variable. 
D) $60,000 fixed plus $4 per direct labor hour variable.

Question 14

Budget reports provide the feedback needed by management to see whether actual operations are on course.

Accepted Answer

A) True 
 B)False

Question 15

For June, Gold Corp.estimated sales revenue at $600,000.It pays sales commissions that are 4% of sales.The sales manager's salary is $285,000, estimated shipping expenses total 1% of sales, and miscellaneous selling expenses are $15,000.How much are budgeted selling expenses for the month of July if sales are expected to be $540,000?

Accepted Answer

A) $42,000 
B) $327,000 
C) $27,000 
D) $330,000 
A) $42,000 
B) $327,000 
C) $27,000 
D) $330,000

Question 16

Which of the following valuations of operating assets is not readily available from the accounting records?

Accepted Answer

A) Cost 
B) Book value 
C) Market value 
D) Both cost and market value 
A) Cost 
B) Book value 
C) Market value 
D) Both cost and market value

Question 17

The flexible budget report evaluates a manager's performance in two areas: (1) production and (2) costs.

Accepted Answer

A) True 
 B)False

Question 18

Smart Manufacturing budgeted costs for 50,000 linear feet of block are: $\begin{array}{ll}
\text {Fixed manufacturing costs }&\text { $ \$ 24,000 $ per month }\
\text {Variable manufacturing costs }&\text {$ \$ 16.00 $ per linear foot }\
\end{array}$
 Smart installed 40,000 linear feet of block during March.How much is budgeted total manufacturing costs in March?

Accepted Answer

A) $640,000 
B) $824,000 
C) $800,000 
D) $664,000 
A) $640,000 
B) $824,000 
C) $800,000 
D) $664,000

Question 19

What is budgetary control?

Accepted Answer

A) Another name for a flexible budget 
B) The degree to which the CFO controls the budget 
C) The use of budgets in controlling operations 
D) The process of providing information on budget differences to lower level managers 
A) Another name for a flexible budget 
B) The degree to which the CFO controls the budget 
C) The use of budgets in controlling operations 
D) The process of providing information on budget differences to lower level managers

Question 20

The terms controllable costs and noncontrollable costs are synonymous with variable costs and fixed costs, respectively.

Accepted Answer

A) True 
 B)False

Certain budget reports are prepared monthly, whereas others are prepared more frequently depending on the activities being monitored.

In the performance report for cost centers,

Las Sendas, Inc.had average operating assets of $4,000,000 and sales of $2,000,000 in 2013.If the controllable margin was $600,000, the ROI was

A static budget is appropriate in evaluating a manager's performance if

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

The selection of levels of activity to depict a flexible budget 1. will be within the relevant range. 2. is largely a matter of expediency. 3. is governed by generally accepted accounting principles.

Assume that actual sales results exceed the planned results for the second quarter.This favorable difference is greater than the unfavorable difference reported for the first quarter sales.Which of the following statements about the sales budget report on June 30 is true?

A static budget report

Power Manufacturing recorded operating data for its shoe division for the year. Sales \ 1,500,000 Contribution margin 300,000 Controllable fixed costs 180,000 Average total operating assets 600,000 How much is controllable margin for the year?

A master budget is most useful in evaluating a manager's performance in controlling costs.

A flexible budget depicted graphically

At zero direct labor hours in a flexible budget graph, the total budgeted cost line intersects the vertical axis at $30,000.At 15,000 direct labor hours, a horizontal line drawn from the total budgeted cost line intersects the vertical axis at $90,000.Fixed and variable costs may be expressed as:

Budget reports provide the feedback needed by management to see whether actual operations are on course.

Which of the following valuations of operating assets is not readily available from the accounting records?

The flexible budget report evaluates a manager's performance in two areas: (1) production and (2) costs.

Smart Manufacturing budgeted costs for 50,000 linear feet of block are: Fixed manufacturing costs \ 24,000 per month Variable manufacturing costs \ 16.00 per linear foot Smart installed 40,000 linear feet of block during March.How much is budgeted total manufacturing costs in March?

What is budgetary control?

The terms controllable costs and noncontrollable costs are synonymous with variable costs and fixed costs, respectively.

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

Certain budget reports are prepared monthly, whereas others are prepared more frequently depending on the activities being monitored.

In the performance report for cost centers,

Las Sendas, Inc.had average operating assets of $4,000,000 and sales of $2,000,000 in 2013.If the controllable margin was $600,000, the ROI was

A static budget is appropriate in evaluating a manager's performance if

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

The selection of levels of activity to depict a flexible budget 1. will be within the relevant range. 2. is largely a matter of expediency. 3. is governed by generally accepted accounting principles.

Assume that actual sales results exceed the planned results for the second quarter.This favorable difference is greater than the unfavorable difference reported for the first quarter sales.Which of the following statements about the sales budget report on June 30 is true?

A static budget report

Power Manufacturing recorded operating data for its shoe division for the year. Sales \ 1,500,000 Contribution margin 300,000 Controllable fixed costs 180,000 Average total operating assets 600,000 How much is controllable margin for the year?

A master budget is most useful in evaluating a manager's performance in controlling costs.

A flexible budget depicted graphically

At zero direct labor hours in a flexible budget graph, the total budgeted cost line intersects the vertical axis at $30,000.At 15,000 direct labor hours, a horizontal line drawn from the total budgeted cost line intersects the vertical axis at $90,000.Fixed and variable costs may be expressed as:

Budget reports provide the feedback needed by management to see whether actual operations are on course.

Which of the following valuations of operating assets is not readily available from the accounting records?

The flexible budget report evaluates a manager's performance in two areas: (1) production and (2) costs.

Smart Manufacturing budgeted costs for 50,000 linear feet of block are: Fixed manufacturing costs \ 24,000 per month Variable manufacturing costs \ 16.00 per linear foot Smart installed 40,000 linear feet of block during March.How much is budgeted total manufacturing costs in March?

What is budgetary control?

The terms controllable costs and noncontrollable costs are synonymous with variable costs and fixed costs, respectively.

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