Question 1

Financial budgets are prepared:

Accepted Answer

A) to specify expectations for selling, purchasing, and production. 
B) to evaluate the financial results of the proposed decisions. 
C) so that financial statements can be prepared for shareholders. 
D) to plan for production capacity. 
A) to specify expectations for selling, purchasing, and production. 
B) to evaluate the financial results of the proposed decisions. 
C) so that financial statements can be prepared for shareholders. 
D) to plan for production capacity.

Question 2

Are negative variances always unfavorable and positive variances always favorable? Explain.

Accepted Answer

No. In identifying whether a variance is

Question 3

Explain what each of the following variances indicates,and discuss what conditions might have caused each variance.
Direct material price variance: $1,000 U
Direct material quantity variance: $1,500 F
Direct labor rate variance: $800 F
Direct labor efficiency variance: $300 U

Accepted Answer

Direct material price variance: $1,000 U

Question 4

A demand forecast is:

Accepted Answer

A) an estimate of sales demand at a specified selling price for each product. 
B) developed primarily to prepare next year's marketing campaign. 
C) an estimate of market demand based on the amount sold in the previous year. 
D) a summary of product costs that influence pricing decisions. 
A) an estimate of sales demand at a specified selling price for each product. 
B) developed primarily to prepare next year's marketing campaign. 
C) an estimate of market demand based on the amount sold in the previous year. 
D) a summary of product costs that influence pricing decisions.

Question 5

A budget is a qualitative expression of the cash inflows and outflows that show whether the current operating plan will meet the firm's organizational objectives.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is NOT a role of budgeting in organizations?

Accepted Answer

A) performance evaluation. 
B) historical financial statements. 
C) allocation of resources. 
D) motivation of employees. 
A) performance evaluation. 
B) historical financial statements. 
C) allocation of resources. 
D) motivation of employees.

Question 7

For the next six months, Kurtz Company projects the following information (in units).
   
Demand drives production for that month and cannot be carried over from one month to another. Retail customers are satisfied first.
-Painting capacity appears to be:

Accepted Answer

A) short-term capacity. 
B) intermediate-term capacity. 
C) long-term capacity. 
D) total demand. 
A) short-term capacity. 
B) intermediate-term capacity. 
C) long-term capacity. 
D) total demand.

Question 8

The best label for the formula (AQ - SQ)× SP is the:

Accepted Answer

A) materials quantity variance. 
B) materials price variance. 
C) total cost variance for materials. 
D) labor wage rate variance. 
A) materials quantity variance. 
B) materials price variance. 
C) total cost variance for materials. 
D) labor wage rate variance.

Question 9

Once authorized,discretionary spending budgets are committed or fixed and do not vary with levels of production or service.

Accepted Answer

A) True 
 B)False

Question 10

Assume only the specified parameters change in a sensitivity analysis.If the contribution margin increases by $10 per unit then operating profits will:

Accepted Answer

A) also increase by $10 per unit. 
B) increase by less than $10 per unit. 
C) decrease by $10 per unit. 
D) be indeterminable. 
A) also increase by $10 per unit. 
B) increase by less than $10 per unit. 
C) decrease by $10 per unit. 
D) be indeterminable.

Question 11

The role of budgeting in planning and control is more important in manufacturing than in a not-for-profit environment.

Accepted Answer

A) True 
 B)False

Question 12

The following information pertains to Maxi Corporation:
   
∙ Cash is collected from customers in the following manner:
Month of sale 20%
Month following the sale 50%
Two months following sale 28%
Amount uncollectible 2%
∙ Thirty percent of purchases are paid for in cash in the month of purchase,and the balance is paid the following month. A 2% discount is allowed on purchases paid for in the month of purchase.
∙ Labor costs equal 20% of sales; other operating costs of $5,000 per month (including $2,000)of depreciation. Both are paid in the month incurred.
∙ The cash balance on October 1 is $4,300. A minimum cash balance of $4,000 is required at the end of the month. Money is borrowed in multiples of $1,000.
∙ The company will issue $6,000 of common stock and pay $10,000 in dividends in October.
∙ There is no debt outstanding at October 1.
Required:
Prepare a projected cash flow statement in good form for the month ended October 31.

Accepted Answer

@#IMG-DLM& 
 @#IMG-DLM&
**$7,350 + $7,00

Question 13

The use of low-quality raw materials is likely to result in an unfavorable material quantity variance and a favorable material price variance.

Accepted Answer

A) True 
 B)False

Question 14

Budgeting does NOT require:

Accepted Answer

A) knowledge of the organization's activities. 
B) specialized expertise in financial management and control. 
C) knowledge about how activities affect costs. 
D) the ability to see how the organization's different activities fit together. 
A) knowledge of the organization's activities. 
B) specialized expertise in financial management and control. 
C) knowledge about how activities affect costs. 
D) the ability to see how the organization's different activities fit together.

Question 15

Unfavorable variances arise when actual costs exceed estimated budget costs.

Accepted Answer

A) True 
 B)False

Question 16

Discuss the terms discretionary expenditures and committed expenditures and give an example of each.

Accepted Answer

Discretionary expenditures provide the i

Question 17

________ occur(s)when a superior simply tells subordinates what their budget will be.

Accepted Answer

A) Traditional budgeting 
B) Stretch goals 
C) Beyond budgeting approach 
D) Budget slack 
A) Traditional budgeting 
B) Stretch goals 
C) Beyond budgeting approach 
D) Budget slack

Question 18

________ bases a period's expenditure level for a discretionary item on the amount spent on that item during the previous period.

Accepted Answer

A) Zero-based budgeting 
B) Periodic budgeting 
C) Incremental budgeting 
D) Continuous budgeting 
A) Zero-based budgeting 
B) Periodic budgeting 
C) Incremental budgeting 
D) Continuous budgeting

Question 19

Financial analysts use the expected cash flow statement to do all of the following EXCEPT:

Accepted Answer

A) plan for when excess cash is generated. 
B) plan for short-term cash investments. 
C) project cash shortages and plan a strategy to deal with the shortages. 
D) project sales. 
A) plan for when excess cash is generated. 
B) plan for short-term cash investments. 
C) project cash shortages and plan a strategy to deal with the shortages. 
D) project sales.

Question 20

It is most meaningful to compare cost targets in the master budget to actual cost results.

Accepted Answer

A) True 
 B)False

Financial budgets are prepared:

Are negative variances always unfavorable and positive variances always favorable? Explain.

Explain what each of the following variances indicates,and discuss what conditions might have caused each variance. Direct material price variance: $1,000 U Direct material quantity variance: $1,500 F Direct labor rate variance: $800 F Direct labor efficiency variance: $300 U

A demand forecast is:

A budget is a qualitative expression of the cash inflows and outflows that show whether the current operating plan will meet the firm's organizational objectives.

Which of the following is NOT a role of budgeting in organizations?

For the next six months, Kurtz Company projects the following information (in units). Demand drives production for that month and cannot be carried over from one month to another. Retail customers are satisfied first. -Painting capacity appears to be:

The best label for the formula (AQ - SQ)× SP is the:

Once authorized,discretionary spending budgets are committed or fixed and do not vary with levels of production or service.

Assume only the specified parameters change in a sensitivity analysis.If the contribution margin increases by $10 per unit then operating profits will:

The role of budgeting in planning and control is more important in manufacturing than in a not-for-profit environment.

The use of low-quality raw materials is likely to result in an unfavorable material quantity variance and a favorable material price variance.

Budgeting does NOT require:

Unfavorable variances arise when actual costs exceed estimated budget costs.

Discuss the terms discretionary expenditures and committed expenditures and give an example of each.

________ occur(s)when a superior simply tells subordinates what their budget will be.

________ bases a period's expenditure level for a discretionary item on the amount spent on that item during the previous period.

Financial analysts use the expected cash flow statement to do all of the following EXCEPT:

It is most meaningful to compare cost targets in the master budget to actual cost results.

How Management Accounting Information Supports Decision Making

The Balanced Scorecard and Strategy Map

Using Costs in Decision Making

Accumulating and Assigning Costs to Products

Activity-Based Cost Systems

Measuring and Managing Customer Relationships

Measuring and Managing Process Performance

Measuring and Managing Life-Cycle Costs

Behavioral and Organizational Issues in Management Accounting and Control Systems

Financial Control

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Exam 10: Using Budgets for Planning and Coordination

Financial budgets are prepared:

Are negative variances always unfavorable and positive variances always favorable? Explain.

Explain what each of the following variances indicates,and discuss what conditions might have caused each variance. Direct material price variance: $1,000 U Direct material quantity variance: $1,500 F Direct labor rate variance: $800 F Direct labor efficiency variance: $300 U

A demand forecast is:

A budget is a qualitative expression of the cash inflows and outflows that show whether the current operating plan will meet the firm's organizational objectives.

Which of the following is NOT a role of budgeting in organizations?

For the next six months, Kurtz Company projects the following information (in units). Demand drives production for that month and cannot be carried over from one month to another. Retail customers are satisfied first. -Painting capacity appears to be:

The best label for the formula (AQ - SQ)× SP is the:

Once authorized,discretionary spending budgets are committed or fixed and do not vary with levels of production or service.

Assume only the specified parameters change in a sensitivity analysis.If the contribution margin increases by $10 per unit then operating profits will:

The role of budgeting in planning and control is more important in manufacturing than in a not-for-profit environment.

The use of low-quality raw materials is likely to result in an unfavorable material quantity variance and a favorable material price variance.

Budgeting does NOT require:

Unfavorable variances arise when actual costs exceed estimated budget costs.

Discuss the terms discretionary expenditures and committed expenditures and give an example of each.

________ occur(s)when a superior simply tells subordinates what their budget will be.

________ bases a period's expenditure level for a discretionary item on the amount spent on that item during the previous period.

Financial analysts use the expected cash flow statement to do all of the following EXCEPT:

It is most meaningful to compare cost targets in the master budget to actual cost results.

How Management Accounting Information Supports Decision Making

The Balanced Scorecard and Strategy Map

Using Costs in Decision Making

Accumulating and Assigning Costs to Products

Activity-Based Cost Systems

Measuring and Managing Customer Relationships

Measuring and Managing Process Performance

Measuring and Managing Life-Cycle Costs

Behavioral and Organizational Issues in Management Accounting and Control Systems

Financial Control

Filters