Question 1

Zero-based budgeting requires that proponents of discretionary expenditures justify these outlays for each budgeting period.

Accepted Answer

A) True 
 B)False

Question 2

The following information pertains to the October operating budget for Flockhart Corporation.
∙ Budgeted sales for October $100,000 and November $200,000.
∙ Collections for sales are 60% in the month of sale and 40% the next month.
∙ Gross margin is 30% of sales.
∙ Administrative costs are $10,000 each month.
∙ Beginning accounts receivable (October 1)$20,000.
∙ Beginning inventory (October 1)$14,000.
∙ Beginning accounts payable (October 1)$60,000. (All from inventory purchases.)
∙ Purchases are paid in full the following month.
∙ Desired ending inventory is 20% of next month's cost of goods sold (COGS).
∙ No loans are outstanding on October 1
-At the end of October,budgeted ending inventory is:

Accepted Answer

A) $20,000. 
B) $28,000. 
C) $40,000. 
D) None of the above is correct. 
A) $20,000. 
B) $28,000. 
C) $40,000. 
D) None of the above is correct.

Question 3

The following information pertains to the October operating budget for Flockhart Corporation.
∙ Budgeted sales for October $100,000 and November $200,000.
∙ Collections for sales are 60% in the month of sale and 40% the next month.
∙ Gross margin is 30% of sales.
∙ Administrative costs are $10,000 each month.
∙ Beginning accounts receivable (October 1)$20,000.
∙ Beginning inventory (October 1)$14,000.
∙ Beginning accounts payable (October 1)$60,000. (All from inventory purchases.)
∙ Purchases are paid in full the following month.
∙ Desired ending inventory is 20% of next month's cost of goods sold (COGS).
∙ No loans are outstanding on October 1
-For October,budgeted cash collections are:

Accepted Answer

A) $20,000. 
B) $60,000. 
C) $80,000. 
D) None of the above is correct. 
A) $20,000. 
B) $60,000. 
C) $80,000. 
D) None of the above is correct.

Question 4

________ summarizes expenditures for advertising and research and development.

Accepted Answer

A) The labor hiring and training plan 
B) The production plan 
C) The administrative and discretionary spending plan 
D) The aggregate plan 
A) The labor hiring and training plan 
B) The production plan 
C) The administrative and discretionary spending plan 
D) The aggregate plan

Question 5

In regard to the amount of detail,a budget should:

Accepted Answer

A) show the detail for each product. 
B) group products into pools of products. 
C) strike a balance between detail and aggregated information. 
D) not consider the cost of gathering the information. 
A) show the detail for each product. 
B) group products into pools of products. 
C) strike a balance between detail and aggregated information. 
D) not consider the cost of gathering the information.

Question 6

L&M Manufacturing produces a single product that sells for $16. Variable (flexible) costs per unit equal $11.20. The company expects the total fixed (capacity-related) costs to be $7,200 for the next month at the projected sales level of 20,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.
-Suppose that L&M Manufacturing's management believes that a $1,600 increase in the monthly advertising expense will result in a considerable increase in sales.How much must sales increase in a month to justify this additional expenditure?

Accepted Answer

A) 200 units 
B) 334 units 
C) 500 units 
D) None of the above is correct. 
A) 200 units 
B) 334 units 
C) 500 units 
D) None of the above is correct.

Question 7

A favorable efficiency variance for direct labor indicates that:

Accepted Answer

A) a lower wage rate than expected was paid for direct labor. 
B) a higher wage rate than expected was paid for direct labor. 
C) less direct labor hours were used during production than expected for actual output. 
D) more direct labor hours were used during production than expected for actual output. 
A) a lower wage rate than expected was paid for direct labor. 
B) a higher wage rate than expected was paid for direct labor. 
C) less direct labor hours were used during production than expected for actual output. 
D) more direct labor hours were used during production than expected for actual output.

Question 8

The following information for the second quarter of 2011 pertains to Huffington Company:
   
•Cash is collected from customers in the following manner:
   
•40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
•Labor costs are 20% of sales. Other operating costs are $45,000 per month (including $12,000 of depreciation). Both of these are paid in the month incurred.
•The cash balance on June 1 is $6,000. A minimum cash balance of $4,500 is required at the end of the month. Money can be borrowed in multiples of $3,000.
•No loans outstanding on June 1.
-How much cash will be collected from customers in June?

Accepted Answer

A) $129,000 
B) $141,000 
C) $150,000 
D) None of the above is correct. 
A) $129,000 
B) $141,000 
C) $150,000 
D) None of the above is correct.

Question 9

Talladega Industries, Inc., (TII) developed the following standard costs for direct material and direct labor for one of their major products, the 10-gallon plastic container.
   
During August, TII produced and sold 10,000 containers using 980 pounds of direct materials at an average cost per pound of $32 and 500 direct labor hours at an average wage of $15.25 per hour.
-August's direct material planning variance was:

Accepted Answer

A) $268,640 favorable. 
B) $270,600 unfavorable. 
C) $1,360 unfavorable. 
D) indeterminable using the above information. 
A) $268,640 favorable. 
B) $270,600 unfavorable. 
C) $1,360 unfavorable. 
D) indeterminable using the above information.

Question 10

Planning variances are the focus of cost control.

Accepted Answer

A) True 
 B)False

Question 11

Talladega Industries, Inc., (TII) developed the following standard costs for direct material and direct labor for one of their major products, the 10-gallon plastic container.
   
During August, TII produced and sold 10,000 containers using 980 pounds of direct materials at an average cost per pound of $32 and 500 direct labor hours at an average wage of $15.25 per hour.
-August's direct labor rate variance was:

Accepted Answer

A) $125 unfavorable. 
B) $125 favorable. 
C) $142,375 favorable. 
D) None of the above is correct. 
A) $125 unfavorable. 
B) $125 favorable. 
C) $142,375 favorable. 
D) None of the above is correct.

Question 12

The labor efficiency variance is likely to be favorable if higher-skilled workers are put on a job.

Accepted Answer

A) True 
 B)False

Question 13

Discuss the importance of the sales forecast and items that influence its accuracy.

Accepted Answer

All other budgets are based on informati

Question 14

Explain when a manager would use what-if analysis.

Accepted Answer

What-if analysis is helpful fo

Question 15

The sales plan identifies:

Accepted Answer

A) expected cash flows from the sales of each product. 
B) actual sales from last year for each product. 
C) the budgeted level of sales for each product. 
D) the variance of sales from actual for each product. 
A) expected cash flows from the sales of each product. 
B) actual sales from last year for each product. 
C) the budgeted level of sales for each product. 
D) the variance of sales from actual for each product.

Question 16

The sales plan and inventory plan is compared to available productive capacity levels and ________ is determined.

Accepted Answer

A) an aggregate plan 
B) a new sales plan 
C) a materials purchasing plan 
D) an administrative and discretionary spending plan 
A) an aggregate plan 
B) a new sales plan 
C) a materials purchasing plan 
D) an administrative and discretionary spending plan

Question 17

The variances that should be investigated by management include:

Accepted Answer

A) only unfavorable variances. 
B) only favorable variances. 
C) all variances, both favorable and unfavorable. 
D) both favorable and unfavorable variances that are considered significant in amount for the company. 
A) only unfavorable variances. 
B) only favorable variances. 
C) all variances, both favorable and unfavorable. 
D) both favorable and unfavorable variances that are considered significant in amount for the company.

Question 18

________ requires that each discretionary expenditure be justified.

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

The following information pertains to the October operating budget for Flockhart Corporation.
∙ Budgeted sales for October $100,000 and November $200,000.
∙ Collections for sales are 60% in the month of sale and 40% the next month.
∙ Gross margin is 30% of sales.
∙ Administrative costs are $10,000 each month.
∙ Beginning accounts receivable (October 1)$20,000.
∙ Beginning inventory (October 1)$14,000.
∙ Beginning accounts payable (October 1)$60,000. (All from inventory purchases.)
∙ Purchases are paid in full the following month.
∙ Desired ending inventory is 20% of next month's cost of goods sold (COGS).
∙ No loans are outstanding on October 1
-For October,budgeted net income is:

Accepted Answer

A) $20,000. 
B) $30,000. 
C) $40,000. 
D) None of the above is correct. 
A) $20,000. 
B) $30,000. 
C) $40,000. 
D) None of the above is correct.

Question 20

(CPA adapted)The strategy MOST LIKELY to reduce the break-even point would be to:

Accepted Answer

A) increase both the capacity-related (fixed)costs and the contribution margin per unit. 
B) decrease both the capacity-related (fixed)costs and the contribution margin per unit. 
C) decrease the capacity-related (fixed)costs and increase the contribution margin per unit. 
D) increase the capacity-related (fixed)costs and decrease the contribution margin per unit. 
A) increase both the capacity-related (fixed)costs and the contribution margin per unit. 
B) decrease both the capacity-related (fixed)costs and the contribution margin per unit. 
C) decrease the capacity-related (fixed)costs and increase the contribution margin per unit. 
D) increase the capacity-related (fixed)costs and decrease the contribution margin per unit.

Zero-based budgeting requires that proponents of discretionary expenditures justify these outlays for each budgeting period.

________ summarizes expenditures for advertising and research and development.

In regard to the amount of detail,a budget should:

A favorable efficiency variance for direct labor indicates that:

Planning variances are the focus of cost control.

The labor efficiency variance is likely to be favorable if higher-skilled workers are put on a job.

Discuss the importance of the sales forecast and items that influence its accuracy.

Explain when a manager would use what-if analysis.

The sales plan identifies:

The sales plan and inventory plan is compared to available productive capacity levels and ________ is determined.

The variances that should be investigated by management include:

________ requires that each discretionary expenditure be justified.

(CPA adapted)The strategy MOST LIKELY to reduce the break-even point would be to:

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

Exam 10: Using Budgets for Planning and Coordination

Zero-based budgeting requires that proponents of discretionary expenditures justify these outlays for each budgeting period.

________ summarizes expenditures for advertising and research and development.

In regard to the amount of detail,a budget should:

A favorable efficiency variance for direct labor indicates that:

Planning variances are the focus of cost control.

The labor efficiency variance is likely to be favorable if higher-skilled workers are put on a job.

Discuss the importance of the sales forecast and items that influence its accuracy.

Explain when a manager would use what-if analysis.

The sales plan identifies:

The sales plan and inventory plan is compared to available productive capacity levels and ________ is determined.

The variances that should be investigated by management include:

________ requires that each discretionary expenditure be justified.

(CPA adapted)The strategy MOST LIKELY to reduce the break-even point would be to:

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