Question 1

If initial budgets prove unacceptable,planners achieve the MOST benefit from:

Accepted Answer

A) repeating the budgeting cycle with a new set of decisions. 
B) deciding not to budget this year. 
C) accepting an unbalanced budget. 
D) using last year's budget. 
A) repeating the budgeting cycle with a new set of decisions. 
B) deciding not to budget this year. 
C) accepting an unbalanced budget. 
D) using last year's budget.

Question 2

The PRIMARY reason for using cost variances is:

Accepted Answer

A) that they diagnose the cause of a problem and what should be done to correct it. 
B) for superiors to communicate expectations to lower level employees. 
C) to administer appropriate disciplinary action. 
D) for financial control of operating activities. 
A) that they diagnose the cause of a problem and what should be done to correct it. 
B) for superiors to communicate expectations to lower level employees. 
C) to administer appropriate disciplinary action. 
D) for financial control of operating activities.

Question 3

Operating budgets include the:

Accepted Answer

A) projected balance sheet. 
B) projected income statement. 
C) capital spending plan. 
D) expected cash flow statement. 
A) projected balance sheet. 
B) projected income statement. 
C) capital spending plan. 
D) expected cash flow statement.

Question 4

Discretionary expenditures:

Accepted Answer

A) are usually planned for first. 
B) are amounts paid for the use of flexible resources. 
C) are not determined by the organization's level of production. 
D) increase in amount during periods of greater activity. 
A) are usually planned for first. 
B) are amounts paid for the use of flexible resources. 
C) are not determined by the organization's level of production. 
D) increase in amount during periods of greater activity.

Question 5

Sensitivity analysis is the process of selectively varying a plan's or a budget's key estimates for the purpose of identifying over what range a decision option is preferred.

Accepted Answer

A) True 
 B)False

Question 6

The ________ summarizes planned revenues from each product.

Accepted Answer

A) capital spending plan 
B) production plan 
C) administrative and discretionary spending plan 
D) sales plan 
A) capital spending plan 
B) production plan 
C) administrative and discretionary spending plan 
D) sales plan

Question 7

The actual information pertains to the month of June. As part of the budgeting process, Petrified Products Company developed the following master budget for June. The manager, Pete, is in the process of preparing the flexible budget and understanding the results.
  
-The flexible budget variance for flexible (variable)costs is:

Accepted Answer

A) $32,000 unfavorable. 
B) $120,000 unfavorable. 
C) $32,000 favorable. 
D) $120,000 favorable. 
A) $32,000 unfavorable. 
B) $120,000 unfavorable. 
C) $32,000 favorable. 
D) $120,000 favorable.

Question 8

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 10% reduction in the selling price will result in a 30% increase in sales.If this proposed reduction in selling price is implemented,then:

Accepted Answer

A) profit will decrease by $12,800 in a month. 
B) profit will increase by $12,800 in a month. 
C) profit will decrease by $32,000 in a month. 
D) profit will increase by $32,000 in a month. 
A) profit will decrease by $12,800 in a month. 
B) profit will increase by $12,800 in a month. 
C) profit will decrease by $32,000 in a month. 
D) profit will increase by $32,000 in a month.

Question 9

_________ mean(s)that the organization will attempt to reach much higher goals with the current budget.

Accepted Answer

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

Question 10

In the beyond budgeting approach,targets are developed based on stretch goals tied to peers,competitors,and key global benchmarks.

Accepted Answer

A) True 
 B)False

Question 11

Community Manufacturing Inc. developed the following standard costs for direct material and direct labor for one of their major products, the 30-gallon heavy-duty plastic container.
   
During May, Community produced and sold 10,000 containers using 2,200 pounds of direct materials at an average cost per pound of $24 and 1,050 direct labor hours at an average wage of $14.75 per hour.
-May's direct material price variance was:

Accepted Answer

A) $2,800 favorable. 
B) $2,200 favorable. 
C) $5,000 unfavorable. 
D) None of the above is correct. 
A) $2,800 favorable. 
B) $2,200 favorable. 
C) $5,000 unfavorable. 
D) None of the above is correct.

Question 12

Sun Inc.sells a single product.The company's 2012 income statement is given below.
Sales (4,000 units) $800,000
Less flexible (variable)expenses $200,000
Less capacity-related (fixed)expenses $300,000
In an attempt to improve performance,Jo,the manager is considering a number of alternative actions.Each situation is to be evaluated separately.
Required:
a. Calculate operating income and the break-even point in units and dollars for 2012
b. Jo believes that a $100,000 increase in equipment improvements will increase sales considerably.How much must sales increase to justify this capital expenditure?
c. Jo believes that flexible costs can be decreased by 10%.As a result,she wants to reduce the selling price by 2% in anticipation of a 5% increase in sales.What are projected profits if these proposals are implemented?

Accepted Answer

a. 2007 operating income equals $300,000

Question 13

The expected cash flow statement does NOT include:

Accepted Answer

A) cash inflows from the collection of receivables. 
B) cash outflows paid toward committed resources. 
C) all sales revenues. 
D) interest paid and collected. 
A) cash inflows from the collection of receivables. 
B) cash outflows paid toward committed resources. 
C) all sales revenues. 
D) interest paid and collected.

Question 14

Community Manufacturing Inc. developed the following standard costs for direct material and direct labor for one of their major products, the 30-gallon heavy-duty plastic container.
   
During May, Community produced and sold 10,000 containers using 2,200 pounds of direct materials at an average cost per pound of $24 and 1,050 direct labor hours at an average wage of $14.75 per hour.
-May's direct material quantity variance was:

Accepted Answer

A) $2,800 unfavorable. 
B) $2,200 favorable. 
C) $5,000 unfavorable. 
D) None of the above is correct. 
A) $2,800 unfavorable. 
B) $2,200 favorable. 
C) $5,000 unfavorable. 
D) None of the above is correct.

Question 15

A favorable variance indicates management's attention is not needed.

Accepted Answer

A) True 
 B)False

Question 16

In ________,as one budget period passes,planners delete that budget period from the master budget and add another one.

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 17

In zero-based budgeting:

Accepted Answer

A) the prior year's budgeted amounts or actual results are used to build the new operating budget. 
B) the budget is prepared by the top managers. 
C) managers must justify each item within the operating budget as if it were a new budget item. 
D) the budget is updated every month. 
A) the prior year's budgeted amounts or actual results are used to build the new operating budget. 
B) the budget is prepared by the top managers. 
C) managers must justify each item within the operating budget as if it were a new budget item. 
D) the budget is updated every month.

Question 18

All of the following are true regarding the labor hiring and training plan EXCEPT that it:

Accepted Answer

A) may include retraining plans to redeploy employees to other parts of the organization. 
B) determines discretionary spending for research and development. 
C) works backward from the date when personnel are needed. 
D) can include plans for both expansion and contraction. 
A) may include retraining plans to redeploy employees to other parts of the organization. 
B) determines discretionary spending for research and development. 
C) works backward from the date when personnel are needed. 
D) can include plans for both expansion and contraction.

Question 19

The production plan should be based on the sales plan.

Accepted Answer

A) True 
 B)False

Question 20

An organization planned to use $44 of material per unit of activity but it actually used $42 of material per unit of activity,and it planned to make 1,200 units but it actually made 1,000 units.The planning variance is:

Accepted Answer

A) $2,000. 
B) $8,800. 
C) $16,400. 
D) $2,400. 
A) $2,000. 
B) $8,800. 
C) $16,400. 
D) $2,400.

If initial budgets prove unacceptable,planners achieve the MOST benefit from:

The PRIMARY reason for using cost variances is:

Operating budgets include the:

Discretionary expenditures:

Sensitivity analysis is the process of selectively varying a plan's or a budget's key estimates for the purpose of identifying over what range a decision option is preferred.

The ________ summarizes planned revenues from each product.

_________ mean(s)that the organization will attempt to reach much higher goals with the current budget.

In the beyond budgeting approach,targets are developed based on stretch goals tied to peers,competitors,and key global benchmarks.

The expected cash flow statement does NOT include:

A favorable variance indicates management's attention is not needed.

In ________,as one budget period passes,planners delete that budget period from the master budget and add another one.

In zero-based budgeting:

All of the following are true regarding the labor hiring and training plan EXCEPT that it:

The production plan should be based on the sales plan.

An organization planned to use $44 of material per unit of activity but it actually used $42 of material per unit of activity,and it planned to make 1,200 units but it actually made 1,000 units.The planning variance is:

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

If initial budgets prove unacceptable,planners achieve the MOST benefit from:

The PRIMARY reason for using cost variances is:

Operating budgets include the:

Discretionary expenditures:

Sensitivity analysis is the process of selectively varying a plan's or a budget's key estimates for the purpose of identifying over what range a decision option is preferred.

The ________ summarizes planned revenues from each product.

_________ mean(s)that the organization will attempt to reach much higher goals with the current budget.

In the beyond budgeting approach,targets are developed based on stretch goals tied to peers,competitors,and key global benchmarks.

The expected cash flow statement does NOT include:

A favorable variance indicates management's attention is not needed.

In ________,as one budget period passes,planners delete that budget period from the master budget and add another one.

In zero-based budgeting:

All of the following are true regarding the labor hiring and training plan EXCEPT that it:

The production plan should be based on the sales plan.

An organization planned to use $44 of material per unit of activity but it actually used $42 of material per unit of activity,and it planned to make 1,200 units but it actually made 1,000 units.The planning variance is:

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