Question 1

Line managers who feel that top management does not believe in the budget are MOST likely to:

Accepted Answer

A) spend less time on the budgeting process. 
B) be motivated by the budget. 
C) pick up the slack and participate in the budgeting process. 
D) convert the budget to a shorter more reasonable time period. 
A) spend less time on the budgeting process. 
B) be motivated by the budget. 
C) pick up the slack and participate in the budgeting process. 
D) convert the budget to a shorter more reasonable time period.

Question 2

Activity-based budgeting (ABB)focuses on budgeting the cost of activities necessary to produce and sell products and services.

Accepted Answer

A) True 
 B)False

Question 3

The use of activity-based cost drivers gives rise to activity-based budgeting.

Accepted Answer

A) True 
 B)False

Question 4

Answer the following questions using the information below:
Footscray Company has the following sales budget for the last six months of 2018:
 $$\begin{array} { l r l r } 
\text { July } & \$ 100000 & \text { October } & \$ 90000 \
\text { August } & 80000 & \text { November } & 100000 \
\text { September } & 110000 & \text { December } & 94000
\end{array}$$ Historically,the cash collection of sales has been as follows:
65% of sales collected in the month of sale
25% of sales collected in the month following the sale
8% of sales collected in the second month following the sale
2% of sales are uncollectible
-What is the ending balance of accounts receivable for September,assuming uncollectible balances are written off during the second month following the sale?

Accepted Answer

A) $48 500 
B) $44 900 
C) $99 500 
D) $46 500 
A) $48 500 
B) $44 900 
C) $99 500 
D) $46 500

Question 5

Distinguish between controllable and uncontrollable aspects of revenue and costs.Can a manager totally control all revenue and costs? Why or why not?

Accepted Answer

Although no revenue or cost can be total

Question 6

Explain what is meant by sensitivity analysis in budgeting,and discuss how managers might use this technique in practice.

Accepted Answer

Sensitivity analysis is a 'what-if' tech

Question 7

Participation creates greater ________ and accountability towards the budget among lower-level managers.

Accepted Answer

A) resistance 
B) animosity 
C) concern 
D) commitment 
A) resistance 
B) animosity 
C) concern 
D) commitment

Question 8

The manufacturing overhead costs budget includes budgeted amounts for:

Accepted Answer

A) indirect manufacturing labour. 
B) direct materials. 
C) direct manufacturing labour. 
D) All of these answers are correct. 
A) indirect manufacturing labour. 
B) direct materials. 
C) direct manufacturing labour. 
D) All of these answers are correct.

Question 9

Activity-based budgeting would separately estimate:

Accepted Answer

A) the cost of a setup activity. 
B) the cost of overhead for a department. 
C) a plant-wide cost-driver rate. 
D) All of these answers are correct. 
A) the cost of a setup activity. 
B) the cost of overhead for a department. 
C) a plant-wide cost-driver rate. 
D) All of these answers are correct.

Question 10

Albury Enterprises reports year-end information from 2018 as follows:
 $$\begin{array} { l r } 
\text { Sales ( } 80000 \text {  units) } & \$ 640000 \
\text { Cost of goods sold } & \underline { 40000 } \\
\text { Gross margin }  & 160000 \
\text { Operating expenses }& \underline { 130000 } \\
\text { Operating expenses } & \$ 30000
\end{array}$$
 Albury is developing the 2019 budget.In 2019 the company would like to increase selling prices by 8%,and as a result expects a decrease in sales volume of 10%.All other operating expenses are expected to remain constant.Assume that COGS is a variable cost and that operating expenses are a fixed cost.
-What is budgeted sales for 2019?

Accepted Answer

A) $432 000 
B) $533 333 
C) $622 080 
D) $518 400 
A) $432 000 
B) $533 333 
C) $622 080 
D) $518 400

Question 11

Answer the following questions using the information below:
Ku-ring-gai & Co expects to sell 25 000 pool cues for $12.00 each.Direct materials costs are $2.00,direct manufacturing labour is $4.00,and manufacturing overhead is $0.80 per pool cue.The following inventory levels apply to 2017:
 $$\begin{array} { l r r } 
& \text { Beginning inventory } & \text { Ending inventory } \
\text { Direct materials } & 24000 \text { units } & 24000 \text { units } \
\text { Work-in-process inventory } & 0 \text { units } & 0 \text { units } \
\text { Finished goods inventory } & 2000 \text { units } & 2500 \text { units }
\end{array}$$
-On the 2018 budgeted income statement,what amount will be reported for cost of goods sold?

Accepted Answer

A) $150 000 
B) $170 000 
C) $152 600 
D) $179 400 
A) $150 000 
B) $170 000 
C) $152 600 
D) $179 400

Question 12

Answer the following questions using the information below:
The following information pertains to the January operating budget for Canberra Corporation.
∙ Budgeted sales for January $100 000 and for February $200 000.
∙ Collections for sales are 70% in the month of sale and 30% the next month.
∙ Gross margin is 30% of sales.
∙ Administrative costs are $10 000 each month.
∙ Beginning accounts receivable is $20 000.
∙ Beginning inventory is $14 000.
∙ Beginning accounts payable is $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).
-At the end of January,budgeted ending inventory is:

Accepted Answer

A) $40 000. 
B) $28 000. 
C) $20 000. 
D) None of these answers are correct. 
A) $40 000. 
B) $28 000. 
C) $20 000. 
D) None of these answers are correct.

Question 13

Answer the following questions using the information below:
Newcastle Enterprises reports the year-end information from 2018 as follows:
 $\begin{array}{lr}
\text { Sales (70 000 units) } & \$ 720000 \
\text { Cost of goods sold } & \underline{370000} \
& \
\text { Gross margin } & 350000 \
\text { Operating expenses } & \underline{200000} \
& \
\text { Operating profit } & \underline{ \$ 150000}
\end{array}$
 Newcastle is developing the 2019 budget.In 2019 the company would like to increase selling prices by 4%,and as a result expects a decrease in sales volume of 10%.All other operating expenses are expected to remain constant.Assume that COGS is a variable cost and that operating expenses are a fixed cost.
-What is budgeted sales for 2019?

Accepted Answer

A) $504 000 
B) $673 920 
C) $582 400 
D) $720 000 
A) $504 000 
B) $673 920 
C) $582 400 
D) $720 000

Question 14

With a long enough time-span,________________ costs will come under somebody's control.

Accepted Answer

A) few 
B) all 
C) employee 
D) selling 
A) few 
B) all 
C) employee 
D) selling

Question 15

Answer the following questions using the information below:
Footscray Company has the following sales budget for the last six months of 2018:
 $$\begin{array} { l r l r } 
\text { July } & \$ 100000 & \text { October } & \$ 90000 \
\text { August } & 80000 & \text { November } & 100000 \
\text { September } & 110000 & \text { December } & 94000
\end{array}$$ Historically,the cash collection of sales has been as follows:
65% of sales collected in the month of sale
25% of sales collected in the month following the sale
8% of sales collected in the second month following the sale
2% of sales are uncollectible
-Cash collections for September are:

Accepted Answer

A) $102 000. 
B) $86 700. 
C) $99 500. 
D) $71 500. 
A) $102 000. 
B) $86 700. 
C) $99 500. 
D) $71 500.

Question 16

Sensitivity analysis is a 'what-if' technique that examines how a result will change if the original prediction or assumptions change.

Accepted Answer

A) True 
 B)False

Question 17

When the operating budget is used as a control device,managers are more likely to be motivated to budget higher sales than actually anticipated.

Accepted Answer

A) True 
 B)False

Question 18

The manager of a hobby store that is part of a chain of stores is MOST likely responsible for a(n):

Accepted Answer

A) cost centre. 
B) profit centre. 
C) revenue centre. 
D) investment centre. 
A) cost centre. 
B) profit centre. 
C) revenue centre. 
D) investment centre.

Question 19

How is budgeting for a multinational corporation different than budgeting for a corporation that is strictly domestic?

Accepted Answer

Budgeting for a multinational corporatio

Question 20

Multinational companies find budgeting to be a valuable tool when operating in very
________ environments.

Accepted Answer

A) stable 
B) political 
C) certain 
D) uncertain 
A) stable 
B) political 
C) certain 
D) uncertain

Line managers who feel that top management does not believe in the budget are MOST likely to:

Activity-based budgeting (ABB)focuses on budgeting the cost of activities necessary to produce and sell products and services.

The use of activity-based cost drivers gives rise to activity-based budgeting.

Distinguish between controllable and uncontrollable aspects of revenue and costs.Can a manager totally control all revenue and costs? Why or why not?

Explain what is meant by sensitivity analysis in budgeting,and discuss how managers might use this technique in practice.

Participation creates greater ________ and accountability towards the budget among lower-level managers.

The manufacturing overhead costs budget includes budgeted amounts for:

Activity-based budgeting would separately estimate:

With a long enough time-span,________________ costs will come under somebody's control.

Sensitivity analysis is a 'what-if' technique that examines how a result will change if the original prediction or assumptions change.

When the operating budget is used as a control device,managers are more likely to be motivated to budget higher sales than actually anticipated.

The manager of a hobby store that is part of a chain of stores is MOST likely responsible for a(n):

How is budgeting for a multinational corporation different than budgeting for a corporation that is strictly domestic?

Multinational companies find budgeting to be a valuable tool when operating in very ________ environments.

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

Inventory Management, Just-In-Time and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing and Multinational Considerations

Performance Measurement, Compensation and Multinational Considerations

Measuring and Reporting Sustainability

Filters

Exam 11: Budgeting, Management Control and Responsibility Accounting

Line managers who feel that top management does not believe in the budget are MOST likely to:

Activity-based budgeting (ABB)focuses on budgeting the cost of activities necessary to produce and sell products and services.

The use of activity-based cost drivers gives rise to activity-based budgeting.

Distinguish between controllable and uncontrollable aspects of revenue and costs.Can a manager totally control all revenue and costs? Why or why not?

Explain what is meant by sensitivity analysis in budgeting,and discuss how managers might use this technique in practice.

Participation creates greater ________ and accountability towards the budget among lower-level managers.

The manufacturing overhead costs budget includes budgeted amounts for:

Activity-based budgeting would separately estimate:

With a long enough time-span,________________ costs will come under somebody's control.

Sensitivity analysis is a 'what-if' technique that examines how a result will change if the original prediction or assumptions change.

When the operating budget is used as a control device,managers are more likely to be motivated to budget higher sales than actually anticipated.

The manager of a hobby store that is part of a chain of stores is MOST likely responsible for a(n):

How is budgeting for a multinational corporation different than budgeting for a corporation that is strictly domestic?

Multinational companies find budgeting to be a valuable tool when operating in very ________ environments.

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Flexible Budgets, Direct Cost Variances and Management Control

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

Inventory Management, Just-In-Time and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing and Multinational Considerations

Performance Measurement, Compensation and Multinational Considerations

Measuring and Reporting Sustainability

Filters