Question 1

A key use of sensitivity analysis is for cash-flow budgeting.

Accepted Answer

A) True 
 B)False

Question 2

Responsibility accounting focuses only on control,not on information and knowledge.

Accepted Answer

A) True 
 B)False

Question 3

Management will most likely behave the same way if a department is structured as a revenue centre or if the same department is structured as a profit centre.

Accepted Answer

A) True 
 B)False

Question 4

Businesses are increasingly using rolling budgets.

Accepted Answer

A) True 
 B)False

Question 5

Few costs are clearly under the sole influence of one manager.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following can a budget not do?

Accepted Answer

A) Help management allocate limited resources 
B) Become the performance standard against which firms can compare the actual results 
C) Be adjusted if new opportunities become available during the year 
D) Be prepared by managers from different functional areas working independently of each other 
A) Help management allocate limited resources 
B) Become the performance standard against which firms can compare the actual results 
C) Be adjusted if new opportunities become available during the year 
D) Be prepared by managers from different functional areas working independently of each other

Question 7

Which of the following describes what a responsibility centre manager can do to a controllable cost for a period of time?

Accepted Answer

A) Segregate 
B) Influence 
C) Control 
D) Exclude 
A) Segregate 
B) Influence 
C) Control 
D) Exclude

Question 8

Answer the following questions using the information below:
Wallaby Company has the following information:
 $$\begin{array} { l c } 
\text { Month } & \text { Budgeted Purchases } \
\text { January } & \$ 26800 \
\text { February } & 29000 \
\text { March } & 30520 \
\text { April } & 29480 \
\text { May } & 27680
\end{array}$$ Purchases are paid for in the following manner:
10% of the purchase amount in the month of purchase
50% of the purchase amount in the month after purchase
40% of the purchase amount in the month after purchase
-What is the expected balance in Accounts Payable as of 30 April?

Accepted Answer

A) $26 532 
B) $38 740 
C) $17 688 
D) $12 208 
A) $26 532 
B) $38 740 
C) $17 688 
D) $12 208

Question 9

Answer the following questions using the information below:
Margaret River Enterprises are using the kaizen approach to budgeting for 2018.The budgeted income statement for January 2018 is as follows:
 $\begin{array}{lr}
\text { Sales (84 000 units) } & \$ 700000 \
\text { Less: Cost of goods sold } & \underline{500000} \
& \
\text { Gross margin } & 200000 \
\text { Operating expenses (includes } \$ 50000 \text { of fixed costs) } & \underline{150000} \
& \
\text { Operating profit } & \$ 50000
\end{array}$
 Under the kaizen approach,cost of goods sold and variable operating expenses are budgeted to decline by 1% per month.
-What is budgeted cost of goods sold for March 2018?

Accepted Answer

A) $490 050 
B) $500 000 
C) $297 000 
D) $294 000 
A) $490 050 
B) $500 000 
C) $297 000 
D) $294 000

Question 10

Long-run planning and short-run planning are best performed independently of each other.

Accepted Answer

A) True 
 B)False

Question 11

Budgets should not be administered rigidly,as changing conditions usually call for changes in plans.

Accepted Answer

A) True 
 B)False

Question 12

The direct materials quantities _____________ depend on the efficiency with which materials are consumed to produce a product.

Accepted Answer

A) purchased 
B) sold 
C) estimated 
D) used 
A) purchased 
B) sold 
C) estimated 
D) used

Question 13

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 sales?

Accepted Answer

A) $312 000 
B) $300 000 
C) $246 000 
D) $318 000 
A) $312 000 
B) $300 000 
C) $246 000 
D) $318 000

Question 14

Kaizen refers to incorporating cost reductions:

Accepted Answer

A) in each successive budgeting period. 
B) in all customer service centres. 
C) in each successive sales forecast. 
D) All of these answers are correct. 
A) in each successive budgeting period. 
B) in all customer service centres. 
C) in each successive sales forecast. 
D) All of these answers are correct.

Question 15

It is necessary to prepare the cash budget and the budgeted income statement before the budgeted balance sheet and budgeted cash flow statement can be prepared.

Accepted Answer

A) True 
 B)False

Question 16

The number of units in the sales budget and the production budget may differ because of a change in:

Accepted Answer

A) direct material inventory levels. 
B) sales returns and allowances. 
C) overhead charges. 
D) finished goods inventory levels. 
A) direct material inventory levels. 
B) sales returns and allowances. 
C) overhead charges. 
D) finished goods inventory levels.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

A company's actual performance should be compared against budgeted rather than actual amounts for the same accounting period so that:

Accepted Answer

A) no feedback is possible. 
B) a rolling budget can be implemented. 
C) adjustments for expected changes in future conditions can be included in the comparison. 
D) inefficiencies of the past year can be included in the comparison. 
A) no feedback is possible. 
B) a rolling budget can be implemented. 
C) adjustments for expected changes in future conditions can be included in the comparison. 
D) inefficiencies of the past year can be included in the comparison.

Question 19

A manager of a profit centre is responsible for all of the following EXCEPT:

Accepted Answer

A) the cost of merchandise purchased for resale. 
B) selling and marketing costs. 
C) sales revenue. 
D) expanding into new geographic areas. 
A) the cost of merchandise purchased for resale. 
B) selling and marketing costs. 
C) sales revenue. 
D) expanding into new geographic areas.

Question 20

Budgeting slack is most likely to occur when a firm uses the budget only as a planning device and not to evaluate performance.

Accepted Answer

A) True 
 B)False

A key use of sensitivity analysis is for cash-flow budgeting.

Responsibility accounting focuses only on control,not on information and knowledge.

Management will most likely behave the same way if a department is structured as a revenue centre or if the same department is structured as a profit centre.

Businesses are increasingly using rolling budgets.

Few costs are clearly under the sole influence of one manager.

Which of the following can a budget not do?

Which of the following describes what a responsibility centre manager can do to a controllable cost for a period of time?

Long-run planning and short-run planning are best performed independently of each other.

Budgets should not be administered rigidly,as changing conditions usually call for changes in plans.

The direct materials quantities _____________ depend on the efficiency with which materials are consumed to produce a product.

Kaizen refers to incorporating cost reductions:

It is necessary to prepare the cash budget and the budgeted income statement before the budgeted balance sheet and budgeted cash flow statement can be prepared.

The number of units in the sales budget and the production budget may differ because of a change in:

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

A company's actual performance should be compared against budgeted rather than actual amounts for the same accounting period so that:

A manager of a profit centre is responsible for all of the following EXCEPT:

Budgeting slack is most likely to occur when a firm uses the budget only as a planning device and not to evaluate performance.

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

A key use of sensitivity analysis is for cash-flow budgeting.

Responsibility accounting focuses only on control,not on information and knowledge.

Management will most likely behave the same way if a department is structured as a revenue centre or if the same department is structured as a profit centre.

Businesses are increasingly using rolling budgets.

Few costs are clearly under the sole influence of one manager.

Which of the following can a budget not do?

Which of the following describes what a responsibility centre manager can do to a controllable cost for a period of time?

Long-run planning and short-run planning are best performed independently of each other.

Budgets should not be administered rigidly,as changing conditions usually call for changes in plans.

The direct materials quantities _____________ depend on the efficiency with which materials are consumed to produce a product.

Kaizen refers to incorporating cost reductions:

It is necessary to prepare the cash budget and the budgeted income statement before the budgeted balance sheet and budgeted cash flow statement can be prepared.

The number of units in the sales budget and the production budget may differ because of a change in:

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

A company's actual performance should be compared against budgeted rather than actual amounts for the same accounting period so that:

A manager of a profit centre is responsible for all of the following EXCEPT:

Budgeting slack is most likely to occur when a firm uses the budget only as a planning device and not to evaluate performance.

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