Question 1

Which of the following departments is most likely to be a profit center?

Accepted Answer

A) the accounting department of a company that also assists in budgeting process 
B) the research and development department of a company 
C) the sales department of a company whose objective is to maximize the revenues 
D) the consulting department of a law firm 
A) the accounting department of a company that also assists in budgeting process 
B) the research and development department of a company 
C) the sales department of a company whose objective is to maximize the revenues 
D) the consulting department of a law firm

Question 2

Managers who feel that top management does not believe in the budget are most likely to ________.

Accepted Answer

A) pick up the slack and participate in the budgeting process 
B) to face little interference in the day-to-day aspects of running the business 
C) be less engaged participants in the budgeting process and less committed to achieving budgeted targets 
D) convert the budget to a shorter more reasonable time period that will help with real time reporting 
A) pick up the slack and participate in the budgeting process 
B) to face little interference in the day-to-day aspects of running the business 
C) be less engaged participants in the budgeting process and less committed to achieving budgeted targets 
D) convert the budget to a shorter more reasonable time period that will help with real time reporting

Question 3

Companies implementing kaizen budgeting believe that employees who actually do the job have the best knowledge of how the job can be done better.

Accepted Answer

A) True 
 B)False

Question 4

A rolling budget is the same as a continuous budget.

Accepted Answer

A) True 
 B)False

Question 5

Describe the concept of kaizen budgeting.

Accepted Answer

Kaizen budgeting explicitly incorporates

Question 6

Kaizen budgeting is driven by ________.

Accepted Answer

A) management 
B) employees 
C) stockholders 
D) creditors 
A) management 
B) employees 
C) stockholders 
D) creditors

Question 7

Which of the following is the fundamental purpose of responsibility accounting?

Accepted Answer

A) to penalize managers for inefficiency 
B) to gather information that will enable future improvement 
C) to create an efficient and centralized organization 
D) to evaluate the performance of managers 
A) to penalize managers for inefficiency 
B) to gather information that will enable future improvement 
C) to create an efficient and centralized organization 
D) to evaluate the performance of managers

Question 8

Which of the following is true of budgets when they are administered thoughtfully?

Accepted Answer

A) They eliminate subjectivity in performance evaluation. 
B) They can eliminate the uncertainty faced by a company. 
C) They promote coordination within the subunits of a company. 
D) They are a substitute the planning and coordination functions of management. 
A) They eliminate subjectivity in performance evaluation. 
B) They can eliminate the uncertainty faced by a company. 
C) They promote coordination within the subunits of a company. 
D) They are a substitute the planning and coordination functions of management.

Question 9

Variances between actual and budgeted amounts inform management about performance relative to the budget.

Accepted Answer

A) True 
 B)False

Question 10

Bob and Dale have just purchased a small honey manufacturing company that was having financial difficulties.After a brief operating period,they decided that the company's main problem was an improper budgeting function.The company made a good product and market potential was great.
Required:
Describe the usual budgeting cycle that well-managed companies adopt?

Accepted Answer

The usual budgeting cycle that well-mana

Question 11

Which of the following is true of responsibility accounting?

Accepted Answer

A) It is a system that measures the plans,budgets,actions,and actual results of a responsibility center. 
B) It is an arrangement of lines of responsibility and authority within a responsibility center. 
C) It explicitly incorporates continuous improvement and changes due to learning curve. 
D) It examines how a result will change if the original plan is not achieved. 
A) It is a system that measures the plans,budgets,actions,and actual results of a responsibility center. 
B) It is an arrangement of lines of responsibility and authority within a responsibility center. 
C) It explicitly incorporates continuous improvement and changes due to learning curve. 
D) It examines how a result will change if the original plan is not achieved.

Question 12

Operating decisions primarily deal with ________.

Accepted Answer

A) the best use of scarce resources 
B) how to obtain funds to acquire resources 
C) acquiring equipment and buildings 
D) satisfying stockholders 
A) the best use of scarce resources 
B) how to obtain funds to acquire resources 
C) acquiring equipment and buildings 
D) satisfying stockholders

Question 13

The possibility of exchange rate fluctuations does NOT influence the budgeting procedures in a multinational corporation.

Accepted Answer

A) True 
 B)False

Question 14

The revenues budget reveals

Accepted Answer

A) expected cash flows for each product 
B) actual unit sales from last year multiplied by the budget period's expected selling prices for each product 
C) the expected level of unit sales multiplied by expected unit selling prices for company products 
D) the variance of sales from actual for each product 
A) expected cash flows for each product 
B) actual unit sales from last year multiplied by the budget period's expected selling prices for each product 
C) the expected level of unit sales multiplied by expected unit selling prices for company products 
D) the variance of sales from actual for each product

Question 15

Variances that are calculated frequently and in a timely manner can provide early warnings to management so corrective action can be taken.

Accepted Answer

A) True 
 B)False

Question 16

The sales forecast should be primarily based on ________.

Accepted Answer

A) statistical analysis 
B) input from sales managers and sales representatives 
C) production capacity   
A) statistical analysis 
B) input from sales managers and sales representatives 
C) production capacity

Question 17

Nantucket Industries manufactures and sells two models of watches,Prime and Luxuria.It expects to sell 4,000 units of Prime and 1,100 units of Luxuria in 2019.The following estimates are given for 2019:
 
Nantucket had an inventory of 230 units of Prime and 125 units of Luxuria at the end of 2018.It has decided that as a measure to counter stock outages it will maintain ending inventory of 360 units of Prime and 210 units of Luxuria.
Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $15.There were 100 units of Crimpson in stock at the end of 2018.The management does not want to have any stock of Crimpson at the end of 2019.
What is the amount budgeted for purchase of Crimpson in 2019?

Accepted Answer

A) $61,950 
B) $16,275 
C) $17,775 
D) $16,500 
A) $61,950 
B) $16,275 
C) $17,775 
D) $16,500

Question 18

Which of the following best describes a rolling budget?

Accepted Answer

A) It is a budget that continually outlines the amount required to roll over debt in a future period. 
B) It is created continually by adding a month,quarter,or year to the period just ended 
C) It is a budget that outlines budgeted expenses while utilizing a moving average 
D) It is a budget that is submitted to a bank at the beginning of every month as per a loan covenant. 
A) It is a budget that continually outlines the amount required to roll over debt in a future period. 
B) It is created continually by adding a month,quarter,or year to the period just ended 
C) It is a budget that outlines budgeted expenses while utilizing a moving average 
D) It is a budget that is submitted to a bank at the beginning of every month as per a loan covenant.

Question 19

Favata Company has the following information:
   
In addition,the cost of goods sold rate is 70% and the desired inventory level is 30% of next month's cost of sales.
Required:
Prepare a purchases budget for July through September.

Accepted Answer

@#IMG-DLM&_TB5540_00

Question 20

First Class,Inc. ,expects to sell 22,000 pool cues for $12 each.Direct materials costs are $3,direct manufacturing labor is $4,and manufacturing overhead is $0.84 per pool cue.The following inventory levels apply to 2019:
 
On the 2019 budgeted income statement,what amount will be reported for sales?

Accepted Answer

A) $277,200 
B) $264,000 
C) $396,000 
D) $409,200 
A) $277,200 
B) $264,000 
C) $396,000 
D) $409,200

Exam 6: Master Budget and Responsibility Accounting

Which of the following departments is most likely to be a profit center?

Managers who feel that top management does not believe in the budget are most likely to ________.

Companies implementing kaizen budgeting believe that employees who actually do the job have the best knowledge of how the job can be done better.

A rolling budget is the same as a continuous budget.

Describe the concept of kaizen budgeting.

Kaizen budgeting is driven by ________.

Which of the following is the fundamental purpose of responsibility accounting?

Which of the following is true of budgets when they are administered thoughtfully?

Variances between actual and budgeted amounts inform management about performance relative to the budget.

Which of the following is true of responsibility accounting?

Operating decisions primarily deal with ________.

The possibility of exchange rate fluctuations does NOT influence the budgeting procedures in a multinational corporation.

The revenues budget reveals

Variances that are calculated frequently and in a timely manner can provide early warnings to management so corrective action can be taken.

The sales forecast should be primarily based on ________.

Which of the following best describes a rolling budget?

Favata Company has the following information: In addition,the cost of goods sold rate is 70% and the desired inventory level is 30% of next month's cost of sales. Required: Prepare a purchases budget for July through September.

First Class,Inc. ,expects to sell 22,000 pool cues for $12 each.Direct materials costs are $3,direct manufacturing labor is $4,and manufacturing overhead is $0.84 per pool cue.The following inventory levels apply to 2019: On the 2019 budgeted income statement,what amount will be reported for sales?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

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

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