Question 1

The preparation of all the budgets in the master budget forces managers to think about their business operations and to formulate plans,while:

Accepted Answer

A) detecting inaccurate historical records to avoid errors in budgets 
B) setting expectations against which actual results can be compared 
C) completing the budgeting tasks with minimal cross functional feedback 
D) ignoring financial risks and opportunities 
A) detecting inaccurate historical records to avoid errors in budgets 
B) setting expectations against which actual results can be compared 
C) completing the budgeting tasks with minimal cross functional feedback 
D) ignoring financial risks and opportunities

Question 2

Kaizen budgeting allows for budgeting of small incremental increases in costs each budgeting period to allow for the effects of normal inflation.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is a limitation of using past performance as a basis for judging actual results?

Accepted Answer

A) It does not account for productivity increases over the periods. 
B) It increases the incentive for managers to introduce budgetary slack. 
C) It assumes inefficiencies of previous periods without considering possible efficiencies of the budget period. 
D) It increases the tendency of senior managers exaggerating changes in future conditions as opposed to changes in current conditions. 
A) It does not account for productivity increases over the periods. 
B) It increases the incentive for managers to introduce budgetary slack. 
C) It assumes inefficiencies of previous periods without considering possible efficiencies of the budget period. 
D) It increases the tendency of senior managers exaggerating changes in future conditions as opposed to changes in current conditions.

Question 4

The practice of developing reasonably challenging budgets tend to help:

Accepted Answer

A) discourage out-of-the-box and creative thinking as there is very little room for error 
B) set unrealistic expectations and are perceived as overly ambitious and unachievable 
C) increase anxiety without motivation not meeting them is viewed as a failure 
D) motivate improved performance as employees work more intensely to avoid failure 
A) discourage out-of-the-box and creative thinking as there is very little room for error 
B) set unrealistic expectations and are perceived as overly ambitious and unachievable 
C) increase anxiety without motivation not meeting them is viewed as a failure 
D) motivate improved performance as employees work more intensely to avoid failure

Question 5

Activity-based costing analysis takes a long-run perspective and treats all activity costs as variable costs.

Accepted Answer

A) True 
 B)False

Question 6

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 7

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

Accepted Answer

A) True 
 B)False

Question 8

Wallace Company provides the following data for next year:
 
The gross profit rate is 35% of sales.Inventory at the end of December is $29,600 and target ending inventory levels are 10% of next month's sales,stated at cost.
What is the amount of purchases budgeted for January?

Accepted Answer

A) $70,980 
B) $55,420 
C) $78,000 
D) $85,020 
A) $70,980 
B) $55,420 
C) $78,000 
D) $85,020

Question 9

Which one of the following budgets would be prepared using activity based budgeting techniques?

Accepted Answer

A) direct materials purchase budget 
B) revenues budget 
C) manufacturing overhead cost budget 
D) production budget 
A) direct materials purchase budget 
B) revenues budget 
C) manufacturing overhead cost budget 
D) production budget

Question 10

Rolling budgets help management to ________.

Accepted Answer

A) better review the past calendar year 
B) deal with a 5-year time frame 
C) focus on the upcoming budget period 
D) rigidly administer the budget 
A) better review the past calendar year 
B) deal with a 5-year time frame 
C) focus on the upcoming budget period 
D) rigidly administer the budget

Question 11

Three Bears Manufacturing produces an auto-quartz watch movement called OM362.Three Bears expects to sell 20,000 units of OM362 and to have an ending finished inventory of 5,000 units.Currently,it has a beginning finished inventory of 1,100 units.Each unit of OM362 requires two labor operations,two labor hour(s)of assembling and three labor hour(s)of polishing.The direct labor rate for assembling is $11 per assembling hour and the direct labor rate for polishing is $14.50 per polishing hour.
The expected number of hours of direct labor for OM362 is ________.

Accepted Answer

A) 32,200 hours of assembling;48,300 hours of polishing 
B) 47,800 hours of assembling;71,700 hours of polishing 
C) 48,300 hours of assembling;32,200 hours of polishing 
D) 71,700 hours of assembling;47,800 hours of polishing 
A) 32,200 hours of assembling;48,300 hours of polishing 
B) 47,800 hours of assembling;71,700 hours of polishing 
C) 48,300 hours of assembling;32,200 hours of polishing 
D) 71,700 hours of assembling;47,800 hours of polishing

Question 12

A budgeting process can facilitate learning in that feedback from budgets can lead to changes in plans and strategies.

Accepted Answer

A) True 
 B)False

Question 13

Estate Corp. ,has the following information:
 
Purchases are paid for in the following manner:
 
What is the expected Accounts Payable balance as of May 31?

Accepted Answer

A) $34,196 
B) $33,503 
C) $38,768 
D) $4,572 
A) $34,196 
B) $33,503 
C) $38,768 
D) $4,572

Question 14

Sherry and John Enterprises are using the kaizen approach to budgeting for 2018.The budgeted income statement for January 2018 is as follows:
 
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) $637,065 
B) $656,500 
C) $650,000 
D) $643,500 
A) $637,065 
B) $656,500 
C) $650,000 
D) $643,500

Question 15

A master budget ________.

Accepted Answer

A) is the initial plan of what the company intends to accomplish in the period and evolves from both the operating and financing decisions 
B) is only prepared for manufacturers as they are the only type of company with material purchases and work-in-process accounts. 
C) improves companies' market capitalization and evolves from both the investing and financing decisions 
D) is another name given to the financial budget 
A) is the initial plan of what the company intends to accomplish in the period and evolves from both the operating and financing decisions 
B) is only prepared for manufacturers as they are the only type of company with material purchases and work-in-process accounts. 
C) improves companies' market capitalization and evolves from both the investing and financing decisions 
D) is another name given to the financial budget

Question 16

Participation of employees in the budgeting process helps ________.

Accepted Answer

A) create greater commitment towards the budget 
B) create demanding but achievable budget 
C) decrease deviations from the budget 
D) secure communication of sensitive information 
A) create greater commitment towards the budget 
B) create demanding but achievable budget 
C) decrease deviations from the budget 
D) secure communication of sensitive information

Question 17

Creating a little anxiety among managers and staff with challenging budgets helps employee work harder to achieve goals.

Accepted Answer

A) True 
 B)False

Question 18

A budget is the quantitative expression of a proposed plan of action by management for a specified period.

Accepted Answer

A) True 
 B)False

Question 19

When performing a sensitivity analysis,if the selling price per unit is increased,then the ________.

Accepted Answer

A) per unit fixed administrative costs will increase 
B) per unit direct materials purchase price will increase 
C) total volume of sales will increase 
D) total costs for sales commissions and other nonmanufacturing variable costs will increase 
A) per unit fixed administrative costs will increase 
B) per unit direct materials purchase price will increase 
C) total volume of sales will increase 
D) total costs for sales commissions and other nonmanufacturing variable costs will increase

Question 20

Kaizen budgeting does NOT make sense for cost centers.

Accepted Answer

A) True 
 B)False

Exam 6: Master Budget and Responsibility Accounting

The preparation of all the budgets in the master budget forces managers to think about their business operations and to formulate plans,while:

Kaizen budgeting allows for budgeting of small incremental increases in costs each budgeting period to allow for the effects of normal inflation.

Which of the following is a limitation of using past performance as a basis for judging actual results?

The practice of developing reasonably challenging budgets tend to help:

Activity-based costing analysis takes a long-run perspective and treats all activity costs as variable costs.

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

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

Wallace Company provides the following data for next year: The gross profit rate is 35% of sales.Inventory at the end of December is $29,600 and target ending inventory levels are 10% of next month's sales,stated at cost. What is the amount of purchases budgeted for January?

Which one of the following budgets would be prepared using activity based budgeting techniques?

Rolling budgets help management to ________.

A budgeting process can facilitate learning in that feedback from budgets can lead to changes in plans and strategies.

Estate Corp. ,has the following information: Purchases are paid for in the following manner: What is the expected Accounts Payable balance as of May 31?

A master budget ________.

Participation of employees in the budgeting process helps ________.

Creating a little anxiety among managers and staff with challenging budgets helps employee work harder to achieve goals.

A budget is the quantitative expression of a proposed plan of action by management for a specified period.

When performing a sensitivity analysis,if the selling price per unit is increased,then the ________.

Kaizen budgeting does NOT make sense for cost centers.

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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