Question 1

Redoing the budget to actual output is most useful:

Accepted Answer

A) For planning purposes 
B) When actual output equals budgeted output 
C) As a tool to help evaluate performance 
D) To calculate profitability accurately 
A) For planning purposes 
B) When actual output equals budgeted output 
C) As a tool to help evaluate performance 
D) To calculate profitability accurately

Question 2

The statement that is not true is:

Accepted Answer

A) Performance reports normally report standard costs and variances 
B) Performance reports should contain space for explanations of variances 
C) Performance reports should be tailored to the responsibilities of the manager or department for which they are prepared 
D) Performance reports do not present the causes of variances 
A) Performance reports normally report standard costs and variances 
B) Performance reports should contain space for explanations of variances 
C) Performance reports should be tailored to the responsibilities of the manager or department for which they are prepared 
D) Performance reports do not present the causes of variances

Question 3

These were Lakeview Company's budgeted production costs for the current year at an expected output of 20 000 units: $$\begin{array} { l l } 
\text { Direct labour } & \$ 13 \text { per unit } \
\text { Direct materials } & \$ 7 \text { per unit } \
\text { Variable overhead } & \$ 5 \text { per unit } \
\text { Fixed ov erhead } & \$ 30000
\end{array}$$ Assume Lakeview uses a flexible budgeting system and actually produced 22 000 units at a total cost of $560 000.By how much did actual production cost differ from the flexible budget amount and in which direction?

Accepted Answer

A) Actual cost was $10 000 over flexible budget 
B) Actual cost was $20 000 under flexible budget 
C) Actual cost was $20 000 over flexible budget 
D) Actual cost was $40 000 under flexible budget 
A) Actual cost was $10 000 over flexible budget 
B) Actual cost was $20 000 under flexible budget 
C) Actual cost was $20 000 over flexible budget 
D) Actual cost was $40 000 under flexible budget

Question 4

An income statement is prepared in segment reporting but a b___________ s__________ is typically not prepared.

Accepted Answer

The answer of An income statement is prepared in segment...

Question 5

A basis for the allocation of delivery expenses to other departments which results in an answer that is not an estimate is:

Accepted Answer

A) Number of deliveries 
B) Sales volume 
C) Cubic volume of deliveries 
D) The allocation of indirect expenses is always an estimate no matter which method is used 
A) Number of deliveries 
B) Sales volume 
C) Cubic volume of deliveries 
D) The allocation of indirect expenses is always an estimate no matter which method is used

Question 6

R__________________ accounting encompasses the accounting procedures used to evaluate the financial performance of responsibility centres.

Accepted Answer

The answer of R__________________ accounting encompasses the accounting procedures used...

Question 7

In a manufacturing firm the personnel department,the accounting department and the advertising department are all examples of s_____________ departments.

Accepted Answer

The answer of In a manufacturing firm the personnel department,the...

Question 8

S____________ costs are carefully predetermined costs of how much it should cost to produce a product or perform a service.

Accepted Answer

The answer of S____________ costs are carefully predetermined costs of...

Question 9

A measurement-based management system which aligns business activities with the vision and strategies of the organisation and which uses measures to monitor performance in achieving these strategies over time is known as the b_______________ _________________.

Accepted Answer

The answer of A measurement-based management system which aligns business...

Question 10

The method not employed in the establishment of standard costs is:

Accepted Answer

A) Analysis of historical performance data 
B) Time and motion studies 
C) Management judgement concerning future operating conditions 
D) Discounted cash flow analysis 
A) Analysis of historical performance data 
B) Time and motion studies 
C) Management judgement concerning future operating conditions 
D) Discounted cash flow analysis

Question 11

The true statement concerning the allocation of indirect expenses to departments is:

Accepted Answer

A) Accountants have developed methods that have completely removed the subjectivity in allocating indirect costs to departments 
B) A departmental profit calculation should exclude expenses that the departmental manager has no control over 
C) When preparing departmental profit reports it is best to assume that the departments are independent businesses 
D) Different accountants will normally chose similar bases to allocate overhead costs to departments 
A) Accountants have developed methods that have completely removed the subjectivity in allocating indirect costs to departments 
B) A departmental profit calculation should exclude expenses that the departmental manager has no control over 
C) When preparing departmental profit reports it is best to assume that the departments are independent businesses 
D) Different accountants will normally chose similar bases to allocate overhead costs to departments

Question 12

The biggest problem with allocating indirect expenses to segments is that:

Accepted Answer

A) Allocations can be somewhat arbitrary and the results can vary widely 
B) Some departments consume more indirect expenses 
C) Fixed costs are ignored 
D) It is a time-consuming exercise 
A) Allocations can be somewhat arbitrary and the results can vary widely 
B) Some departments consume more indirect expenses 
C) Fixed costs are ignored 
D) It is a time-consuming exercise

Question 13

Hot Chilli produces a range of women's swimsuits.During October,the company's records revealed the following information about production of the swimsuits.
$\begin{array}{ll}\text { Standards: }\
\text { Direct materials } & 4 \text { metres @ \$2.50 per metre } \
\text { Direct labour } & 1.5 \text { hours @ \$9.00 per hour }\
\text { Manufacturing overhead }\
\text { Variable } & \$ 5.00 \text { per direct labour hour } \
\text { Fixed } & \$ 5.50 \text { per direct labour hour }
\end{array}$
Compute the standard unit cost for a swimsuit.

Accepted Answer

A) $39.25 
B) $42.25 
C) $33.50 
D) $43.65 
A) $39.25 
B) $42.25 
C) $33.50 
D) $43.65

Question 14

Broadway Store is considering closing down one of its low-profit departments.Assume that discontinuance of this department will not affect sales of the remaining departments.Which of the cost classifications below should be compared with departmental income to determine whether or not to close the department?

Accepted Answer

A) Variable costs 
B) Direct costs 
C) Controllable costs 
D) Avoidable costs 
A) Variable costs 
B) Direct costs 
C) Controllable costs 
D) Avoidable costs

Question 15

The fixed budget performance report of Discount Sale Pty Ltd for the year ended 30 June 2011 shows budgeted manufacturing costs of $420 000 and actual manufacturing costs of $370 000.The favourable variance of $50 000 must have been due to:

Accepted Answer

A) Cost factors 
B) Poor budgeting 
C) Lack of supervision of workers 
D) Cannot be determined from the information provided 
A) Cost factors 
B) Poor budgeting 
C) Lack of supervision of workers 
D) Cannot be determined from the information provided

Question 16

How many of the following could not be cost objects?
.A product
.A specialised item of equipment
.An activity
.A department

Accepted Answer

A) 0 
B) 1 
C) 2 
D) 3 
A) 0 
B) 1 
C) 2 
D) 3

Question 17

If the actual quantity of direct materials used equals the budgeted quantity of direct materials that should have been used,any difference between the budgeted total cost and the actual total cost of direct materials used must be due to a:

Accepted Answer

A) Materials quantity variance 
B) Materials efficiency variance 
C) Overhead variance 
D) Materials price variance 
A) Materials quantity variance 
B) Materials efficiency variance 
C) Overhead variance 
D) Materials price variance

Question 18

The Corporation has three departments,Widgets,Ridgets and Digits.At the end of the accounting period the following information is available. $\begin{array}{|l|r|r|r|r|}
\hline & \text { Widgets } & \text { Ridgets } & \text { Digits } & \text { Total } \
\hline \text { Net Sales } & \$ 5000 & \$ 9000 & \$ 6000 & \$ 20000 \
\hline \text { Cost of sales }& \underline{3000} & \underline{400} & \underline{2400} & \underline{900} \
\hline \text { Gross Profit }&\$ 2000 & 4500 & \$ 3600 & \$ 10100 \
\hline \text { Direct Operating Exps }&\underline{500} & \underline{1000} & \underline{1500} & {3000} \
\hline \text { Departmental Margin }&1500 & \$ 3500 & \$ 2100 & \$ 7100 \
\hline \text { Indirect Operating Exps }&& & & \underline{3000} \
\hline \text { Profit }&& & & \$ 4100 \
\hline 
\end{array}$ The Corporation is considering eliminating the Widgets department.What will be the change in The Corporation's profit if the Widgets department is eliminated? Assume that all indirect expenses are unavoidable and that all other circumstances are held constant.

Accepted Answer

A) $500 fall 
B) $1500 fall 
C) $1000 fall 
D) $1500 increase 
A) $500 fall 
B) $1500 fall 
C) $1000 fall 
D) $1500 increase

Question 19

A flexible is a budget where:

Accepted Answer

A) The budget estimates are prepared for a range of activities 
B) Fixed costs are not included 
C) The estimates are amended if they are not attained in the period 
D) Preparation may be postponed if the entity is very busy or is short staffed 
A) The budget estimates are prepared for a range of activities 
B) Fixed costs are not included 
C) The estimates are amended if they are not attained in the period 
D) Preparation may be postponed if the entity is very busy or is short staffed

Question 20

The true statement is:

Accepted Answer

A) The limitation of actual costs is that they represent what happened not necessarily what should have happened 
B) Standard costs are the costs necessary to produce an average or standard product 
C) Standard costs can serve as benchmarks against which budgeted performance is measured 
D) Standard costs can only be used for analytical purposes and can never be incorporated into the formal accounting system. 
A) The limitation of actual costs is that they represent what happened not necessarily what should have happened 
B) Standard costs are the costs necessary to produce an average or standard product 
C) Standard costs can serve as benchmarks against which budgeted performance is measured 
D) Standard costs can only be used for analytical purposes and can never be incorporated into the formal accounting system.

Exam 13: Performance Evaluation for Managers

Redoing the budget to actual output is most useful:

The statement that is not true is:

An income statement is prepared in segment reporting but a b___________ s__________ is typically not prepared.

A basis for the allocation of delivery expenses to other departments which results in an answer that is not an estimate is:

R__________________ accounting encompasses the accounting procedures used to evaluate the financial performance of responsibility centres.

In a manufacturing firm the personnel department,the accounting department and the advertising department are all examples of s_____________ departments.

S____________ costs are carefully predetermined costs of how much it should cost to produce a product or perform a service.

A measurement-based management system which aligns business activities with the vision and strategies of the organisation and which uses measures to monitor performance in achieving these strategies over time is known as the b_______________ _________________.

The method not employed in the establishment of standard costs is:

The true statement concerning the allocation of indirect expenses to departments is:

The biggest problem with allocating indirect expenses to segments is that:

The fixed budget performance report of Discount Sale Pty Ltd for the year ended 30 June 2011 shows budgeted manufacturing costs of $420 000 and actual manufacturing costs of $370 000.The favourable variance of $50 000 must have been due to:

How many of the following could not be cost objects? .A product .A specialised item of equipment .An activity .A department

If the actual quantity of direct materials used equals the budgeted quantity of direct materials that should have been used,any difference between the budgeted total cost and the actual total cost of direct materials used must be due to a:

A flexible is a budget where:

The true statement is:

Decision Making and the Role of Accounting

Financial Statements for Decision Making

Recording Transactions

Adjusting the Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Retailing

Accounting for Systems

Accounting for Manufacturing

Cost Accounting Systems

Cash Management and Internal Control

Cost-Volume-Profit Analysis for Decision Making

Budgeting for Planning and Control

Differential Analysis,profitability Analysis and Capital Budgeting

Partnerships: Formation,operation and Reporting

Companies: Formation and Operations

Regulation and the Conceptual Framework

Receivables

Inventories

Non-Current Assets: Acquisition and Depreciation

Non-Current Assets: Revaluation,disposal and Other Aspects

Liabilities

Presentation of Financial Statements

Liabilities

Analysis and Interpretation of Financial Statements

Filters

An income statement is prepared in segment reporting but a b_ s is typically not prepared.

A measurement-based management system which aligns business activities with the vision and strategies of the organisation and which uses measures to monitor performance in achieving these strategies over time is known as the b_ ___.