Question 1

Which accounting report is most commonly prepared for departmental reporting?

Accepted Answer

A)  Cash flow statement 
B)  Statement of changes in equity 
C)  Income statement 
D)  Balance sheet 
A)  Cash flow statement 
B)  Statement of changes in equity 
C)  Income statement 
D)  Balance sheet C

Question 2

Which of the following statements is not true?

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. D

Question 3

The expenses that will continue to exist even if a department is eliminated are called:

Accepted Answer

A)  traceable expenses. 
B)  indirect expenses. 
C)  controllable costs. 
D)  unavoidable costs. 
A)  traceable expenses. 
B)  indirect expenses. 
C)  controllable costs. 
D)  unavoidable costs. D

Question 4

Which department is typically responsible for direct materials price variances?

Accepted Answer

A)  Production 
B)  Purchasing 
C)  Engineering 
D)  Sales 
A)  Production 
B)  Purchasing 
C)  Engineering 
D)  Sales

Question 5

Which statement is true?

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.

Question 6

A variance is the difference between:

Accepted Answer

A)  a standard cost and a budgeted cost. 
B)  an actual cost and a budgeted cost. 
C)  budgeted costs at two different points of time. 
D)  actual costs at two different points of time. 
A)  a standard cost and a budgeted cost. 
B)  an actual cost and a budgeted cost. 
C)  budgeted costs at two different points of time. 
D)  actual costs at two different points of time.

Question 7

Department Z has a gross profit of $30 000, direct departmental expenses of $12 000 and allocated expenses of $21 000 giving it a net loss of $3000. What would be the effect on the total organisation's profit if Department Z were closed?

Accepted Answer

A)  Profits would increase by $3000 
B)  Profits would decrease by $18 000 
C)  Profits would decrease $9000 
D)  Profits would increase by $30 000 
A)  Profits would increase by $3000 
B)  Profits would decrease by $18 000 
C)  Profits would decrease $9000 
D)  Profits would increase by $30 000

Question 8

Ten minutes of direct labour is needed to produce one unit of product and direct labour is paid $24 per hour. Budgeted output for the period is estimated to be 8000 units. Actual output for the period turns out to be 8500 units and actual labour costs are $36 200 What budgeted direct labour amount should actual direct labour costs be compared to in order to calculate a valid variance?

Accepted Answer

A)  $32 000 
B)  $19 200 
C)  $20 400 
D)  $34 000 
A)  $32 000 
B)  $19 200 
C)  $20 400 
D)  $34 000

Question 9

Which of these is not an engineering method that can be used to develop standards?

Accepted Answer

A)  Time and motion studies 
B)  Work sampling 
C)  Simulation procedures 
D)  Balanced scorecard 
A)  Time and motion studies 
B)  Work sampling 
C)  Simulation procedures 
D)  Balanced scorecard

Question 10

Performance reports should only contain costs, income or resources that are:

Accepted Answer

A)  different from budgeted amounts. 
B)  more than budgeted amounts. 
C)  controllable by the manager. 
D)  actual rather than budgeted amounts. 
A)  different from budgeted amounts. 
B)  more than budgeted amounts. 
C)  controllable by the manager. 
D)  actual rather than budgeted amounts.

Question 11

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 12

Which of the following statements concerning the allocation of indirect expenses to departments is true?

Accepted Answer

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

Question 13

In a decision relating to the possible elimination of a department consideration would need to be given to how many of the following factors?
F1F1F1S1F1F1F10F1F1F1S1F1F1F10Alternative uses of the space currently occupied by the department
F1F1F1S1F1F1F10F1F1F1S1F1F1F10Adverse effect of the elimination of sales of other departments
F1F1F1S1F1F1F10F1F1F1S1F1F1F10Whether all of the direct operating expenses are avoidable

Accepted Answer

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

Question 14

Which of these is not an example of a service department for a university?

Accepted Answer

A)  Personnel 
B)  Marketing 
C)  German department 
D)  University library 
A)  Personnel 
B)  Marketing 
C)  German department 
D)  University library

Question 15

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 16

The performance standard that is usually considered best for use in setting standard costs is:

Accepted Answer

A)  historical. 
B)  attainable. 
C)  ideal. 
D)  average. 
A)  historical. 
B)  attainable. 
C)  ideal. 
D)  average.

Question 17

Which of these statements is not true? A responsibility accounting system:

Accepted Answer

A)  recognises that expenses are the collective responsibility of the organisation. 
B)  requires managers to participate in the development of financial plans for their unit. 
C)  measures separately the performance of each manager's area of responsible. 
D)  holds managers responsible for costs and income over which they have control. 
A)  recognises that expenses are the collective responsibility of the organisation. 
B)  requires managers to participate in the development of financial plans for their unit. 
C)  measures separately the performance of each manager's area of responsible. 
D)  holds managers responsible for costs and income over which they have control.

Question 18

Which of these is a financial performance measure?

Accepted Answer

A)  Customer complaints 
B)  Number of orders shipped 
C)  Working capital ratio 
D)  Hours of inspections 
A)  Customer complaints 
B)  Number of orders shipped 
C)  Working capital ratio 
D)  Hours of inspections

Question 19

For a retailer departmental gross profit is calculated as:

Accepted Answer

A)  departmental sales revenue, less cost of sales, less selling expenses allocated to the department. 
B)  departmental sales revenue, less cost of sales. 
C)  departmental sales revenue, less all expenses allocated to the department. 
D)  departmental sales revenue, less gross profit. 
A)  departmental sales revenue, less cost of sales, less selling expenses allocated to the department. 
B)  departmental sales revenue, less cost of sales. 
C)  departmental sales revenue, less all expenses allocated to the department. 
D)  departmental sales revenue, less gross profit.

Question 20

Which of the following statements concerning departmental (segmental) accounting is true?

Accepted Answer

A)  There is an accounting standard dealing with segment reporting. 
B)  Segment/departmental information is only produced for use by internal management. 
C)  Segment/departmental information can only be produced by large organisations. 
D)  A balance sheet is normally produced for each segment of the business under segmental accounting. 
A)  There is an accounting standard dealing with segment reporting. 
B)  Segment/departmental information is only produced for use by internal management. 
C)  Segment/departmental information can only be produced by large organisations. 
D)  A balance sheet is normally produced for each segment of the business under segmental accounting.

Exam 13: Performance Evaluation for Managers

Which accounting report is most commonly prepared for departmental reporting?

Which of the following statements is not true?

The expenses that will continue to exist even if a department is eliminated are called:

Which department is typically responsible for direct materials price variances?

Which statement is true?

A variance is the difference between:

Department Z has a gross profit of $30 000, direct departmental expenses of $12 000 and allocated expenses of $21 000 giving it a net loss of $3000. What would be the effect on the total organisation's profit if Department Z were closed?

Which of these is not an engineering method that can be used to develop standards?

Performance reports should only contain costs, income or resources that are:

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

Which of the following statements concerning the allocation of indirect expenses to departments is true?

Which of these is not an example of a service department for a university?

A flexible is a budget where:

The performance standard that is usually considered best for use in setting standard costs is:

Which of these statements is not true? A responsibility accounting system:

Which of these is a financial performance measure?

For a retailer departmental gross profit is calculated as:

Which of the following statements concerning departmental (segmental) accounting is true?

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 Closing and Reversing Entries

Accounting for Retailing

Accounting for Systems

Accounting for Manufacturing

Cost Accounting Systems

Cash Management and 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

Statement of Cash Flows

Analysis and Interpretation of Financial Statements

Filters