1. No.049 MC(Points: 2)

Top management notices a variation from budget and an investigation of the difference reveals that the department manager could not be expected to have controlled the variation. Which of the following statements is applicable?

 a. Department managers should be held accountable for all variances from budgets for their departments.

 b. Department managers should only be held accountable for controllable variances for their departments.

 c. Department managers should be credited for favorable variances even if they are beyond their control.

 d. Department managers' performances should not be evaluated based on actual results to budgeted results.

Save Answer  2. No.087 MC(Points: 2)

Which one of the following is not needed in preparing a production budget?

 a. Budgeted unit sales

 b. Budgeted raw materials

 c. Beginning finished goods units

 d. Ending finished goods units

Save Answer  3. No.106 MC(Points: 2)

Beginning cash balance plus total receipts

 a. equals ending cash balance.

 b. must equal total disbursements.

 c. equals total available cash.

 d. is the excess of available cash over disbursements.

Save Answer  4. No.037 MC(Points: 2)

Why are budgets useful in the planning process?

 a. They provide management with information about the company's past performance.

 b. They help communicate goals and provide a basis for evaluation.

 c. They guarantee the company will be profitable if it meets its objectives.

 d. They enable the budget committee to earn their paycheck.

Save Answer  5. No.050 MC(Points: 2)

An unrealistic budget is more likely to result when it

 a. has been developed in a top down fashion.

 b. has been developed in a bottom up fashion.

 c. has been developed by all levels of management.

 d. is developed with performance appraisal usages in mind.

Save Answer  6. No.132 MC(Points: 2)

For a merchandiser, the starting point in the development of the master budget is the

 a. cash budget.

 b. sales budget.

 c. selling and administrative expenses budget.

 d. budgeted income statement.

Save Answer  7. No. 116 MC(Points: 2)

Which one of the following items would never appear on the cash budget

 1. Office Salaries Expense

 2. Interest Expense

 3. Depreciation Expense

 4. Travel Expense

Save Answer  8. No.105 MC(Points: 2)

The financing section of a cash budget is needed if there is a cash deficiency or if the ending cash balance is less than

 a. the prior years.

 b. management's minimum required balance.

 c. the amount needed to avoid a service charge at the bank.

 d. the industry average.

Save Answer  9. No.122 MC(Points: 2)

Lowe Ridge has budgeted its activity for December according to the following information:1. Sales at $400,000, all for cash.2. Budgeted depreciation for December is $10,000.4. The cash balance at December 1 was $10,000.5. Selling and administrative expenses are budgeted at $40,000 for December and are paid for in cash.6. The planned merchandise inventory on December 31 and December 1 is $12,000.7. The invoice cost for merchandise purchases represents 75% of the sales price. All purchases are paid in cash.How much are the budgeted cash disbursements for December?

 a. $230,000

 b. $340,000

 c. $350,000

 d. $328,000

Save Answer  10. No.064 MC(Points: 2)

The total direct labor hours required in preparing a direct labor budget are calculated using the

 a. sales forecast.

 b. production budget.

 c. direct materials budget.

 d. sales budget.

Save Answer  11. No.065 MC(Points: 2)

The direct materials and direct labor budgets provide information for preparing the

 a. sales budget.

 b. production budget.

 c. manufacturing overhead budget.

 d. cash budget.

Save Answer  12. No.126 MC(Points: 2)

Kemper Company's direct materials budget shows total cost of direct materials purchases for April $200,000, May $240,000 and June $280,000. Cash payments are 60% in the month of

purchase and 40% in the following month. The budgeted cash payments for June are

 a. $264,000.

 b. $256,000.

 c. $240,000.

 d. $208,000.

Save Answer  13. No.123 MC(Points: 2)

Streak Merchandising Company expects to purchase $60,000 of materials in March and $70,000 of materials in April. Three-quarters of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. In addition, a 2% discount is received for payments made in the month of purchase. How much will April's cash disbursements for materials purchases be?

 a. $44,100

 b. $54,100

 c. $66,450

 d. $60,000

Save Answer  14. No.099 MC(Points: 2)

A company determined that the budgeted cost of producing a product is $30 per unit. On June 1, there were 40,000 units on hand, the sales department budgeted sales of 150,000 units in June, and the company desires to have 60,000 units on hand on June 30. The budgeted cost of goods manufactured for June would be

 a. $3,900,000.

 b. $5,700,000.

 c. $4,500,000.

 d. $5,100,000.

Save Answer  15. No.072 MC(Points: 2)

The following information is taken from the production budget for the first quarter:Beginning inventory in units 900Sales budgeted for the quarter 342,000Capacity in units of production facility 354,000

How many finished goods units should be produced during the quarter if the company desires 2,400 units available to start the next quarter?

 a. 343,500

 b. 340,500

 c. 355,500

 d. 344,400

Save Answer  16. No.115 MC(Points: 2)

A company's past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder is never collected. Budgeted credit sales were:

 The cash inflow in the month of March is expected to be

 a. $203,400.

 b. $153,900.

 c. $162,000.

 d. $194,400.

Save Answer  17. No.108 MC(Points: 2)

Reed Merchandising Company expects to purchase $90,000 of materials in July and $105,000 of materials in August. Three-quarters of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. How much will August's cash disbursements for materials purchases be?

 a. $67,500

 b. $78,750

 c. $101,250

 d. $105,000

Save Answer  18. No.132 MC(Points: 2)

The denominator in the formula for return on investment calculation is

 a. investment center controllable margin.

 b. dependent on the specific type of profit center.

 c. average investment center operating assets.

 d. sales for the period.

Save Answer  19. No.105 MC(Points: 2)

Controllable margin is most useful for

 a. external financial reporting.

 b. preparing the master budget.

 c. performance evaluation of profit centers.

 d. break-even analysis.

Save Answer  20. No.040 MC(Points: 2)

Budget reports should be prepared

 a. daily.

 b. monthly.

 c. weekly.

 d. as frequently as needed.

Save Answer  21. No.039 MC(Points: 2)

A major element in budgetary control is

 a. the preparation of long-term plans.

 b. the comparison of actual results with planned objectives.

 c. the valuation of inventories.

 d. approval of the budget by the stockholders.

Save Answer  22. No.052 MC(Points: 2)

A static budget is appropriate for

 a. variable overhead costs.

 b. direct materials costs.

 c. fixed overhead costs.

 d. none of these.

Save Answer  23. No.097 MC(Points: 2)

A manager of a cost center is evaluated mainly on

 a. the profit that the center generates.

 b. his or her ability to control costs.

 c. the amount of investment it takes to support the cost center.

 d. the amount of revenue that can be generated.

Save Answer  24. No.104 MC(Points: 2)

Controllable margin is defined as

 a. sales minus variable costs.

 b. sales minus contribution margin.

 c. contribution margin less controllable fixed costs.

 d. contribution margin less noncontrollable fixed costs.

Save Answer  25. No.054 MC(Points: 2)

A flexible budget

 a. is prepared when management cannot agree on objectives for the company.

 b. projects budget data for various levels of activity.

 c. is only useful in controlling fixed costs.

 d. cannot be used for evaluation purposes because budgeted data are adjusted to reflect actual results.

Save Answer  26. No.058 MC(Points: 2)

Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets?

 a. Direct materials cost

 b. Direct labor cost

 c. Variable manufacturing overhead

 d. Fixed manufacturing overhead

Save Answer  27. No.072 MC(Points: 2)

The activity index used in preparing the flexible budget

 a. is prescribed by generally accepted accounting principles.

 b. is only applicable to fixed manufacturing costs.

 c. is the same for all departments.

 d. should significantly influence the costs that are being budgeted.

Save Answer  28. No.107 MC(Points: 2)

Given below is an excerpt from a management performance report:

 The manager's overall performance

 a. is 20% below expectations.

 b. is 20% above expectations.

 c. is equal to expectations.

 d. cannot be determined from information given.

Save Answer  29. No.115 MC(Points: 2)

Halpern Division's operating results include: controllable margin of $150,000, sales totaling $1,200,000, and average operating assets of $500,000. Halpern is considering a project with sales of $100,000, expenses of $86,000, and an investment of average operating assets of $200,000. Halpern's required rate of return is 9%. Should Halpern accept this project?

 a. Yes, ROI will drop by 6.6% which is still above the required rate of return.

 b. No, the return is less than the required rate of 9%.

 c. Yes, ROI still exceeds the cost of capital.

 d. No, ROI will decrease to 7%.

Save Answer  30. No.070 MC(Points: 2)

Romano Roofing's budgeted manufacturing costs for 25,000 squares of shingles are:Fixed manufacturing costs $15,000Variable manufacturing costs $20.00 per square

Romano produced 20,000 squares of shingles during March. How much are budgeted total manufacturing costs in March?

 a. $400,000

 b. $515,000

 c. $500,000

 d. $415,000

Save Answer  31. No.149 MC(Points: 2)

Weiser Company uses flexible budgets. At normal capacity of 8,000 units, budgeted manufacturing overhead is $64,000 variable and $180,000 fixed. If Weiser had actual overhead costs of $250,000 for 9,000 units produced, what is the difference between actual and budgeted costs?

 a. $2,000 unfavorable

 b. $2,000 favorable

 c. $6,000 unfavorable

 d. $8,000 favorable

Save Answer  32. No.121 MC(Points: 2)

CinRich Corporation recorded operating data for its Waterhole division for the year. CinRich requires its return to be 9%.

 How much is ROI for the year?

 a. 10%

 b. 16.7%

 c. 20%

 d. 30%

Save Answer  33. No.113 MC(Points: 2)

The area manager of the Steak House Restaurants is considering two possible expansion alternatives. The required investments, expected controllable margins, and the ROIs of each are as follows:

 The Steak House segment has currently $2,000,000 in invested capital and a controllable margin of $250,000. Which one of following projects will increase the Steak House division's ROI?

 a. Both the Charlotte and Richmond options

 b. Only the Charlotte option

 c. Only the Richmond option

 d. Neither the Charlotte nor the Richmond options

Save Answer  34. No.129 MC(Points: 2)

The total overhead variance is equal to the

 a. sum of the total materials variance and the total labor variance.

 b. difference between the total materials variance and the total labor variance.

 c. sum of the controllable variance and the volume variance.

 d. total variance minus the controllable variance and the volume variance.

Save Answer  35. No.144 MC(Points: 2)

Variance reports are

 a. external financial reports.

 b. SEC financial reports.

 c. internal reports for management.

 d. all of these.

Save Answer  36. No.094 MC(Points: 2)

Labor efficiency is measured by the

 a. materials quantity variance.

 b. total labor variance.

 c. labor quantity variance.

 d. labor rate variance.

Save Answer  37. No.138 MC(Points: 2)

The total overhead variance is the difference between the

 a. actual overhead costs and overhead costs applied based on standard hours allowed.

 b. actual overhead costs and overhead costs applied based on actual hours.

 c. overhead costs applied based on actual hours and overhead costs applied based on standard hours allowed.

 d. the actual overhead costs and the standard direct labor costs.

Save Answer  38. No.117 MC(Points: 2)

If actual costs are greater than standard costs, there is a(n)

 a. normal variance.

 b. unfavorable variance.

 c. favorable variance.

 d. error in the accounting system.

Save Answer  39. No.127 MC(Points: 2)

A favorable variance

 a. is an indication that the company is not operating in an optimal manner.

 b. implies a positive result if quality control standards are met.

 c. implies a positive result if standards are flexible.

 d. means that standards are too loosely specified.

Save Answer  40. No.060 MC(Points: 2)

The direct materials quantity standard would not be expressed in

 a. pounds.

 b. barrels.

 c. dollars.

 d. board feet.

Save Answer  41. No.063 MC(Points: 2)

A manufacturing company would include setup and downtime in their direct

 a. materials price standard.

 b. materials quantity standard.

 c. labor price standard.

 d. labor quantity standard.

Save Answer  42. No.145 MC(Points: 2)

In using variance reports, management looks for

 a. total assets invested.

 b. significant variances.

 c. competitors' costs in comparison to the company's costs.

 d. more efficient ways of valuing inventories.

Save Answer  43. No.148 MC(Points: 2)

The costing of inventories at standard cost for external financial statement reporting purposes is

 a. not permitted.

 b. preferable to reporting at actual costs.

 c. in accordance with generally accepted accounting principles if significant differences exist between actual and standard costs.

 d. in accordance with generally accepted accounting principles if significant differences do not exist between actual and standard costs.

Save Answer  44. No.137 MC(Points: 2)

Unfavorable materials price and quantity variances are generally the responsibility of the

 a. 1

 b. 2

 c. 3

 d. 4

Save Answer  45. No.072 MC(Points: 2)

Breakmorning Corporation produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $4 per pound, but a 2% discount is usually taken. Freight costs are $.15 per pound, and receiving and handling costs are $.10 per pound. The hourly wage rate is $9.00 per hour, but a raise which will average $.25 will go into effect soon. Payroll taxes are $1.00 per hour, and fringe benefits average $2.00 per hour. Standard production time is 1 hour per unit,

and the allowance for rest periods and setup is .2 hours and .1 hours, respectively.The standard direct materials price per pound is

 a. $3.92.

 b. $4.00.

 c. $4.17

 d. $4.25

Save Answer  46. No.178 MC(Points: 2)

Budgeted overhead for Harrington Company at normal capacity of 30,000 direct labor hours is $4.50 per hour variable and $3 per hour fixed. In May, $232,500 of overhead was incurred in working 31,500 hours when 32,000 standard hours were allowed.The overhead controllable variance is

 a. $3,750 favorable.

 b. $1,500 favorable.

 c. $7,500 favorable.

 d. $7,500 unfavorable.

Save Answer  47. No.083 MC(Points: 2)

ToolTime has a standard of 1.5 pounds of materials per unit, at $4 per pound. In producing 2,000 units, ToolTime used 3,100 pounds of materials at a total cost of $12,090. ToolTime's materials quantity variance is

 a. $90 F.

 b. $310 U.

 c. $400 U.

 d. $700 U.

Save Answer  48. No.134 MC(Points: 2)

A company purchases 20,000 pounds of materials. The materials price variance is $3,000 favorable. What is the difference between the standard and actual price paid for the materials?

 a. $.75

 b. $.15

 c. $3.75

 d. Cannot be determined from the data provided.

Save Answer  49. No.104 MC(Points: 2)

The standard number of hours that should have been worked for the output attained is 10,000 direct labor hours and the actual number of direct labor hours worked was 10,500. If the direct labor price variance was $10,500 unfavorable, and the standard rate of pay was $15 per direct labor hour, what was the actual rate of pay for direct labor?

 a. $14 per direct labor hour

 b. $12 per direct labor hour

 c. $16 per direct labor hour

 d. $15 per direct labor hour

Save Answer  50. No.150 MC(Points: 2)

In Sonic Corporation's income statement, they report gross profit of $50,000 at standard and the following variances:

 Sonic would report actual gross profit of

 a. $46,660.

 b. $47,500.

 c. $52,500.

 d. $53,340.

Save Answer