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Exam 10: Budgetary Control and Responsibility Accounting

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Question 31

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A static budget

A) should not be prepared in a company.
B) is useful in evaluating a manager's performance by comparing actual variable costs and planned variable costs.
C) shows planned results at the original budgeted activity level.
D) is changed only if the actual level of activity is different than originally budgeted.

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Question 32

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Budget reports should be prepared

A) daily.
B) monthly.
C) weekly.
D) as frequently as needed.

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Question 33

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Kathleen Corp. produced 320,000 units in 150,000 direct labor hours. Production for the period was estimated at 330,000 units and 165,000 direct labor hours. A flexible budget would compare budgeted costs and actual costs, respectively, at

Bogey Co. recorded operating data for its Cheap division for the year. Bogey requires its return to be 10%. $\begin{array}{lr}\text { Sales } & \$ 1,400,000 \\\text { Controllable margin } & 160,000 \\\text { Total average assets } & 4,000,000 \\\text { Fixed costs } & 100,000\end{array}$ What is the ROI for the year?

Which responsibility centers generate both revenues and costs?

As one moves up to each higher level of managerial responsibility,

Performance reports for cost centers compare actual

Costs that relate specifically to one center and are incurred for the sole benefit of that center are

A static budget is not appropriate in evaluating a manager's effectiveness if a company has

Kevin Jarvis Industries produced 192,000 units in 90,000 direct labor hours. Production for the period was estimated at 198,000 units and 99,000 direct labor hours. A flexible budget would compare budgeted costs and actual costs, respectively, at

Within the relevant range of activity, the behavior of total costs is assumed to be

Le Sud Retailers has a current return on investment of 10% and the company has established an 8% minimum rate of return for the division. The division manager has two investment projects available, for which the following estimates have been made: Project A - Annual controllable margin = $24,000, operating assets = $400,000 Project B - Annual controllable margin = $60,000, operating assets = $550,000 Which project should be funded?

Total budgeted fixed costs appearing on a flexible budget will be the same amount as total fixed costs on the master budget.

In the Goblette Manufacturing Company, indirect labor is budgeted for $108,000 and factory supervision is budgeted for $36,000 at normal capacity of 160,000 direct labor hours. If 180,000 direct labor hours are worked, flexible budget total for these costs is:

Most direct fixed costs are not controllable by the profit center manager.

Sydney, Inc. uses flexible budgets. At normal capacity of 16,000 units, budgeted manufacturing overhead is $128,000 variable and $360,000 fixed. If Sydney had actual overhead costs of $500,000 for 18,000 units produced, what is the difference between actual and budgeted costs?

To develop the flexible budget, management takes all of the following steps except identify the

More costs become controllable as one moves down to each lower level of managerial responsibility.

What is budgetary control?

The purpose of the sales budget report is to