Question 1

Boland Manufacturing prepared a 2013 budget for 120,000 units of product.Actual production in 2013 was 130,000 units.To be most useful, what amounts should a performance report for this company compare?

Accepted Answer

A)  The actual results for 130,000 units with the original budget for 120,000 units.
B)  The actual results for 130,000 units with a new budget for 130,000 units.
C)  The actual results for 130,000 units with last year's actual results for 134,000 units.
D)  It doesn't matter.All of these choices are equally useful.

Question 2

What budgeted amounts appear on the flexible budget?

Accepted Answer

A)  Original budgeted amounts at the static budget activity level
B)  Actual costs for the budgeted activity level
C)  Budgeted amounts for the actual activity level achieved
D)  Actual costs for the estimated activity level

Question 3

Which responsibility centers generate both revenues and costs?

Accepted Answer

A)  Investment and profit centers
B)  Profit and cost centers
C)  Cost and investment centers
D)  Only profit centers

Question 4

If a company plans to sell 48,000 units of product but sells 60,000, the most appropriate comparison of the cost data associated with the sales will be by a budget based on

Accepted Answer

A)  the original planned level of activity.
B)  54,000 units of activity.
C)  60,000 units of activity.
D)  48,000 units of activity.

Question 5

The foreign subsidiary of a large corporation is

Accepted Answer

A)  not a responsibility center.
B)  a profit center.
C)  a cost center.
D)  an investment center.

Question 6

A major element in budgetary control is

Accepted Answer

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.

Question 7

If an investment center has a $90,000 controllable margin and $1,200,000 of sales, what average operating assets are needed to have a return on investment of 10%?

Accepted Answer

A)  $120,000
B)  $210,000
C)  $900,000
D)  $1,200,000

Question 8

The master budget is not used in the budgetary control process.

Accepted Answer

A) True 
 B)False

Question 9

A static budget is changed only when actual activity is different from the level of activity expected.

Accepted Answer

A) True 
 B)False

Question 10

The purpose of the departmental overhead cost report is to

Accepted Answer

A)  control indirect labor costs.
B)  control selling expense.
C)  determine the efficient use of materials.
D)  control overhead costs.

Question 11

The comparison of differences between actual and planned results

Accepted Answer

A)  is done by the external auditors.
B)  appears on the company's external financial statements.
C)  is usually done orally in departmental meetings.
D)  appears on periodic budget reports.

Question 12

Controllable margin is subtracted from controllable fixed costs to get net income for a profit center.

Accepted Answer

A) True 
 B)False

Question 13

The dollar amount of the controllable margin

Accepted Answer

A)  is usually higher than the contribution margin.
B)  is usually lower than the contribution margin.
C)  is always equal to the contribution margin.
D)  cannot be a negative figure.

Question 14

Controllable margin is defined as

Accepted Answer

A)  sales minus variable costs.
B)  sales minus contribution margin.
C)  contribution margin less controllable fixed costs.
D)  contribution margin less noncontrollable fixed costs.

Question 15

All of the following statements are correct about management by exception except it

Accepted Answer

A)  enables top management to focus on problem areas that need attention.
B)  means that management has to investigate every budget difference.
C)  requires that there must be some guidelines for identifying an exception.
D)  means that top management's review of a budget report is focused primarily on differences between actual results and planned objectives.

Question 16

An investment center generated a contribution margin of $400,000, fixed costs of $200,000 and sales of $2,000,000.The center's average operating assets were $800,000.How much is the return on investment?

Accepted Answer

A)  25%
B)  175%
C)  50%
D)  75%

Question 17

The terms "direct fixed costs" and "indirect fixed costs" are synonymous with "traceable costs" and "common costs," respectively.

Accepted Answer

A) True 
 B)False

Question 18

When budgeted and actual results are not the same amount, there is a budget

Accepted Answer

A)  error.
B)  difference.
C)  anomaly.
D)  by-product.

Question 19

Sales results that are evaluated by a static budget might show
1.	favorable differences that are not justified.
2.	unfavorable differences that are not justified.

Accepted Answer

A)  1
B)  2
C)  both 1 and 2.
D)  neither 1 nor 2.

Question 20

A flexible budget can be prepared for which of the following budgets comprising the master budget?

Accepted Answer

A)  Sales
B)  Overhead
C)  Direct materials
D)  All of these.

Exam 10: Reporting and Analyzing Liabilities

Which responsibility centers generate both revenues and costs?

Correct AnswerverifiedShow Answer

A flexible budget can be prepared for which of the following budgets comprising the master budget?

Correct AnswerverifiedShow Answer

If a company plans to sell 48,000 units of product but sells 60,000, the most appropriate comparison of the cost data associated with the sales will be by a budget based on

Correct AnswerverifiedShow Answer

Boland Manufacturing prepared a 2013 budget for 120,000 units of product.Actual production in 2013 was 130,000 units.To be most useful, what amounts should a performance report for this company compare?

Correct AnswerverifiedShow Answer

The master budget is not used in the budgetary control process.

Correct AnswerverifiedShow Answer

The foreign subsidiary of a large corporation is

Correct AnswerverifiedShow Answer

The purpose of the departmental overhead cost report is to

Correct AnswerverifiedShow Answer

Controllable margin is subtracted from controllable fixed costs to get net income for a profit center.

Correct AnswerverifiedShow Answer

A static budget is changed only when actual activity is different from the level of activity expected.

Correct AnswerverifiedShow Answer

Controllable margin is defined as

Correct AnswerverifiedShow Answer

Sales results that are evaluated by a static budget might show 1. favorable differences that are not justified. 2. unfavorable differences that are not justified.

Correct AnswerverifiedShow Answer

The dollar amount of the controllable margin

Correct AnswerverifiedShow Answer

A major element in budgetary control is

Correct AnswerverifiedShow Answer

An investment center generated a contribution margin of $400,000, fixed costs of $200,000 and sales of $2,000,000.The center's average operating assets were $800,000.How much is the return on investment?

Correct AnswerverifiedShow Answer

The comparison of differences between actual and planned results

Correct AnswerverifiedShow Answer

If an investment center has a $90,000 controllable margin and $1,200,000 of sales, what average operating assets are needed to have a return on investment of 10%?

Correct AnswerverifiedShow Answer

The terms "direct fixed costs" and "indirect fixed costs" are synonymous with "traceable costs" and "common costs," respectively.

Correct AnswerverifiedShow Answer

All of the following statements are correct about management by exception except it

Correct AnswerverifiedShow Answer

When budgeted and actual results are not the same amount, there is a budget

Correct AnswerverifiedShow Answer

What budgeted amounts appear on the flexible budget?

Correct AnswerverifiedShow Answer

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