1. The purpose of management accounting is to: a. serve the needs of management b. serve the needs of creditors c. serve the needs of stockholders and regulators d. serve the needs of IRS and government agencies 2. Selling and administrative costs are generally treated as: a. product costs b. inventoriable costs c. period costs d. allocated costs 3. Which of the following accounts would appear in a balance sheet of a manufacturi company? a. cost of goods sold, finished goods and work in process. b. cost of goods sold, cost of goods manufactured and gross margin C. raw materials, work in process and cost of goods sold d. raw materials. work in process and finished goods 4. Wages paid to the factory manager are considered: Direct labor a. Yes Period Cost Yes b. C. No Yes No No d. No Yes 6. Last year, Motor Company incurred the following costs: Direct Materials $60,000 Direct Labor 70,000 Manufacturing overhead 130,000 40,000 38,000 Selling expense Administrative expense Motor Company produced and sold 20,000 units at a price of $37 each. Conversion cost per unit is: a. $9 b. $16 c. $10 d. $17 7. An example of a favorable variance is A) actual revenues are less than expected revenues B) actual expenses are less than expected expenses C) actual material prices are greater than expected material prices D) expected labor costs are less than actual labor costs 8. Spending less than budgeted for maintenance costs will result in a(n) When actual revenues exceed budgeted revenues, this results in a(n) A) unfavorable; unfavorable B) unfavorable; favorable C) favorable; unfavorable D) favorable; favorable 9. Unfavorable variances A) always B) sometimes C) never D) none of the above represent bad decisions made by managers. Variance. variance. 8. Spending less than budgeted for maintenance costs will result in a(n). When actual revenues exceed budgeted revenues, this results in a(n). A) unfavorable; unfavorable B) unfavorable; favorable C) favorable; unfavorable D) favorable; favorable 9. Unfavorable variances represent bad decisions made by managers. variance. variance. A) always B) sometimes C) never D) none of the above 10. A budget prepared for one expected level of activity is called at A) flexible budget B) static budget C) variable budget D) rolling budget 11. A budget prepared for different levels of activity is called a A) rolling budget B) operating budget C) flexible budget D) static budget 12. The static budget is based on the on the level of output. A) actual; expected level of output and the flexible budget is based B) expected; actual C) expected; planned D) actual; projected 13. To calculate the numbers in a flexible budget, managers use A) cost functions developed from regression analysis B) flexible budget formulas C) cost functions obtained from the high-low method D) all of the above 14. When preparing a flexible budget income statement, levels of activity. A) variable B) step C) contributed D) fixed costs are constant at different 14. When preparing a flexible budget income statement, levels of activity. A) variable B) step costs are constant at different C) contributed D) fixed 15. Which of the following statements is FALSE? A) Flexible budgets are prepared for a range of activity. B) Flexible budgets are matched to actual levels of activity. C) A flexible budget is also called a variable budget. D) Flexible budgets are based on different assumptions about cost behavior than those used for static budgets. 16. Oroz Company had the following information available: Expected Costs and Selling Price Based on 5.000 units: Variable manufacturing costs per unit Fixed manufacturing costs per unit Selling price per unit $32 $20 $70 3 Expected production level 5,000 units In the flexible budget at 10,000 units, what is the total manufacturing cost? A) $250,000 B) $420,000 C) $520,000 D) $700,000 17. Perez Company had the following information available: Expected Costs and Selling Price Based on 5,000 Units: Variable manufacturing costs per unit Fixed manufacturing costs per unit Selling price per unit Expected production level $32 $20 $70 5,000 units In the flexible budget at 15,000 units, what is the total manufacturing cost? A) $480,000 B) $580,000 C) $680,000 D) $780,000 18. Huntsman Company's variable selling, and administrative expenses are $48,000 at a production level of 6,000 units. If the production level is 8.000 units, what are the variable selling administrative expenses? A) $48,000 B) $56.000 C) $64.000 D) $80,000 19. Which of the following is used to develop flexible budgets? A) fixed overhead variances B) static budget variances C) flexible budget variances D) cost functions 20. Margaret Duffy Company has the following information available: Budgeted cost of direct materials at 900,000 units $900,000 Budgeted cost of direct materials at 820,000 units $820,000 Actual cost of direct materials at 820,000 units $840,000 Actual level of output(units) 820,000 Planned level of output(units) 900,000 The cost driver of product costs is units of output. What is the flexible budget variance for direct material costs? A) $20,000 Unfavorable B) $20,000 Favorable C) $60,000 Favorable D) $60,000 Unfavorable 21. Corrao Company had a static budgeted operating income of $8.6 million. Actual operating income was $6.4 million. The flexible budget operating income at the actual level of output is $7,000,000. What is the static-budget variance of operating income? A) $1.6 million Favorable B) $1.6 million Unfavorable C) $2.2 million Favorable D) $2.2 million Unfavorable 22. For the current year, LeBombard Company's static budget sales were $225,000. Actual sales for the current year were $220,000. Actual sales last year were $219,000. Expected sales last year were $225,000. What is the static budget variance for sales in the current year? A) $5,000 Favorable B) $5,000 Unfavorable C) $6,000 Favorable D) $6,000 Unfavorable D 23. Differences between the actual results and the flexible budget at the actual level of output achieved are A) static budget B) activity budget variances. C) flexible budget D) operating budget 26. The following information is available for Munter Manufacturing Company. --Direct materials price standard is $3.25 per pound. --Direct materials quantity standard is six pounds per finished unit. --Budgeted production is 25,000 finished units. -175,000 pounds of direct materials were purchased for $525,000. -175,000 pounds of direct materials were used in production. --25,600 finished units of product were produced. What is the direct materials price variance? A) $43,750 Unfavorable B) $43,750 Favorable C) $350,000 Unfavorable D) $350,000 Favorable 27. The following information is presented for the Maybeel Manufacturing Company. - Direct labor rate standard is $11.55. - Direct labor efficiency standard is 2.5 hours per unit. Budgeted production is 1,200 units. Production required 2,910 direct labor hours at a cost of $33,174. - Actual production is 1,150 units. What is the direct labor efficiency variance? A) $404.25 Favorable B) $404.25 Unfavorable C) $1,039.50 Favorable D) $1,039.50 Unfavorable 28. A flexible budget a) is not based on the master budget. b) is widely used in production departments, and least used in service departments. c) report will compare actual costs with the budgeted costs at the actual activity level achieved. d) cannot be prepared for each of the types of budgets included in the master budget