1) Which of the following A) Budgets help coordinate B) The vast majority of man following statements about budgets and budgeting is FALSE? coordinate financial and operational activities of managers use budgeting as an effective cost management tool. the process of formulating an organization's plans not use budgets for performance evaluation. Budgeting D) Managers do not use bud 5) Two of the above can lead to incentives to cheat and lie. Cheating and lying may take the 2) Misuse of budgets can lead un decisions just to increase profits that are not in the company's best long run form of A) making short-run decisi interests B) budgetary slack decreasing profits when a D) all of the above rofits when actual profits significantly exceed the profit target E) Two of the above except D o main components of a master budget are the 3) The two main components of am Al cash budget and the capital budget churchases budget and the budgeted income statement sted income statement and the budgeted balance sheet Di operating budget and the financial budget C) budgeted income statement and E) None of the above. Which of the following is NOT a component of the operating budget? A) purchases and cost of goods sold budget B) budgeted income statement Ovo operating expense budget D) capital budget E) Two of the above 5) The final output of the operating budget is _and the final output of a financial budget A) budgeted balance sheet and budgeted stockholders' equity B) budgeted balance sheet and budgeted statement of cash flows C) budgeted statement of cash flows and budgeted balance sheet D) budgeted income statement and budgeted balance sheet E) None of the above 6) Santelle Company expects August sales to be $30,000. Approximately 40% of sales are cash sales, Collection of credit sales are 50% in the month of sale, 40% in the month following sale and 5% two months following sale. The remaining 5% is uncollectible. The expected cash collection in August from August sales is_ A) $9,000 B) $12,000 C) $21,000 D) $36,000 E) The correct answer is 7) The activity-based budgeting system emphasizes D) usage quantity E) price; quantity 12) Comell Company had the following information available for its specialty product: Standards for one unit of product Materials and Labor Used to produce 8,500 units: Direct Materials: 5 pounds at $2 per pound Direct Materials: 46,000 pounds at $3 per pound Direct Labor: 0.50 hour at $16 per hour Direct Labor: 4,000 hours at ? per hour If the Direct Labor Price Variance is $4,600 Unfavorable, what is the actual labor rate per hour? A) $16.00 B) $16.50 C) $17.10 D) $17.50 E) My calculation is $_ 13) The Quinn Company makes tables for which the following standards have been developed Standard Inputs Expected Standard Price Expected For Each Unit of Output Per Unit of Input Direct Materials 10 pounds $4 per pound Direct Labor 3 hours $16 per hour Production of 200 tables was expected in June, but 220 tables were actually completed. Direct materials purchased and used were 2,100 pounds at an actual price of $4.40 per pound. Direct labor cost for the month was $10,620, and the actual pay per hour was $18.00. What is the direct labor quantity variance for the month of June? A) $1,120 Favorable B) $1,120 Unfavorable C) $1,260 Favorable D) $1,260 Unfavorable E) My calculation is 14) Which of the following statement is FALSE? A) One cause of a flexible budget variance for direct labor may be a difference between standard and actual hourly wage rates for factory workers. B) A quantity variance for direct materials measures the deviation between the quantity of inputs that should have been used to achieve the actual output and the actual quantity of inputs used to achieve the actual output. The flexible budget variance for direct labor equals the labor price variance plus the labor quantity variance. D) The flexible budget variance for direct labor can be broken down into a price variance and an effectiveness variance. E) A favorable materials price variance may lead to an unfavorable materials usage variance 15) Variable overhead efficiency variances are unfavorable when A) the actual cost-driver activity exceeds the standard activity allowed for the actual output B) the actual cost driver activity is less than the standard activity allowed for the actual output C) the actual cost driver activity exceeds the standard activity allowed for the static budget output D) the actual cost-driver activity is less than the standard activity allowed for the static budget output E) I miss Prof. Loh and the sound of his voice speaking so fast. 16) Simmons Company has the following information available for variable overhead costs. Direct labor hours are the cost driver for variable overhead costs. Actual variable overhead costs $4,700 Standard variable overhead costs $1.20 per hour Actual direct labor hours 3,750 hours Standard direct labor hours per unit 5 hours Units produced 200 What is the variable overhead spending variance? A) $200 Favorable B) $200 Unfavorable C) $500 Favorable D) $500 Unfavorable E) My calculation is 17) The efficiency variance for fixed overhead costs A) is greater than the flexible budget variance for fixed overhead costs B) is greater than the spending variance for fixed overhead costs C) is greater than the flexible budget variance for variable overhead costs D) is less than the spending variance for fixed overhead costs E) does not exist within a given capacity. 18) Which of the following statements is FALSE? A) Capital-budgeting decisions have significant financial effects beyond the current year. B) Discounted cash flow models focus on future cash inflows and outflows. C) Discounted cash flow models consider the time value of money D) Discounted cash flow models focus on net income. E) Discounted cash flow models compare cash outflows today to the present value of future cash flows. 19) Which of the following statements is EALSE? A) The higher the minimum desired rate of return, the lower the present value of each future cash flow. B) Higher required rates of return lead to lower net present values for capital investments C) Higher required rates of return lead to higher net present values for capital investments D) The net present value for a project can be negative or positive depending on the minimum desired rate of return used E) When using an NPV model, we assume predicted cash flows are certain to occur at the times Specified 20) Which of the following statement is TRUE? A) The IRR model determines the interest rate at which the NPV of an investment equals zero. B) In the net present value method, the only relevant operating cash flows are the ones that differ among alternatives