1 Which of the following statements is true More than one may be correct Cash collections in a schedule of cash collections typically consist of collections on sales made to customers in prior periods plus collections on sales made in the current budget period The number of units to be produced in a period can be determined by adding the expected sales to the desired ending inventory and then deducting the beginning inventory 2 Which of the following statements is true More than one may be correct In a production budget, if the number of units in finished goods inventory at the end of the period is less than the number of units in finished goods inventory at the beginning of the period, then the expected number of units sold is less than the number of units to be produced during the period In the merchandise purchases budget, the required purchases (in units) for a period can be determined by subtracting the beginning merchandise inventory (in units) from the budgeted sales (in units) and desired ending merchandise inventory (in units) When preparing a direct materials budget, beginning inventory for raw materials should be added to production needs, and desired ending inventory should be subtracted to determine the amount of raw materials to be purchased 3 Which of the following statements is true More than one may be correct When Raw Materials, Work in Process, and Finished Goods are recorded and carried at their standard cost, the actual prices paid for inputs and the actual quantities of inputs that are used in production affect the costs recorded in the inventory accounts As defined it the text, the ending balance in retained earnings equals the beginning balance in retained earnings plus net operating income minus dividends 4 Which of the following statements is true There is only one right answer The spending variance for a variable expense will equal zero if the actual expense incurred equals the expense expected for the actual level of activity The spending variance for a variable expense will be unfavorable if the amount of the expense contained in the flexible budget is greater than the actual amount of the expense The spending variance for a variable expense will be unfavorable if the amount of the expense contained in the flexible budget is less than the planned amount of the expense The spending variance for a variable expense can be favorable or unfavorable depending on whether the actual expense is greater than or less than the planned expense 5 Assume a manufacturing company is deciding whether to make or buy a component part Which of the following indicates the need to include an opportunity cost when making the decision If the company buys the part (instead of making it) it will expand the unused capacity within its plant If the company buys the part (instead of making it) it can use newly available capacity to introduce and produce another profitable product If the company buys the part (instead of making it) it will pay a price to the supplier that is less than the full manufacturing cost of the part If the company buys the part (instead of making it) it will continue to pay the full salary of the plant manager 6 Assume a manufacturing company is deciding whether to accept or reject a special order opportunity Which of the following statements is true The financial analysis should include an allocated amount of fixed manufacturing overhead cost The financial analysis should include the incremental costs incurred to fulfill the order The financial analysis should exclude all variable and fixed overhead costs because they are indirect costs The financial analysis should include an allocated amount of fixed manufacturing overhead cost plus an allocated amount of the companys general administrative expenses

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1. Which of the following statements is true? More than one may be correct. Cash collections in a schedule of cash collections typically consist of

1. Which of the following statements is true? More than one may be correct.

Cash collections in a schedule of cash collections typically consist of collections on sales made to customers in prior periods plus collections on sales made in the current budget period.
The number of units to be produced in a period can be determined by adding the expected sales to the desired ending inventory and then deducting the beginning inventory.

2. Which of the following statements is true? More than one may be correct.

In a production budget, if the number of units in finished goods inventory at the end of the period is less than the number of units in finished goods inventory at the beginning of the period, then the expected number of units sold is less than the number of units to be produced during the period.
In the merchandise purchases budget, the required purchases (in units) for a period can be determined by subtracting the beginning merchandise inventory (in units) from the budgeted sales (in units) and desired ending merchandise inventory (in units).
When preparing a direct materials budget, beginning inventory for raw materials should be added to production needs, and desired ending inventory should be subtracted to determine the amount of raw materials to be purchased.

3. Which of the following statements is true? More than one may be correct.

When Raw Materials, Work in Process, and Finished Goods are recorded and carried at their standard cost, the actual prices paid for inputs and the actual quantities of inputs that are used in production affect the costs recorded in the inventory accounts.
As defined it the text, the ending balance in retained earnings equals the beginning balance in retained earnings plus net operating income minus dividends.

4. Which of the following statements is true? There is only one right answer.

The spending variance for a variable expense will equal zero if the actual expense incurred equals the expense expected for the actual level of activity.
The spending variance for a variable expense will be unfavorable if the amount of the expense contained in the flexible budget is greater than the actual amount of the expense.
The spending variance for a variable expense will be unfavorable if the amount of the expense contained in the flexible budget is less than the planned amount of the expense.
The spending variance for a variable expense can be favorable or unfavorable depending on whether the actual expense is greater than or less than the planned expense.

5. Assume a manufacturing company is deciding whether to make or buy a component part. Which of the following indicates the need to include an opportunity cost when making the decision?

If the company buys the part (instead of making it) it will expand the unused capacity within its plant.
If the company buys the part (instead of making it) it can use newly available capacity to introduce and produce another profitable product.
If the company buys the part (instead of making it) it will pay a price to the supplier that is less than the full manufacturing cost of the part.
If the company buys the part (instead of making it) it will continue to pay the full salary of the plant manager.

6. Assume a manufacturing company is deciding whether to accept or reject a special order opportunity. Which of the following statements is true?

The financial analysis should include an allocated amount of fixed manufacturing overhead cost.
The financial analysis should include the incremental costs incurred to fulfill the order.
The financial analysis should exclude all variable and fixed overhead costs because they are indirect costs.
The financial analysis should include an allocated amount of fixed manufacturing overhead cost plus an allocated amount of the companys general administrative expenses.