A direct materials price variance is considered favorable if the amount paid is less than the standard.

Group of answer choices

True

False

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Question 22 pts

When the direct materials price variance is unfavorable, the purchasing department should be consulted to determine what happened.

Group of answer choices

True

False

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Question 32 pts

The sales budget is the first one prepared in the master budget sequence.

Group of answer choices

True

False

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Question 42 pts

The direct labor rate variance in the direct labor standard costing model is the responsibility of the human resources department.

Group of answer choices

True

False

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Question 52 pts

Typically, an accounting or purchasing department in a company would be considered a cost center.

Group of answer choices

True

False

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Question 62 pts

The residual income amount should be greater than zero to be considered a favorable outcome for a division, product line, or department.

Group of answer choices

True

False

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Question 72 pts

Communication of company goals and expectations is a benefit of budgeting.

Group of answer choices

True

False

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Question 82 pts

The purchasing department is responsible for any direct labor efficiency variances.

Group of answer choices

True

False

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Question 92 pts

The flexible budget is based on knowing the cost formula for the variable and fixed expenses.

Group of answer choices

True

False

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Question 102 pts

The return on investment (ROI) calculation measures the dollars added or subtracted to the company's treasury.

Group of answer choices

True

False

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Question 113 pts

When preparing a production budget, the required production equals:

Group of answer choices

Budgeted sales + desired ending inventory - beginning inventory

Budgeted sales - beginning inventory - desired ending inventory

Budgeted sales + desired ending inventory + beginning inventory

Budgeted sales - desired ending inventory + beginning inventory

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Question 123 pts

Which of the following is not an example of a responsibility center?

Group of answer choices

contribution center

profit center

cost center

investment center

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Question 133 pts

When preparing a flexible budget for a car wash, some cost are considered fixed expenses, while others are considered a variable cost. Which of the following would be considered a fixed expense for a car wash?

Group of answer choices

depreciation on the equipment

cleaning supplies

electricity

machinery repairs

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Question 143 pts

When preparing a flexible budget for a car wash, some costs are considered fixed expenses, while others are considered a variable cost. Which of the following would be considered a variable cost for a car wash?

Group of answer choices

electricity

salary of the car wash manager

monthly rent on the facility

depreciation on the equipment

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Question 153 pts

Barklee Company has budgeted sales of 30,000 units in January and 60,000 units in February. The company has 5,000 units of finished goods on hand on January 1. If the company requires an ending inventory equal to 10% of the next month's sales, required production for the month of January should be:

Group of answer choices

31,000 units

29,000 units

30,000 units

41,000 units

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Question 163 pts

Variances are computed by taking the difference between which of the following?

Group of answer choices

actual cost and standard cost

actual cost and differential cost

variable cost and fixed cost

product cost and period cost

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Question 173 pts

The variance that is most useful in assessing the performance of the purchasing department manager is:

Group of answer choices

the materials price variance

the materials quantity variance

the direct labor rate variance

the direct labor efficiency variance

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Question 183 pts

Chandler Corporation uses residual income to evaluate the performance of its divisions. The company's minimum required rate of return is 11%. In April, the Commercial Products Division had average operating assets of $100,000 and net operating income of $20,000. What was the Commercial Products Division's residual income in April?

Group of answer choices

$9,000

$80,000

$20,000

$79,000

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Question 193 pts

Which of the following is used in the ROI (return on investment) calculation?

Group of answer choices

net operating income in the numerator

net operating income in the denominator

average operating assets in the numerator

fixed assets in the denominator

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Question 203 pts

The purpose of the Information Technology Department of Fullerton Corporation is to assist the various departments of the corporation with their information needs free of charge. The Information Technology Department would best be evaluated as a:

Group of answer choices

cost center

revenue center

profit center

intelligent center

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Question 213 pts

Which of the following is not a benefit of budgeting?

Group of answer choices

it reduces the need for tracking actual cost activity

it uncovers potential bottlenecks

it provides a communication of the company's goals

it sets benchmarks for evaluation performance

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Question 223 pts

The purpose of the production budget is to:

Group of answer choices

inform the production team how many units of product must be manufactured in each month, quarter, or year

to inform the purchasing department how much direct materials to purchase in each month, quarter, or year

to help the marketing team prepare the sales budget

to use at the bank to apply for financing

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Question 233 pts

What department should be held accountable for an unfavorable direct materials price variance?

Group of answer choices

purchasing

production

engineering

human resources

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Question 243 pts

Sunnyvale Corporation makes collections on sales according to the following schedule:

40% in the month of sale

50% in the month after the sale

10% two months after the sale

Here are their expected sales for the first quarter:

January............$70,000

February..........$50,000

March...............$30,000

How much cash will they collect in the month of March?

Group of answer choices

$44,000

$30,000

$42,000

$37,000

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Question 253 pts

The purpose of a flexible budget is to:

Group of answer choices

compare actual and budgeted results at virtually any level of activity

give management excuses to justify why they have large variances

reduce the time to prepare the annual budget

eliminate fluctuations in production reports by ignoring variable costs

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Question 263 pts

Which of the following represents the normal sequence in which the budgets are prepared in the master budget:

Group of answer choices

Sales budget, production budget, income statement

Balance sheet, sales budget, direct materials budget

Cash receipts budget, production budget, sales budget

Production budget, sales budget, income statement