Question 1.1. When is a budget most likely to be effective? (Points : 2)

it is used to assess blame when things do not occur according to plans. it is not used to evaluate a manager's performance. employees and managers at the lower levels do not get involved in the budgeting process. it has top management support.

Question 2.2. When is a static budget inappropriate in evaluating a company manager's effectiveness? (Points : 2)

When the company has substantial fixed costs. When the company has substantial variable costs. When the company has planned activity levels that match actual activity levels. When the company has no variable costs.

Question 3.3. Long-range planning usually encompasses a period of at least how long? (Points : 2)

1 year 2 years 5 years 10 years

Question 4.4. What is a common starting point in the budgeting process? (Points : 2)

expected future net income. past performance. to motivate the sales force. a clean slate, with no expectations.

Question 5.5. What is the primary difference between a static budget and a flexible budget? (Points : 2)

The static budget contains only fixed costs, while the flexible budget contains only variable costs. The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels. The static budget is constructed using input from only upper level management, while a flexible budget obtains input from all levels of management. The static budget is prepared only for units produced, while a flexible budget reflects the number of units sold.

Question 6.6. What is another name for the static budget? (Points : 2)

master budget. overhead budget. permanent budget. inflexible budget.

Question 7.7. What is the purpose of the sales budget report? (Points : 2)

determine whether sales goals are being met. control selling expenses. determine whether income objectives are being met. control sales commissions.

Question 8.8. The production budget shows expected unit sales of 65,000. Beginning finished goods units are 11,200. Required production units are 67,200. What are the desired ending finished goods units? (Points : 2)

9,000 11,200 12,800 13,400

Question 9.9. Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets? (Points : 2)

Direct materials cost Direct labor cost Variable manufacturing overhead Fixed manufacturing overhead

Question 10.10. Which of the following are financial measures of performance?

Controllable margin

Product quality

Labor productivity

(Points : 2)

1 2 3 1 and 3

Question 11.11. The direct materials and direct labor budgets provide information for preparing what? (Points : 2)

sales budget. production budget. manufacturing overhead budget. cash budget.

Question 12.12. Which statement is applicable to Not-for-profit entities? (Points : 2)

They do not use responsibility accounting. They utilize responsibility accounting in trying to maximize net income. They utilize responsibility accounting in trying to minimize the cost of providing services. They have only noncontrollable costs.

Question 13.13. The master budget of a company shows that the planned activity level for next year is expected to be 100,000 machine hours. At this level of activity, the following manufacturing overhead costs are expected: Indirect labor $480,000 Machine supplies 120,000 Indirect materials 140,000 Depreciation on factory building 80,000 Total manufacturing overhead $820,000 A flexible budget for a level of activity of 120,000 machine hours would show how much total manufacturing overhead costs? (Points : 2)

$. 820,000 $. 940,000 $984,000. $968,000.

Question 14.14. What does a master budget consists of? (Points : 2)

interrelated financial budgets and operating budgets. financial budgets and a long-term plan. an interrelated long-term plan and operating budgets. all the accounting journals and ledgers used by a company.

Question 15.15. What is the proper preparation sequencing of the following budgets?

Budgeted Balance Sheet

Sales Budget

Selling and Administrative Budget

Budgeted Income Statement

(Points : 2)

1, 2, 3, 4 1, 4, 3, 2 2, 3, 1, 4 2, 3, 4, 1

Question 16.16. Given below is an excerpt from a management performance report: Budget Actual Difference Contribution margin $1,200,000 $1,160,000 $40,000U Controllable fixed costs $400,000 $440,000 $40,000U What can you deduce regarding the manager's overall performance? (Points : 2)

It is 10% below expectations. It is 10% above expectations. It is equal to expectations. It cannot be determined from the information provided

Question 17.17. A company's budgeted manufacturing costs for 50,000 squares of shingles are: Fixed manufacturing costs $30,000 Variable manufacturing costs $20.00 per square Arthur produced 45,000 squares of shingles during March. How much are budgeted total manufacturing costs in March? (Points : 2)

$900,000 $930,000 $980,000 $1,030,000

Question 18.18. At 18,000 direct labor hours, the flexible budget for indirect materials is $36,000. If $37,600 are incurred at 18,400 direct labor hours, how much difference for indirect materials should the flexible budget report should show ? (Points : 2)

$800 unfavorable. $800 favorable. $1,600 unfavorable. $1,600 favorable.

Question 19.19. Under management by exception, which differences between planned and actual results should be investigated? (Points : 2)

Material and noncontrollable Material and controllable Controllable and noncontrollable All differences should be investigated

Question 20.20. Which is true of a flexible budget? (Points : 2)

It is prepared before the master budget. It is relevant both within and outside the relevant range. It eliminates the need for a master budget. It is a series of static budgets at different levels of activity.

Question 21.21. In a production budget, total required units are the budgeted sales units plus what? (Points : 2)

beginning finished goods units. desired ending finished goods units. desired ending finished goods units plus beginning finished goods units. desired ending finished goods units minus beginning finished goods units.

Question 22.22. Top management notices a variation from budget and an investigation of the difference reveals that the department manager could not be expected to have controlled the variation. Which of the following statements is applicable? (Points : 2)

Department managers should be held accountable for all variances from budgets for their departments. Department managers should only be held accountable for their department's controllable variances. Department managers should be credited for favorable variances even if they are beyond their control. Department managers' performances should not be evaluated based on actual results to budgeted results.

Question 23.23. A company budgeted unit sales of 204,000 units for January, 2014 and 240,000 units for February, 2014. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 62,200 units of inventory on hand on December 31, 2013, how many units should be produced in January, 2014 in order for the company to meet its goals? (Points : 2)

193,200 units 204,000 units 213,800 units 276,000 units

Question 24.24. Which of the following will cause an increase in ROI? (Points : 2)

An increase in variable costs An increase in average operating assets An increase in sales An increase in controllable fixed costs

Question 25.25. A manufacturing company's required production for June is 132,000 units. To make one unit of finished product, three pounds of direct material NG are required. Actual beginning and desired ending inventories of direct material NG are 300,000 and 320,000 pounds, respectively. How many pounds of direct material NG must be purchased? (Points : 2)

376,000. 396,000. 406,000. 416,000.