QUESTION 1 Which of the following series of budgets is presented in the proper order in which accountants would prepare them (chronologically), reading from left to right? O A. Production, Sales, Income Statement, Capital Expenditures B. Sales, Production, Cash, Balance Sheet C. Sales, Cash, Cost of Goods Sold Income Statement D. None of the above QUESTION 2 The static budget, at the beginning of the month, for Divine Dcor Company, follows: Static budget: Sales volume: 1,500 units; Sales price: $70.00 per unit Variable costs: $32.00 per unit; Fixed costs: $38,000 per month Actual results, at the end of the month, follows: Actual results: Sales volume: 990 units; Sales price: $75.00 per unit Variable costs: $35.00 per unit; Fixed costs: $33,000 per month Calculate the flexible budget variance for sales revenue A. $6,980 V B. $6,980 F C. $4,950 F D. None of the above QUESTION 3 Which of the following statements concerning budgets is true? A. A strategic budget is a long-term plan used to coordinate the activities needed to achieve the long-term goals of the company. B. Budgetary slack occurs when managers intentionally overstate expected revenues and understate expected expenses. C. Operational budgets often span 3 to 10 years. D. All of the above QUESTION 4 Which of the following expenses will not appear in a cash budget? A. Variable manufacturing overhead B. Income taxes C. Depreciation expense D. Management of manufacturing companies should budget for all of the above items in a cash budget because cash is the lifeblood of a business and needs to be controlled closely. QUESTION 5 Milly Company manufactures suitcases. The budgeted selling price is $100 per suitcase, the variable cost is $40 per suitcase, and budgeted fixed costs are $27,000 per month. What would be the difference in operating income in a flexible budget based on 1,000 suitcases and 3,000 suitcases? A. $80.000 B. $120,000 C $200,000 D. None of the above QUESTION 6 The idea behind keeping track of "scores" for a business from different perspectives will help managers manage a company better than if they just focus on the financial perspective. Improvements of scores in one perspective (or area) should cause scores in another perspective (or area) to improve. Which of the following lists of perspectives (or areas) is in proper causal order, reading from left to right? O A. Financial, Customer, Learning & Growth, Internal Business B. Learning & Growth, Internal Business, Customer, Financial C. Internal Business, Customer, Financial, Learning & Growth D. None of the above QUESTION 7 A division of company generally would be considered which of the following responsibility centers? A. Investment Center B. Profit center C. Revenue center D. None of the above QUESTION 8 The sales volume variance is the difference between the A. actual results and the expected results in the flexible budget for the actual units sold. B. expected results in the flexible budget for the actual units sold and the static budget. C.static budget and actual amounts due to differences in sales price. D. flexible budget and static budget due to differences in fixed costs. QUESTION 9 Big Company expects to produce 2,000 units in January that will require 4,000 hours of direct labor. Big budgets $10 per unit for variable manufacturing overhead; $5,000 per month for depreciation, and $10,000 per month for other fixed manufacturing overhead costs. What is Big's predetermined overhead allocation rate (using direct labor hours as the allocation base) for January? O A $8.75 per direct labor hour OB. $10.00 per direct labor hour C. The answer cannot be determined. D. None of the above. QUESTION 10 Which of the following variances is a component of the flexible budget variance? A. Sales volume variance B. Cost variance CEfficiency variance D. Both B and C QUESTION 11 An unfavorable flexible budget variance in variable costs suggests a(n) A increase in sales price per unit. B. decrease in sales volume. Cincrease in variable cost per unit. D. decrease in fixed costs. QUESTION 12 Which of the following correctly describes the responsibility reports for a company's responsibility centers? A. Such reports for cost centers typically focus on the flexible budget variance. B. Such reports for revenue centers often highlight both the flexible budget variance and the sales volume variance. O . Such reports for profit centers include both revenues and expenses along with flexible budget variances. D. All of the above. QUESTION 13 Pearl, Inc. has prepared the operating budget for the first quarter of the year. The company forecast sales of $40,000 in January, $50,000 in February, and $60,000 in March. Variable and fixed selling and administrative expenses are as follows: Variable Expenses: Power cost (30% of sales) Miscellaneous expenses: (5% of sales) Fixed Expenses: Salaries expense: $8000 per month Rent expense: $5000 per month Depreciation expense: $1400 per month Power cost/fixed portion: $800 per month Miscellaneous expenses/fixed portion: $1200 per month Calculate total budgeted selling and administrative expenses for the month of January A. $14,000 B. $16,400 C.$30,400 D. None of the above QUESTION 14 Martin, Inc. manufactures lead crystal glasses. The standard direct labor time is 0.5 hours per glass, at a cost of $18 per hour. The actual results for one month's production of 6,500 glasses were 0.2 hours per glass, at a cost of $11 per hour. What is the direct labor cost variance? A. $9.100 Favorable B. $35,100 Favorable C.$44,200 Unfavorable D. None of the above QUESTION 15 Verle, Inc. has a cash balance of $20,000 on April 1. The company is now preparing the cash budget for the second quarter. Budgeted cash collections and payments are as follows: Apr May Jun Cash collections | $25,000 $24,000 $25,000 Cash payments: Purchases of direct materials 5800 5800 7000 Operating expenses 3500 5000 5300 There are no budgeted capital expenditures or financing transactions during the quarter. Based on the above data, calculate the projected cash balance at the end of May. A $28,900 B. 548,900 C $90,000 D. None of the above QUESTION 16 Billy Company expects to sell 1,000 units of finished product in January and 2,000 units in February. The company has 200 units on hand on January 1 and desires to have an ending inventory equal to 60% of the next month's sales. March sales are expected to be 3,000 units. What is Billy's budgeted units to be produced in January? A. 2,000 B.2,200 C-2,800 D. None of the above QUESTION 17 Which of the following statements is true concerning master budgets? A. Master budgets are operational. B. Master budgets contain an operating budget. C. Master budgets are static budgets. D. All of the above. QUESTION 15 Verle, Inc. has a cash balance of $20,000 on April 1. The company is now preparing the cash budget for the second quarter. Budgeted cash collections and payments are as follows: Apr May Jun Cash collections | $25,000 $24,000 $25,000 Cash payments: Purchases of direct materials 5800 5800 7000 Operating expenses 3500 5000 5300 There are no budgeted capital expenditures or financing transactions during the quarter. Based on the above data, calculate the projected cash balance at the end of May. A $28,900 B. 548,900 C $90,000 D. None of the above QUESTION 16 Billy Company expects to sell 1,000 units of finished product in January and 2,000 units in February. The company has 200 units on hand on January 1 and desires to have an ending inventory equal to 60% of the next month's sales. March sales are expected to be 3,000 units. What is Billy's budgeted units to be produced in January? A. 2,000 B.2,200 C-2,800 D. None of the above QUESTION 17 Which of the following statements is true concerning master budgets? A. Master budgets are operational. B. Master budgets contain an operating budget. C. Master budgets are static budgets. D. All of the above. QUESTION 18 Happy Company has a profit margin ratio of 4% and an asset turnover ratio of 2.5. What is Happy's Return on Investment (ROI)? A. It is not possible to determine without Happy's operating income and average total assets. B. 40% C.10% D. None of the above QUESTION 19 Which of the following statements are true concerning budget variances? A. A variance is the difference between an actual amount and the budgeted amount. B. A variance is favorable if it increases operating income. C. A variance is unfavorable if it decreases operating income. D. All of the above. QUESTION 20 Which of the following amounts of a flexible budget changes, within the specified relevant range, with changes in sales volume? A. Sales price per unit OB. Total fixed costs C.Variable cost per unit D. Total contribution margin QUESTION 21 Which of the following statements is true? A. A controllable cost is one the manager does not have the power to influence by his or her decisions B. A goal of a performance evaluation system is benchmarking. C. A KPI is a knowledge-Promoting Investment. D. All of the above. QUESTION 22 Which of the following variance explanations is correct? O A. The Direct Materials Cost Variance measures the difference between the amount actually paid and what should have been paid for the actual quantity of direct materials used. BThe Direct Materials Efficiency Variance measures the difference between the direct materials actually used and the direct materials that should have been used for the actual output (at the direct materials cost standard). C. Both A and B. D. None of the above. QUESTION 23 During 2019, Little Division has operating income of $10,000. It started the year with total assets of $40,000 and ended the year with total assets of $60,000. If Little's target rate of return is 5%, what is its residual income (RI)? A. It is not possible to determine without Little's net sales revenue. B. $2,500 C.$7,500 D. None of the above QUESTION 24 What is a transfer price? A. The fee a broker charges a customer to transfer property from a seller to a buyer. O B. The cost of shipping goods to a customer (also called "freight out"). . The transaction amount of one unit of goods when the transaction occurs between divisions within the same company. D. All of the above. QUESTION 25 Which of the following fact patterns will result in an unfavorable variance? O A. Actual revenue Budgeted expense C. Both A and B D. None of the above QUESTION 26 What is a responsibility center? A. It is part of an organization for which a manager has decision-making authority. O B. It is part of an organization for which a manager has accountability for the results of his/her decisions. C. Both A and B. D. None of the above QUESTION 27 Which of the following statements is true? A. Disadvantages of decentralization include duplication of costs across segments of a company. B. Goal congruence is aligning the goals of business segment managers with the goals of top management. OC. A company's responsibility accounting system allows for the evaluation of the performance of each responsibility center and its manager. D. All of the above. QUESTION 28 Schwinn Company specializes in making and selling recreational equipment. Its Tire Division makes tires that is sells for bicycles and reports the following information: sales price per tire of $20; variable cost per tire of $8; and contribution margin per tire of $12. Schwinn's Bike Division can purchase similar tires from an outside vendor for $17. Assuming the Tire Division has excess production capacity, what is the minimum transfer unit price that it should consider for selling tires to the Bike Division? A. $8 B. $12 OOO C.$17 D. $20 QUESTION 29 Which of the following statements about budgets are true? A. The capital expenditures budget presents the company's plans for purchasing property, plant, equipment, and other long-term assets. B. The financial budget includes the Budgeted Income Statement and the Budgeted Balance Sheet. C. A flexible budget is a budget prepared for various levels of sales volume. D. All of the above. QUESTION 29 Which of the following statements about budgets are true? O A The capital expenditures budget presents the company's plans for purchasing property, plant, equipment, and other long-term assets. B. The financial budget includes the Budgeted Income Statement and the Budgeted Balance Sheet. O A flexible budget is a budget prepared for various levels of sales volume. D. All of the above QUESTION 30 Blue Company budgeted direct materials purchases of $100,000 in January and $80,000 in February. Assume Blue pays for direct materials purchases 70% in the month of purchase and 30% in the month after purchase. The Accounts Payable balance on January 1 is $20,000. What is Blue's total cash payments for direct materials in January? Round to the nearest dollar. A. $20,000 B. $70,000 C $90,000 D. None of the above