The cash budget should be prepared:

A) after the budgeted income statement has been prepared.

B) after the budgeted balance sheet has been prepared.

C) before the operating budget has been prepared.

D) after the capital expenditures budget has been prepared.

Which of the following is prepared as the final step in the preparation of the financial budget?

A) Master budget

B) Budgeted balance sheet

C) Budgeted statement of cash flows

D) Cash budget

Which of the following budgets is not considered to be an operating budget?

A) Sales budget

B) Budgeted income statement

C) Operating expenses budget

D) Budgeted cash flow statement

Responsibility accounting performance reports compare budgets with actual results for each responsibility center.

TRUE OR FALSE

An investment center is a responsibility center in which a manager is accountable for maximizing only operating income.

TRUE OR FALSE

The manager of which of the following responsibility centers is responsible primarily for controlling expenses?

A) Investment center

B) Revenue center

C) Profit center

D) Cost center

Which of the following is a responsibility center whose success is measured not only by its income, but also by relating that income to its invested capital?

A) Investment center

B) Cost center

C) Profit center

D) Revenue center

What do we call the practice of directing executive attention to important deviations from budgeted amounts?

A) Management by exception

B) Management by objective

C) Management by control

D) Management by analysis

XYZ Company budgeted $4 million for customer service costs, but actually spent only $3 million. Which of the following statements indicates the best course of action for management to take?

A)Because this $1 million variance is favorable, management does not need to investigate further.

B)Management will investigate this $1 million favorable variance to ensure that the cost savings do not reflect skimping on customer service.

C)Management will investigate this $1 million unfavorable variance to try to identify and correct the problem.

D)Management should investigate every variance, especially unfavorable ones.

Information technology has made many tasks easier, but not all tasks. Which of the following tasksrequires more critical thinking skills than the others because it is not as dependent upon information technology?

A) Sensitivity analysis

B) Rolling up individual units' budgets into the companywide budget

C)Removing slack from the budget

D)Preparing responsibility center performance reports that identify variances between actual and budgeted revenues and costs

The manager of a profit center would not be responsible for which of the following?

A) Managing the cost of inventory purchases

B) Generating revenue

C) Managing the cost of employee wages

D) Managing the cost of new building purchases

When performing a sensitivity analysis, an increase in the budgeted direct labor hourly wage rate will not result in which of the following?

A) An increase in the budgeted total manufacturing cost per unit

B) An increase in budgeted cost of goods manufactured

C) An increase in budgeted gross margin

D) A decrease in budgeted retained earnings

Responsibility accounting performance reports should not be used to:

A) evaluate division performance.

B) evaluate individual product lines.

C) compare actual results to the budget.

D) direct blame to particular individuals when variances are unfavorable.

Which of the following is not a responsibility center?

A) Cost center

B) Profit center

C) Equity center

D) Investment center

Which of the following managers is usually at the highest level of the organization?

A)Cost center manager

B)Revenue center manager

C)Profit center manager

D) Investment center manager