The primary purpose of a production budget is to compute a. Required production overhead b. Raw materials inventory c. Cabbages, lots and lots of cabbages d. Production machinery requirements e. The number of production units 12. Sales Budget Diamond Company budgeted the following sales in units for the first quarter of the year: January February 20,000 March 40,000 50,000 The company charges $2 per unit as a sales price. The first quarter total sales S budget is a. 220,000 b. 144,000 c. 36,000 d. 82,000 e. 147,500 Chapter 9 Flexible Budgets 13. The flexible budget is developed by: A. multiplying all amounts by a factor of 2. B. adding the revenue and spending variances together C. updating the planning/static budget to reflect the actual level of activity of the period. D. monkeying around with the forecasted levels of banana sales 14. Actual Results minus the "Planning/Static" budget shows us: A. the revenue variance B. the spending variance C. The "official" budget variance that management is accountable for D. Is never used in managerial accounting 15. Which of the following comparisons computes the activity variance? A. flexible budget minus the planning budget B. actual results minus actual results C. flexible budget plus activity variance D. master budget and static planning budget 2. Wadham's (a snow plowing company) Vehicle operating cost formula is $1,900 per month plus 5430 per planned snow-day. For the month of December, the company planned for 16 snow days. The actual level of Activity was 21 snow.days. The vehicle operating cost in the planning budget for December would be closest A $1,900 B. $11,560 C. 58,780 D. $8,739 18. Petersheim Snow Removal's cost formula for its vehicle operating cost is $1.750 per month plus 5484 per snow-day. For the month of November, the company planned for activity of 15 snow.days, but the actual level of activity was 14 snow days. The actual vehicle operating cost for the month was $8,360. The vehicle operate ing cost in the flexible budget for November would be closest to: A. $8,526 B. $8,409 C. $9,010 D. $8,360 Chapter 11 Performance Measurement in Decentralized Organizations 19. A responsibility center in which a manager is responsible for both revenues and costs and only revenues and costs) is an) a cost center. b. revenue center. c. profit center. d. investment center e. center not presented here. 20. The performance measure that can be computed either as net operating income average operating assets or margin turnover is a. Economic value added (EVA) b. residual income. c. Margin d. return on investment (ROI). c. turnover. 21. A responsibility center in which a manager is responsible for costs only a. cost center. b. revenue center. c. profit center d. investment center e center not presented here. 22. A responsibility center in which a manager is responsible for revenues, costs and investments a. cost center. b. revenue center. c. profit center d. investment center e center not presented here
