exam 3

Question 1

Managers may intentionally build slack into the budget

Answer 1

to gain the resources they need in the event of budget cuts

Question 2

all of the following budgets are prepared by merchandising companies EXCEPT

Answer 2

direct materials

Question 3

most companies use _____ when the lower level management developed budgets each year

Answer 3

participative budgeting

Question 4

which of the following budgets is the cornerstone of the master budget?

Answer 4

sales

Question 5

“capital expenditures budget” is best described by which of the following concepts?

Answer 5

a company’s plan to purchase property, plant, and equipment, and other long-term assets

Question 6

in which of the following company types does a manager use an operating expenses budget?

Answer 6

manufacturing, merchandise, and service

Question 7

which of the following is a benefit to an organization that implements a budget

Answer 7

incentive, goals, motivation
plan, directs, control

Question 8

in which of the following company types does a manger use a sales budget

Answer 8

merchandise
manufacturers
service

Question 9

which of the following budgets project cash inflows, cash outflows, and the budgeted balance sheet?

Answer 9

Financial budget

Question 10

financial budget” is best described as which of the following?

Answer 10

a budget that projects cash inflows, cash outflows, and the end of period budgeted balance

Question 11

the performance evaluation of a profit center is typically based on its

Answer 11

segment margin

Question 12

which of the following alternatives reflects the proper order of preparing components of the comprehensive budget?

Answer 12

Sales budget
Production budget
Direct Materials Budget

Question 13

In a budgeted income statement, we calculate the cost of good sold by multiplying the ________ of unit sales and the ______ cost per unit

Answer 13

number, manufacturing (COGS)

Question 14

in preparing the operating budget, the first step is preparing the -

Answer 14

sales budget

Question 15

which of the following items is a component of a cash payments budget? 

Answer 15

Cash Dividends

Question 16

“ combined cash budget” is best defined by which of the following?

Answer 16

Details about how the company expects to move out of the beginning, cash, balance, and into the desired ending cash balance

Question 17

in which of the following company type does a managers use a sales budget?

Answer 17

Manufacturing, merchandising, service

Question 18

in which of the following company types does a manager use a capital expenditures budget

Answer 18

Service, merchandising, manufacturing

Question 19

All the following are responsibility centers, except

Answer 19

Equity Center

Question 20

Decentralization allows, top managers to hire workers with expert knowledge in each business unit

Answer 20

true

Question 21

A performance report compares actual revenue in expenses with ______ revenues, and expenses

Answer 21

budgeted

Question 22

The difference between actual results and budget results is known as decentralization

Answer 22

FALSE

Question 23

The duties of an investment center manager are similar to those of a CEO

Answer 23

true

Question 24

total assets is the denominator in the formula managers used to compute ROI

Answer 24

true

Question 25

The difference between the actual revenues and expenses and the comprehensive budget is known as

Answer 25

comprehensive budget variance

Question 26

with regard to a static budget instead of a flexible budget, which of the following is true

Answer 26

a static budget is prepared for only one level of sales activity

Question 27

ideal standards allow for normal amount of waste and inefficiency

Answer 27

false

Question 28

They direct materials flexible budget variance can be broken down into a price variance and quantity variance

Answer 28

True

Question 29

The direct materials price variance is calculated as

Answer 29

the Actual Quantity Purchased (AQP) multiplied by the difference between the Actual Price (AP) and the Standard Price (SP) of the input purchased. AQP(AP-SP)

Question 30

Which variance is directly impacted if the employees build a product go on strike and temporary workers who are slower and not a skilled or hired

Answer 30

Direct labor efficiency variance

Question 31

A cost benchmark is valid only if the standards are

Answer 31

Kept up-to-date

Question 32

The variable overhead rate variance may be affected by both indirect labor and indirect materials

Answer 32

True

Question 33

The fixed overhead volume variance is the result of which of the following causes

Answer 33

Viewing variable cost as fixed cost, and incorrectly, estimating activity levels

Question 34

The comprehensive budget is the set of budgeted financial statements and supporting schedules in the entire organization

Answer 34

True

Question 35

in a production budget, the units from _______ inventory will be ______ from the total units needed

Answer 35

ending, deducted

Question 36

On the direct labor budget, the total quantity of direct labor hours needed is computed as

Answer 36

units to be produced x direct labor hour per unit