Академический Документы
Профессиональный Документы
Культура Документы
TRUE/FALSE
2. Budgeting helps management anticipate and adjust for trouble spots in advance.
a. True
b. False
3. Budgets can play both planning and control roles for management.
a. True
b. False
6. If amounts in the sales forecast change, amounts in the production budgets will also change.
a. True
b. False
7. After a budget is agreed upon and finalized by the management team, the amounts should
not be changed for any reason.
a. True
b. False
11. The essence of variance analysis is that it captures a departure from what was expected.
a. True
b. False
12. It is most meaningful to compare cost targets in the master budget to actual cost results.
a. True
b. False
14. An unfavorable variance may be due to poor planning rather than due to inefficiency.
a. True
b. False
16. To compute the direct material price variance, the actual cost is compared to the amount
budgeted at the beginning of the year for the material.
a. True
b. False
17. The use of high-quality raw materials is likely to result in a favorable usage variance and an
unfavorable price variance.
a. True
b. False
18. The labor rate variance is likely to be favorable if higher-skilled workers are put on a job.
a. True
b. False
20. The role of budgeting in planning and control is more important in manufacturing than in a
not-for-profit environment.
a. True
b. False
22. Budgeting slack is most likely to occur when a firm uses the budget only as a planning
device and not for control.
a. True
b. False
23. Authoritative budgeting occurs when a superior simply tells subordinates what their budget
will be.
a. True
b. False
28. All of the following are true statements about the role of budgets and budgeting EXCEPT
that:
a. a budget is a quantitative summary of the expected allocations and financial
consequences of the organization’s short-term operating activities
b. budgeting includes the process of estimating money inflows and outflows to
determine a financial plan that will meet objectives
c. the difference between actual results and the budget plan are called variances
d. budgeting solves most business challenges because it coordinates activities and
communicates the organization’s short-term goals to its members
31. When discussing the roles of budgets, a planning role in the budgeting process includes:
a. measuring outcomes against planned amounts
b. developing the master budget
c. assessing performance
d. reporting actual amounts at the end of the budgeting period
39. __________ provide(s) the starting point and the framework for evaluating the budgeting
process.
a. The sales plan
b. Organizational goals
c. The production plan
d. Expected cash flows
43. The __________ provides the foundation for the production plans.
a. inventory policy
b. sales plan
c. administrative and discretionary spending plan
d. capital spending plan
47. __________ specifies when items such as acquisitions for buildings and special-purpose
equipment must be made to meet activity objectives.
a. The capital-spending plan
b. The production plan
c. The materials purchasing plan
d. The administrative and discretionary spending plan
48. The sales plan is matched with inventory policy and capacity levels and __________ is
determined.
a. an aggregate plan
b. a new sales plan
c. a materials purchasing plan
d. an administrative and discretionary spending plan
51. __________ summarizes expenditures for advertising and research and development.
a. The labor hiring and training plan
b. The production plan
c. The administrative and discretionary spending plan
d. The aggregate plan
53. Financial analysts use the projected cash flow statement to do all of the following
EXCEPT:
a. plan for when excess cash is generated
b. plan for short-term cash investments
c. project cash shortages and plan a strategy to deal with the shortages
d. project sales
Demand drives production for that month and cannot be carried over from one month to another.
Retail customers are satisfied first.
57. The number of dealer units that will be produced and sold in March is:
a. 600 units
b. 700 units
c. 1,000 units
d. 400 units
• 40% of purchases are paid for in cash in the month of purchase, and the balance is paid
the following month.
• Labor costs are 20% of sales. Other operating costs are $15,000 per month (including
$4,000 of depreciation). Both of these are paid in the month incurred.
• The cash balance on March 1 is $4,000. A minimum cash balance of $3,000 is required at
the end of the month. Money can be borrowed in multiples of $1,000.
70. In __________, as one budget period passes, planners delete that budget period from the
master budget and add another one.
a. zero-based budgeting
b. periodic budgeting
c. incremental budgeting
d. continuous budgeting
71. Although planners update or revise the budgets during the period, __________ is typically
performed once per year.
a. zero-based budgeting
b. periodic budgeting
c. incremental budgeting
d. continuous budgeting
73. __________ bases a period's expenditure level for a discretionary item on the amount spent
on that item during the previous period.
a. Zero-based budgeting
b. Periodic budgeting
c. Incremental budgeting
d. Continuous budgeting
76. Assume only the specified parameters change in a sensitivity analysis. If the contribution
margin increases by $2 per unit then operating profits will:
a. also increase by $2 per unit
b. increase by less than $2 per unit
c. decrease by $2 per unit
d. be indeterminable
77. Assume that only the specified parameters change in a sensitivity analysis. The contribution
margin ratio increases when:
a. total capacity-related (fixed) costs increase
b. total capacity-related (fixed) costs decrease
c. flexible (variable) costs per unit increase
d. flexible (variable) costs per unit decrease
79. (CPA adapted, November 1992) The strategy MOST LIKELY to reduce the break-even
point would be to:
a. increase both the capacity-related (fixed) costs and the contribution margin
b. decrease both the capacity-related (fixed) costs and the contribution margin
c. decrease the capacity-related (fixed) costs and increase the contribution margin
d. increase the capacity-related (fixed) costs and decrease the contribution margin
82. Suppose that Cathy Manufacturing's management believes that a 10% reduction in the
selling price will result in a 10% increase in sales. If this proposed reduction in selling
price is implemented, then:
a. profit will decrease by $8,000
b. profit will increase by $8,000
c. profit will decrease by $16,000
d. profit will increase by $16,000
87. All of the following are true of flexible budgets EXCEPT that they:
a. use the same flexible (variable) cost per unit as the master budget
b. result in higher total costs for greater levels of production
c. allow comparison of actual results to targets based on the achieved level of
production
d. reflect the same level of production as the master budget
89. A flexible budget variance is $800 favorable for unit-related costs. This indicates that:
a. costs were $800 more than the master budget
b. costs were $800 less than standard for the achieved level of activity
c. the sum of the planning and efficiency variances totals $800
d. costs were $800 less than for the planned level of activity
92. A favorable wage rate variance for direct labor might indicate that:
a. employees were paid more than planned
b. a corporate-wide wage adjustment was implemented
c. less skilled and qualified employees are being hired
d. an efficient labor force
93. An organization planned to use $82 of material per unit of activity but it actually used $80
of material per unit of activity, and it planned to make 1,200 units but it actually made
1,000 units. The flexible budget amount is:
a. $80,000
b. $82,000
c. $96,000
d. $98,400
94. An organization planned to use $82 of material per unit of activity but it actually used $80
of material per unit of activity, and it planned to make 1,200 units but it actually made
1,000 units. The flexible budget variance is:
a. $2,000 favorable
b. $14,000 unfavorable
c. $16,400 unfavorable
d. $2,400 favorable
96. The best label for the formula (AQ – SQ) x SP is the:
a. quantity variance
b. price variance
c. total cost variance
d. wage rate variance
97. The best label for the formula (AP – SP) x AQ is the:
a. quantity variance
b. price variance
c. total cost variance
d. efficiency variance
98. The best label for the formula [(AP) x (AQ)– (SP) x (AQ)] is the:
a. quantity variance
b. price variance
c. total cost variance
d. efficiency variance
99. The best label for the formula [(AP) x (AQ)– (SP) x (SQ)] is the:
a. quantity variance
b. price variance
c. total cost variance
d. efficiency variance
During June, TII produced and sold 5,000 containers using 490 pounds of direct materials at an
average cost per pound of $32 and 250 direct labor hours at an average wage of $15.25 per hour.
During July, Sanders produced and sold 10,000 containers using 2,200 pounds of direct materials
at an average cost per pound of $24 and 1,050 direct labor hours at an average wage of $14.75
per hour.
112. The flexible budget will report $__________ for the flexible (variable) costs.
a. $512,000
b. $600,000
c. $480,000
d. $640,000
113. The flexible budget will report $__________ for the capacity-related (fixed) costs.
a. $458,000
b. $450,000
c. $360,000
d. $572,500
116. The MOST LIKELY explanation of the above variances for Material A is that:
a. a lower price than expected was paid for Material A
b. higher quality raw materials were used than were planned
d. the company used a new supplier
d. Material A used during September was $2,000 less than expected
117. The MOST LIKELY explanation of the above direct labor variances is that:
a. the average wage rate paid to employees was less than expected
b. employees did not work as efficiently as expected to accomplish the job
c. the company may have assigned more experienced employees this month than
originally planned
d. management may have a problem with budget slack and may be using lax standards
for both labor wage rates and expected efficiency
118. In the service sector, __________ rather than machines usually represent(s) the capacity
constraint, which underscores the importance of budgeting even in nonmanufacturing
organizations.
a. people
b. knowledge
c. familiarity with processes
d. potential for sales
119. _________ occur(s) when a superior simply tells subordinates what their budget will be.
a. Authoritative budgeting
b. Stretch targets
c. Consultative budgeting
d. Budget slack
120. _________ mean(s) that the organization will attempt to reach much higher goals with the
current budget.
a. Authoritative budgeting
b. Stretch targets
c. Consultative budgeting
d. Budget slack
122. _________ involve(s) a joint decision-making process in which all parties agree about
setting the budget targets.
a. The pseudo-participation
b. Budgeting games
c. Budget slack
d. The participation method
123. _________ occur(s) when subordinates ask for excess resources above and beyond what
they need to accomplish budget objectives.
a. Pseudo participation
b. Effective budgeting
c. Budget slack
d. Participative budgeting