managerial acct chapter 7 n 8

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The budget or schedule that provides necessary input data for the direct labor budget is the:

production budget

The cash budget must be prepared before you can complete the:

budgeted balance sheet.

Which of the following is not a benefit of budgeting?

It ensures that accounting records comply with generally accepted accounting principles.

Which of the following is not a benefit of budgeting?

It ensures that accounting records comply with generally accepted accounting principles.

Fairmont Inc. uses an accounting system that charges costs to the manager who has been delegated the authority to make decisions concerning the costs. For example, if the sales manager accepts a rush order that will result in higher than normal manufacturing costs, these additional costs are charged to the sales manager because the authority to accept or decline the rush order was given to the sales manager. This type of accounting system is known as:

responsibility accounting.

The excess or deficiency of cash available over disbursements on the cash budget is calculated as follows:

The beginning balance plus the expected cash receipts less the expected cash disbursements.

A flexible budget:

presents the plan for a range of activity so that the plan can be adjusted for changes in activity levels.

Which of the following comparisons best isolates the impact that changes in prices of inputs and outputs have on performance?

flexible budget and actual results

The materials purchase budget:

most provide for desired ending inventory as well as for production

The budget or schedule that provides necessary input data for the direct labor budget is the:

production budget.

The master budget process usually begins with the:

sales budget.

The cash budget must be prepared before you can complete the:

budgeted balance sheet.

Which of the following is not a benefit of budgeting?

It ensures that accounting records comply with generally accepted accounting principles.

The concept of responsibility accounting means that:

An employee's performance should be evaluated only on those items under his or her control.

Fairmont Inc. uses an accounting system that charges costs to the manager who has been delegated the authority to make decisions concerning the costs. For example, if the sales manager accepts a rush order that will result in higher than normal manufacturing costs, these additional costs are charged to the sales manager because the authority to accept or decline the rush order was given to the sales manager. This type of accounting system is known as:

responsibility accounting.

A self-imposed budget or ________________ budget is a budget that is prepared with the full cooperation of managers at all levels.

participative

There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget? A. It details the required direct labor hours.

It is calculated based on the sales budget and the desired ending inventory.

The excess or deficiency of cash available over disbursements on the cash budget is calculated as follows:

The beginning balance plus the expected cash receipts less the expected cash disbursements.

Which of the following represents the normal sequence in which the indicated budgets are prepared

Production, Cash, Income Statement

Which of the following is not a benefit of budgeting?

It reduces the need for tracking actual cost activity.

Self-imposed budgets typically are:

subject to review by higher levels of management in order to prevent the budgets from becoming too loose.

Which of the following represents the correct order in which the indicated budget documents for a manufacturing company would be prepared?

Selling and administrative expense budget, cash budget, budgeted income statement, budgeted balance sheet

National Telephone company has been forced by competition to put much more emphasis on planning and controlling its costs. Accordingly, the company's controller has suggested initiating a formal budgeting process. Which of the following steps will NOT help the company gain maximum acceptance by employees of the proposed budgeting system?

Implementing the change quickly.

A continuous (or perpetual) budget:

is a plan that is updated monthly or quarterly, dropping one period and adding another.

Which of the following statements is not correct?

The cash budget must be prepared prior to the sales budget because managers want to know the expected cash collections on sales made to customers in prior periods before projecting sales for the current period.

Budgeted production needs are determined by:

adding budgeted sales in units to the desired ending inventory in units and deducting the beginning inventory in units from this total

The budgeted amount of raw materials to be purchased is determined by:

adding the desired ending inventory of raw materials to the raw materials needed to meet the production schedule and subtracting the beginning inventory of raw materials

Which of the following is not correct regarding the manufacturing overhead budget?

Total budgeted cash disbursements for manufacturing overhead is equal to the total of budgeted variable and fixed manufacturing overhead.

A static budget:

is valid for only one level of activity.

When computing standard cost variances, the difference between actual and standard price multiplied by actual quantity yields a(n):

price variance.

The general model for calculating a price variance is:

actual quantity of inputs × (actual price - standard price).

Todco planned to produce 3,000 units of its single product, Teragram, during November. The standard specifications for one unit of Teragram include six pounds of material at $0.30 per pound. Actual production in November was 3,100 units of Teragram. The accountant computed a favorable materials purchase price variance of $380 and an unfavorable materials quantity variance of $120. Based on these variances, one could conclude that:

the actual cost of materials was less than the standard cost.

The materials quantity variance should be computed:

based upon the amount of materials used in production.

Which department should usually be held responsible for an unfavorable materials price variance?

Purchasing.

Tower Company planned to produce 3,000 units of its single product, Titactium, during November. The standards for one unit of Titactium specify six pounds of materials at $0.30 per pound. Actual production in November was 3,100 units of Titactium. There was an unfavorable materials price variance of $380 and a favorable materials quantity variance of $120. Based on these variances, one could conclude that:

the actual usage of materials was less than the standard allowed.

If the labor efficiency variance is unfavorable, then

actual hours exceeded standard hours allowed for the actual output.

A labor efficiency variance resulting from the use of poor quality materials should be charged to

the purchasing agent.

An unfavorable direct labor efficiency variance could be caused by:

an unfavorable materials quantity variance.

Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the direct labor efficiency variance is unfavorable, the variable overhead efficiency variance will be:

unfavorable.

A flexible budget:

presents the plan for a range of activity so that the plan can be adjusted for changes in activity levels.

A flexible budget is a budget that:

is updated to reflect the actual level of activity during the period

Which of the following comparisons best isolates the impact that changes in prices of inputs and outputs have on performance?

flexible budget and actual results

Blackwelder Snow Removal's cost formula for its vehicle operating cost is $1,240 per month plus $348 per snow-day. For the month of December, the company planned for activity of 12 snow-days, but the actual level of activity was 14 snow-days. The actual vehicle operating cost for the month was $6,330. The vehicle operating cost in the planning budget for December would be closest to:

$5,416

Ofarrell Snow Removal's cost formula for its vehicle operating cost is $1,840 per month plus $377 per snow-day. For the month of November, the company planned for activity of 14 snow-days, but the actual level of activity was 19 snow-days. The actual vehicle operating cost for the month was $9,280. The vehicle operating cost in the flexible budget for November would be closest to:

$9,003

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