Accounting 203 Final

The master budget process usually ends with: The budgeted balance sheet. The overhead budget. The sales budget. The production budget. The selling expense budget.

The budgeted balance sheet

Costs that the manager does not have the power to determine or at least significantly affect are: Direct costs. Indirect costs. Uncontrollable costs. Joint costs. Variable costs.

Uncontrollable costs.

Use the following data to find the direct labor rate variance if the company produced 7,000 units of product during the period. Standard: Direct labor (3.2 hrs. per unit @ $7/hr.) $22.40 per unit Actual cost incurred: Direct labor (24,500 hrs. @ $7.50/hr.) $183,750 $26,950 favorable. $14,700 favorable. $14,700 unfavorable. $12,250 unfavorable. $12,250 favorable.

$12,250 unfavorable. AH * AR Given. $183,750 AH * SR 24,500 hrs. * $7/hr. $171,500 Direct labor rate variance $12,250 U

Hassock Corp. produces woven wall hangings. It takes 2 hours of direct labor to produce a single wall hanging. Hassock's standard labor cost is $12 per hour. During August, Hassock produced 10,000 units and used 21,040 hours of direct labor at a total cost of $250,376. What is Hassock's labor efficiency variance for August? $12,480 unfavorable. $14,584 unfavorable. $10,376 unfavorable. $12,480 favorable. $4,160 favorable.

$12,480 unfavorable. AH * SR 21,040 * $12 $252,480 SH * SR (2 × 10,000) * $12 $240,000 Direct labor efficiency variance $12,480 U

A company provided the following direct materials cost information. Compute the direct materials quantity variance. Standard costs assigned: Direct materials standard cost (405,000 units @ $2.00/unit) $810,000 Actual costs: Direct Materials costs incurred (403,750 units @ $2.20/unit) $888,250 $2,500 Unfavorable. $2.500 Favorable. $78,250 Favorable. $2,750 Unfavorable $2,750 Favorable.

$2.500 Favorable. Direct materials quantity variance = $2.00 standard cost per unit x (405,000 standard units - 403,750 actual units) = $2,500 favorable

A job was budgeted to require 3 hours of labor per unit at $8.00 per hour. The job consisted of 8,000 units and was completed in 22,000 hours at a total labor cost of $198,000. What is the direct labor rate variance? $16,000 favorable. $22,000 unfavorable. $16,000 unfavorable. $6,000 unfavorable. $22,000 favorable.

$22,000 unfavorable. AH * AR Given. $198,000 AH * SR 22,000 hours * $8/hour 176,000 Direct labor rate variance $22,000 U

Summerlin Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units. The company actually used 4,500 pounds that cost $5.10 per pound to produce 2,000 units. What is the direct materials price variance? $2,550 unfavorable. $2,500 unfavorable. $450 unfavorable. $400 unfavorable. $2,950 unfavorable.

$450 unfavorable. AQ × AP 4,500 pounds * $5.10/pound $22,950 AQ × SP 4,500 pounds * $5.00/pound 22,500 Direct materials price variance $450 U

The standard materials cost to produce 1 unit of Product R is 6 pounds of material at a standard price of $50 per pound. In manufacturing 8,000 units, 47,000 pounds of material were used at a cost of $51 per pound. What is the direct materials quantity variance? $50,000 favorable. $3,000 favorable. $50,000 unfavorable. $47,000 unfavorable. $47,000 favorable.

$50,000 favorable. AQ × SP 47,000 pounds * $50/pound $ 2,350,000 SQ × SP 8,000 units x 6 pounds/unit * $50/pound 2,400,000 Direct materials quantity variance $50,000 F

Fletcher Company collected the following data regarding production of one of its products. Compute the direct materials quantity variance. Direct materials standard (6 lbs. @ $2/lb.) $12 per finished unit Actual direct materials used 243,000 lbs. Actual finished units produced 40,000 units Actual cost of direct materials used $483,570 $3,570 unfavorable. $3,570 favorable. $6,000 unfavorable. $2,430 unfavorable. $2,430 favorable.

$6,000 unfavorable. AQ * SP = 243,000 * $2.00 = $486,000; SQ * SP = 40,000 * 6 * $2.00 = $480,000 Direct materials quantity variance = $6,000 unfavorable

Fletcher Company collected the following data regarding production of one of its products. Compute the direct labor rate variance. Direct labor standard (2 hrs. @ $12.75/hr.) $25.50 per finished unit Actual direct labor hours 81,500 hrs. Actual finished units produced 40,000 units Actual cost of direct labor $1,100,250 $61,125 favorable. $19,125 unfavorable. $61,125 unfavorable. $80,250 unfavorable. $80,250 favorable.

$61,125 unfavorable. Actual cost = $1,100,250; AH * SR = (81,500 * $12.75) = $1,039,125 Direct labor rate variance = $61,125 unfavorable

Fletcher Company collected the following data regarding production of one of its products. Compute the standard quantity allowed for the actual output. Direct materials standard (6 lbs. @ $2/lb.) $12 per finished unit Actual direct materials used 243,000 lbs. Actual finished units produced 40,000 units Actual cost of direct materials used $483,570 80,000 pounds. 243,000 pounds. 240,000 pounds. 480,000 pounds. 40,000 pounds.

240,000 pounds Standard units at standard cost = 40,000 * 6 lbs. = 240,000 standard lbs.

Which of the following accounts would appear on a budgeted balance sheet? All of the choices are correct. Sales commissions. Depreciation expense. Income tax expense. Accounts receivable.

Accounts receivable

Identify the situation below that will result in a favorable variance. Actual revenue is lower than budgeted revenue. Actual income is lower than expected income. Actual expenses are higher than budgeted expenses. Actual revenue is higher than budgeted revenue. Actual costs are higher than budgeted costs.

Actual revenue is higher than budgeted revenue.

All of the following are necessary for budgets to be effective except: All budgeted amounts must be spent to ensure that budgets aren't reduced for the next period. Managers must be aware of potential negative outcomes of budgeting, such as budgetary slack. Goals should be challenging and attainable. Employees affected by a budget should be consulted when it is prepared. Evaluations should be made carefully with opportunities to explain differences between actual and budgeted amounts.

All budgeted amounts must be spent to ensure that budgets aren't reduced for the next period.

The usual budget period for most companies is: An annual period separated into quarterly and monthly budgets. An annual period separated into weekly budgets. An annual period of 250 working days. A quarterly period separated into weekly budgets. A monthly period separated into daily budgets.

An annual period separated into quarterly and monthly budgets

The difference between a profit center and an investment center is There is no difference; investment center and profit center are synonymous. An investment center incurs no costs but does generate revenues. An investment center incurs costs, but does not directly generate revenues. An investment center provides services to profit centers. An investment center is responsible for investments made in operating assets.

An investment center is responsible for investments made in operating assets.

A responsibility accounting performance report displays: Only actual costs. Only budgeted costs. Only indirect costs. Both actual costs and budgeted costs. Only direct costs.

Both actual costs and budgeted costs.

A formal statement of future plans, usually expressed in monetary terms, is a: Variance analysis. Budget. Prospectus. Variance report. Position statement.

Budget

The central guidance of the budget process is the responsibility of the: Budget Committee. Board of Directors. Chief Accounting Officer. Chief Financial Officer (CFO). Chief Executive Officer (CEO).

Budget Committee

A managerial accounting report that presents predicted amounts of the company's assets, liabilities, and equity as of the end of the budget period is called a(n): Budgeted balance sheet. Continuous balance sheet. Rolling balance sheet. Cash balance sheet. Operating balance sheet.

Budgeted balance sheet

Operating budgets include all the following except the: Selling expense budget. Production budget. General and administrative expense budget. Sales budget. Budgeted balance sheet.

Budgeted balance sheet

A managerial accounting report that presents predicted amounts of the company's revenues and expenses for the budget period is called a: Continuous profit statement. Budgeted income statement. Budgeted balance sheet. Rolling income statement. Master plan.

Budgeted income statement

The process of planning future business actions and expressing them as a formal plan is called: Budgeting. Standard cost analysis. Managerial accounting. Variance analysis. Cost accounting.

Budgeting

A plan that shows the expected cash inflows and cash outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans, is called a(n): Rolling budget. Cash budget. Capital expenditures budget. Income statement. Operating budget.

Cash budget

Which of the following budgets is not an operating budget? Production budget. Sales budget. Selling expenses budget. Cash budget. General and administrative expense budget.

Cash budget

Costs that the manager has the power to determine or at least significantly affect are called: Direct costs. Indirect costs. Joint costs. Uncontrollable costs. Controllable costs.

Controllable costs.

A department that incurs costs without directly generating revenues is a: Cost center. Service center. Profit center. Production center. Performance center.

Cost center.

An accounting system that accumulates and reports costs incurred by each service department for management to evaluate the performance of a department is a: Departmental accounting system. Cost accounting system. Revenue accounting system. Service accounting system. Standard accounting system.

Departmental accounting system.

Expenses that are easily traced and assigned to a specific department because they are incurred for the sole benefit of that department are called: Fixed expenses. Indirect expenses. Uncontrollable expenses. Direct expenses. Controllable expenses.

Direct expenses.

The salaries of employees who spend all their time working in one department are: Variable expenses. Indirect expenses. Responsibility expenses. Direct expenses. Unavoidable expenses.

Direct expenses.

In this type of control system, the master budget is based on a single prediction for sales volume, and the budgeted amount for each cost essentially assumes that a specific amount of sales will occur: Variable budget. Flexible budget. Sales budget. Standard budget. Fixed budget.

Fixed budget.

A budget based on several different levels of activity, often including both a best-case and worst-case scenario, is called a: Rolling budget. Production budget. Fixed budget. Merchandise purchases budget. Flexible budget.

Flexible budget.

Expenses that are not easily associated with a specific department, and which are incurred for the joint benefit of more than one department, are: Fixed expenses. Uncontrollable expenses. Direct expenses. Indirect expenses. Variable expenses.

Indirect expenses.

The type of department that generates revenues and incurs costs, and its manager is responsible for the investments made in operating assets is called a(n): Responsibility center Cost center Investment center Profit center Service department

Investment center

A cost center is a unit of a business that incurs costs without directly generating revenues. All of the following are considered cost centers except: Purchasing department at Best Buy. Advertising department at Hertz. Juice division at Coca Cola. Accounting department at Warner Bros. Research department at Microsoft.

Juice division at Coca Cola.

A plan that reports the units or costs of merchandise to be purchased by a merchandising company during the budget period is called a: Sales budget. Capital expenditures budget. Selling expenses budget. Cash budget. Merchandise purchases budget.

Merchandise purchases budget

Standard costs are: Uniform among companies within an industry. Preset costs for delivering a product or service under normal conditions. Actual costs incurred to produce a specific product or perform a service. Rarely achieved. Established by the IMA.

Preset costs for delivering a product or service under normal conditions.

Standard costs are used in the calculation of: Price, quantity, and sales variances. Price and quantity variances. Quantity and sales variances. Price variances only. Quantity variances only.

Price and quantity variances.

The difference between actual price per unit of input and the standard price per unit of input results in a: Quantity variance. Standard variance. Controllable variance. Volume variance. Price variance.

Price variance.

Which of the following must be prepared before the direct labor budget? Capital expenditures budget. Merchandise purchases budget. Selling expense budget. Budgeted income statement. Production budget.

Production budget

A unit of a business that generates revenues and incurs costs is called a: Cost center. Profit center. Performance center. Expense center. Responsibility center.

Profit center.

Plans that identify costs and expenses under each manager's control prior to the reporting period, typically based on the flexible budget approach, are called: Responsibility accounting systems. Responsibility accounting budgets. Cost accounting systems. Activity-based accounting systems. Managerial accounting systems.

Responsibility accounting budgets.

An accounting system that is set up to control costs and evaluate managers' performance by assigning costs to the managers responsible for controlling them is called a(n): Activity-based accounting system. Cost accounting system. Responsibility accounting system. Managerial accounting system. Financial accounting system.

Responsibility accounting system.

The usual starting point for preparing a master budget is forecasting or estimating: Income. Cash payments. Expenditures. Production. Sales.

Sales

Investment center managers are usually evaluated using performance measures based on assets only. that combine income and assets. that combine income and capital. that combine assets and capital. based on income only.

That combine income and assets.