Exam 3
Which statement is correct?
activity-based cost systems are more accurate than traditional cost systems
The units required in production each period are computed by wotf methods?
adding budgeted sales to the desired ending inventory and subtracting beginning inventory
Which is not a section of the cash budget?
allowance for uncollectible accounts
Which is not a task typically associated with the ABC systems?
applying a single cost rate
Which approach is most likely to result in employee buy-in to the budget?
bottom-up approach
WOTF is a finance budget?
cash budget
WOTF is not an operating budget?
cash budget
WOTF includes only financial budgets?
cash budget, budgeted balance sheet, capital asset budget
Which is not a step in activity-based costing?
compute a cost rate per production
Absorption costing is also referred to as
full costing
Which is not a step in analyzing the cost driver for manufacturing overhead?
identify non-value-added costs
Product costs under variable costing are typically
lower than under absorption costing
A downside to absorption costing is
not well designed for cost-volume-profit analysis
WOTF is not a part of budgeting?
preventing net operating losses
The direct materials budget is prepared using which budget's information?
production budget
WOTF is an operating budget?
production budget
Which of the operating budgets is prepared first?
sales budget
Which budget is the starting point in preparing financial budgets?
the budgeted income statement
WOTF statements is not correct?
the direct materials budget begins with the sales estimated for each period
Overhead costs are assigned to each product based on
the proportion of that product use of the cost driver
What is the main difference between static + flexible budgets?
the variable costs are adjusted in a flexible budget
WOTF is a reason a company would implement activity-based costing?
they want to improve the data on which decisions are made
Activity-based costing systems
uses a single predetermined overhead rate based on machine hours instead of on direct labor
WOTF is true in a bottom-up budgeting approach?
departments determine their needs and relate them to the overall goals
?Under absorption costing, a unit of product includes which costs?
direct material, direct labor, + variable manufacturing overhead
Under variable cost, a unit of product includes which costs?
direct materials, direct labor, + variable manufacturing overhead
Which is the correct formula for computing the overhead rate?
estimated overhead for the activity divided by the estimated use of the cost driver for the activity
The cash budget is part of which category of budgets?
financial budget
Which budget evaluates the results of operations at the actual level of activity?
flexible budget
Activity-based costing is preferable in a system
with multiple, diverse products
The most common budget is prepared for a
year
Which approach requires management to justify all its expenditures?
zero-based budgeting
