Quiz 4 (CH 13,16,17) ACCT 308

The Kansas Company is preparing a cash budget for the month of July. The following information on accounts receivable collections is available from Kansas' past collection experience: The remaining 4% are not collected and are written off as bad debts. Credit sales to date are as follows: What are the estimated collections in July?

131,250 (july est* % this month) + (june * % prior month) + (may * % two month prior) + (April * % three month Prior)

If the total materials variance for a given operation is favorable, why must this variance be further evaluated as to price and usage? There is no need to further evaluate the total materials variance if it is favorable. Generally accepted accounting principles require that all variances be analyzed in three stages. All variances must appear in the annual report to equity owners for proper disclosure. A further evaluation lets management evaluate the activities of the purchasing and production functions.

A further evaluation lets management evaluate the activities of the purchasing and production functions.

Which of the following statements is(are) true? (A) A favorable variance is not necessarily good, and an unfavorable variance is not necessarily bad. (B) The master budget includes operating budgets (e.g., production budget) and financial budgets (e.g., cash budget). Only A is true. Only B is true. Both A and B are true. Neither A nor B is true.

Both A and B are true.

The forecasting method in which individual forecasts of group members are submitted anonymously and evaluated by the group as a whole is called: trend analysis. econometric models. Delphi technique. regression analysis.

Delphi technique.

Which of the following statements is (are) true? (A)The market share variance is more controllable by the marketing department than the industry volume variance. (B)The industry volume variance is the portion of the sales activity variance due to a change in the company's proportion of sales in the markets in which they operate. Only A is true. Only B is true. Both A and B are true. Neither A nor B is true.

Only A is true.

Which of the following statements is (are) true regarding the benefits associated with participative budgeting? (A) Goal congruence by divisions means top management need not be concerned with overall profitability. (B) Budget assumptions and estimates are prepared by those closest to the budgeted activity. Only A is true. Only B is true. Both A and B are true. Neither A nor B is true.

Only B is true.

When a manager is concerned with monitoring total cost, total revenue, and net profit conditioned upon the level of productivity, an accountant should normally recommend: (CPA adapted) Flexible | standard budgeting| costing A. Yes Yes B. Yes No C. No Yes D. No No Option A Option B Option C Option D

Option A

Which department is customarily held responsible for an unfavorable materials quantity variance? Quality control. Purchasing. Engineering. Production.

Production.

Which of the following variances will always be favorable when actual sales exceeds budgeted sales? Variable cost. Fixed cost. Sales activity. Operating profit.

Sales activity.

Which of the following is the most probable reason a company would experience an unfavorable labor rate variance and a favorable labor efficiency variance? The mix of workers assigned to the particular job was heavily weighted towards the use of higher paid experienced individuals. The mix of workers assigned to the particular job was heavily weighted towards the use of new relatively low paid unskilled workers. Because of the production schedule, workers from other production areas were assigned to assist this particular process. Defective materials caused more labor to be used in order to produce a standard unit.

The mix of workers assigned to the particular job was heavily weighted towards the use of higher paid experienced individuals.

During November, TaskMaster purchased 198,000 pounds of direct materials at a total cost of $376,200. The total factory wages for November were $46,000, 90% of which were for direct labor. TaskMaster manufactured 21,000 units of product during November using 170,000 pounds of direct materials and 6,000 direct labor hours. What is the direct labor price (rate) variance for November?

[$46,000 × 90% = $41,400 ÷ 6,000 direct labor hours = $6.90]; ($6.90 - $7.20) × 6,000 = $1,800 favorable (7.20 is standard price of DL)

During November, TaskMaster purchased 160,000 pounds of direct materials at a total cost of $288,000. The total factory wages for November were $44,000, 90% of which were for direct labor. TaskMaster manufactured 17,000 units of product during November using 126,000 pounds of direct materials and 6,000 direct labor hours. TaskMaster computes direct material variances at the time of purchase. What is the direct materials price variance for November?

[($288,000/160,000) = $1.80 - $1.70] × 160,000 = $16,000 unfavorable (1.70 is standard price of DM)

During November, TaskMaster purchased 140,000 pounds of direct materials at a total cost of $238,000. The total factory wages for November were $50,000, 80% of which were for direct labor. TaskMaster manufactured 18,000 units of product during November using 118,000 pounds of direct materials and 4,000 direct labor hours. What is the direct labor efficiency variance for November?

[4,000 - (18,000 × .20) = 400 hours] × $10.40 = $4,160 unfavorable (.20 is standard quantity of DL & 10.40 is standard price of DL)

Long-range planning as a management function is more important: at top management levels. at lower management levels. at middle management levels. for staff functions than line functions.

at top management levels.

The purpose of the flexible budget is to: allow management some latitude in meeting goals. eliminate cyclical fluctuations in production reports by ignoring variable costs. compare actual and budgeted results at virtually any level of production. reduce the total time in preparing the annual budget.

compare actual and budgeted results at virtually any level of production.

A standard cost system may be used in: (CPA adapted) job-order costing but not process costing. either job-order costing or process costing. process costing but not job-order costing. neither process costing nor job-order costing.

either job-order costing or process costing.

If overhead is applied to production using direct labor hours and the direct labor efficiency variance is favorable, then the variable overhead efficiency variance is: favorable. unfavorable. either favorable or unfavorable. neither favorable nor unfavorable.

favorable.

The sales activity variance is equal to the sum of the market share variance and the: selling price variance. industry volume variance. sales quantity variance. sales mix variance.

industry volume variance. Share + industry volume = activity

In general, the first budget prepared is the: production budget. direct labor budget. sales budget. overhead budget.

sales budget.