Accounting Exam 5-9

The sales budget often includes a schedule of expected cash collections

true

Activity-based costing is a costing method that is designed to provide managers with cost information for strategic and other decisions that potentially affect only variable costs.

False

All other things the same, an increase in variable expense per unit will reduce the break-even point.

False

IN activity based costing, nonmanufacturing costs are not assigned to products.

False

Incremental analysis is generally the most complicated and least direct approach to decision making.

False

ON a cost-volume-profit graph, the revenue line will be shown below the total expense line for any activity level above the break-even point.

False

One assumption in CVP analysis is that the number of units produced and sold does not change.

False

One way to compute the total contribution margin is to deduct total fixed expenses from net operating income.

False

Organization-sustaining overhead costs should be allocated to products just like unit-level and product-level activities.

False

Planning involves gathering feedback to ensure that the plan is being properly executed or modified as circumstances change.

False

Product-level activities relate to how many batches are fun or units of product are made.

False

The budgeted selling and administrative expense is calculated by multiplying the budgeted unit sales by the selling and admin expense per unit

False

The costs of idle capacity should be assigned to products in activity-based costing

False

The manufacturing Overhead budget is typically prepared before the production budget.

False

The margin of safety in dollars equals the excess of actual sales over budgeted sales.

False

The overall contribution margin ratio for a company producing three products may be obtained by adding the contribution margin ratios for the three products and dividing the total by three.

False

only variable manufacturing overhead costs are included in the manufacturing overhead budget

False

In business, a budget is a method for putting a limit on spending.

False/True ?

Activity based management seeks to eliminate waste by allocating costs to products that waste resources.

False

Activity rates in activity based costing are computed by dividing costs from the second-stage allocations by the activity measure for each activity cost pool.

False

In companies that do not have "no lay off" policies, the total direct labor cost for a budget period is computed by multiplying the total direct labor hours needed to make the budgeted output of completed units by the direct labor wage rate.

True

Reynold Enterprises sells a single product for $25. The variable expense per unit is $15 and the fixed expense per unit is $5 at the current level of sales. The company's net operating income will increase by $10 if one more unit is sold.

True

Self-imposed budgets prepared by lower-level managers should be scrutinized by higher levels of management

True

The unit sales volume necessary to reach a target profit is determined by dividing the sum of the fixed expenses and the target profit by the contribution margin per unit.

True

The manufacturing overhead budget lists all cost of production other than selling and administrative expenses

false

A self imposed budget is a budget that is prepared with the full cooperation and participation of managers at all levels.

True

Activity-based costing involves a two-stage allocation in which overhead costs are first assigned to departments and then to jobs.

True

At the break-even point, the total contribution margin and fixed expenses are equal.

True

In activity-based costing, some manufacturing costs can be excluded from product costs.

True