Managerial Accounting Exam 4 Wagner SBU

The production budgets are used to prepare which of the following budgets? Answers: a. direct materials purchases, direct labor cost, and factory overhead cost b. sales in dollars c. sales in units d. operating expenses

a

Managers of what type of decentralized units have authority and responsibility for revenues, costs, and assets invested in the unit?

investment center

In a cost center, the manager has responsibility and authority for making decisions that affect

Costs

In a profit center, the manager has responsibility and authority for making decisions that affect

costs

Estimated cash payments are planned reductions in cash from all of the following except Answers: a. payments for interest or dividends b. manufacturing and operating expenses c. capital expenditures d. notes and accounts receivable collections

d

If the wage rate paid per hour differs from the standard wage rate per hour for direct labor, the variance is a Answers: a. quantity variance b. variable variance c. volume variance d. rate variance

d

The Lucy Corporation purchased and used 129,000 board feet of lumber in production, at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5.7 board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units. Compute the material price variance: ​ Answers: a. 63,000 unfavorable b. 63,000 favorable c. 59,400 unfavorable d. 59,400 favorable

d

The formula to compute the direct material quantity variance is to calculate the difference between Answers: a. Actual costs - (Standard price × Standard costs) b. Standard costs - Actual costs c. Actual costs - Standard costs d. (Actual quantity × Standard price) - Standard costs

d

Which of the following conditions normally would not indicate that standard costs should be revised? Answers: a. The engineering department has revised product specifications in responding to customer suggestions. b. The company has signed a new union contract that increases the factory wages on average by $3.50 an hour. c. The average price of raw materials increased from $4.68 per pound to $4.82 per pound. d. Actual costs differed from standard costs for the preceding week.

d

Which of the following would not be used in preparing a cash budget for October? Answers: a. budgeted salaries expense for October b. beginning cash balance on October 1 c. budgeted sales and collections for October d. estimated depreciation expense for October

d

Assume that Division Blue has achieved a yearly income from operations of $110,000 using $900,000 of invested assets. If management has set a minimum acceptable rate of return of 11%, the residual income is

11,000

Mason Corporation had $650,000 in invested assets, sales of $700,000, income from operations amounting to $99,000, and a desired minimum rate of return of 15%.

14.1%

The budgeted volume of production is normally computed as the sum of (1) the expected sales volume and (2) the desired ending inventory. Answers: True False

False

The standard price and quantity of direct materials are separated because Answers: a. standard prices are more difficult to estimate than standard quantities b. direct materials prices are controlled by the purchasing department and quantity used is controlled by the production department c. GAAP and IFRS reporting requires separation d. standard quantities change more frequently than standard prices

b

The balanced scorecard measures

both financial and nonfinancial information

The sales budget is the starting point for preparation of the direct labor cost budget. Answers: True False

False

The difference between the standard cost of a product and its actual cost is called a variance. Answers: True False

True

A formal written statement of management's plans for the future, expressed in financial terms, is a Answers: a. budget b. gross profit report c. responsibility report d. performance report

a

The total manufacturing cost variance is Answers: a. the difference between actual costs and standard costs for units produced b. the flexible budget variance plus the time variance c. the difference between planned costs and standard costs for units produced d. none of the answers are correct

a

A series of budgets for varying rates of activity is termed a(n) Answers: a. activity budget b. flexible budget c. variable budget d. master budget

b

Budgeting supports the planning process by encouraging all of the following activities except Answers: a. increasing the motivation of managers and employees by providing agreed-upon expectations b. directing and coordinating operations during the period c. requiring all organizational units to establish their goals for the upcoming period d. improving overall decision making by considering all viewpoints, options, and cost reduction possibilities

b

Miller and Sons' static budget for 10,000 units of production includes $50,000 for direct materials, $44,000 for direct labor, variable utilities of $5,000, and supervisor salaries of $24,000. A flexible budget for 12,000 units of production would show Answers: a. the same cost structure in total b. direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $24,000 c. total variable costs of $148,000 d. direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $29,000

b

Production estimates for August are as follows: Estimated inventory (units), August 1 12,000 Desired inventory (units), August 31 9,000 Expected sales volume (units), August 75,000 ​ For each unit produced, the direct materials requirements are as follows: Material A ($5 per lb.) 3 lbs. Material B ($18 per lb.) 1/2 lb. ​ ​ The number of pounds of Materials A and B required for August production is a. 225,000 lbs. of A; 37,500 lbs. of B b. 216,000 lbs. of A; 36,000 lbs. of B c. 216,000 lbs. of A; 72,000 lbs. of B d. 234,000 lbs. of A; 39,000 lbs. of B

b

Standards that represent levels of operation that can be attained with reasonable effort are called Answers: a. variable standards b. normal standards c. ideal standards d. theoretical standards

b

The standard costs and actual costs for direct labor in the manufacture of 2,500 units of product are as follows: Standard Costs Direct labor7,500 hours @ $11.80 Actual Costs Direct labor7,400 hours @ $11.40 ​ The direct labor time variance is Answers: a. $1,140 favorable b. $1,180 favorable c. $1,140 unfavorable d. $1,180 unfavorable

b

The standard costs and actual costs for direct materials for the manufacture of 3,000 actual units of product are Standard Costs Direct materials (per completed unit)1,040 kilograms at $8.75 Actual Costs Direct materials2,000 kilograms at $8.00. The amount of direct materials price variance is: ​ Answers: a. $2,750 favorable variance b. $1,500 favorable variance c. $2,750 unfavorable variance d. $1,500 unfavorable variance

b

The total manufacturing cost variance consists of Answers: a. direct materials price variance, direct labor cost variance, and fixed factory overhead volume variance b. direct materials cost variance, direct labor cost variance, and factory overhead cost variance c. direct materials cost variance, direct labor rate variance, and factory overhead cost variance d. direct materials cost variance, direct labor cost variance, and variable factory overhead controllable variance

b

Based on the following production and sales estimates for May, determine the number of units expected to be manufactured in May. Estimated inventory (units), May 1 30,000 Desired inventory (units), May 31 25,000 Expected sales volume (units): South region 20,000 West region 40,000 North region 20,000 Unit sales price $10 a. 80,000 b. 85,000 c. 75,000 d. 105,000

c

If the actual direct labor hours spent producing a commodity differs from the standard hours, the variance is a Answers: a. price variance b. quantity variance c. time variance d. rate variance

c

Jaxson Corporation has the following data related to direct labor costs for September: actual costs are 10,200 hours at $15.75 per hour and standard costs are 10,800 hours at $15.50 per hour. ​ What is the direct labor time variance? Answers: a. $9,300 unfavorable b. $9,450 favorable c. $9,300 favorable d. $9,450 unfavorable

c

Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business—September, October, and November—are $260,000, $375,000, and $400,000, respectively. The company expects to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be collected in the month of the sale and 20% in the month following the sale. ​ The cash collections expected in October from accounts receivable are estimated to be Answers: a. $210,000 b. $262,500 c. $246,400 d. $294,500

c

Standard costs are divided into which of the following components? Answers: a. materials standard and labor standard b. variance standard and quantity standard c. price standard and quantity standard d. quality standard and quantity standard

c

The formula to compute the direct labor rate variance is to calculate the difference between Answers: a. Actual costs - Standard cost b. Actual costs + (Actual hours × Standard rate) c. Actual costs - (Actual hours × Standard rate) d. (Actual hours × Standard rate) - Standard costs

c

The operating budgets of a company includes the Answers: a. capital expenditures budget b. financing budget c. production budget d. cash budget

c

The standard costs and actual costs for direct labor for the manufacture of 2,500 actual units of product are as follows: Standard Costs Direct labor 7,500 hours @ $11.80 Actual Costs Direct labor 7,400 hours @ $11.40 The direct labor rate variance is Answers: a. $2,960 unfavorable b. $4,500 favorable c. $2,960 favorable d. $4,500 unfavorable

c

Which of the following budgets allow for adjustments in activity levels? Answers: a. static budget b. continuous budget c. flexible budget d. zero-based budget

c