Managerial Acct Exam 3

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

False

The basic idea underlying responsibility accounting is that each manager should be held responsible for the overall profit of the company to ensure that all managers are acting together

False

A quantity standard indicates how much output should have been produced

False

A direct materials quantity standard generally includes an allowance for waste

True

A continuous or perpetual budget is a budget that almost never needs to be revised.

False

A benefit of self-imposed budgeting is that it may allow lower-level managers to create budgetary slack.

False

Both variable and fixed manufacturing overhead costs are included in the selling and administrative expense budget.

False

In a merchandising company, the required merchandise purchases for a period are determined by subtracting the desired ending inventory from the sum of the units to be sold during the period and the units in beginning inventory

False

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

False

One disadvantage of a self-imposed budget is that budget estimates prepared by front-line managers are often less accurate and reliable than estimates prepared by top managers

False

Only variable manufacturing overhead costs are included in the manufacturing overhead budget.

False

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

False

The cash budget is typically prepared before the direct materials budget

False

The cash budget is usually prepared after the budgeted income statement.

False

The direct labor budget shows the direct labor-hours required to produce the desired ending inventory.

False

The direct materials budget is typically prepared before the production budget

False

The first budget a company prepares in a master budget is the production budget.

False

The manufacturing overhead budget is typically prepared before the production budget

False

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

False

The standard cost per unit is computed by dividing the standard quantity or hours by the standard price or rate.

False

The standard price per unit for direct materials should not include the cost of delivering the materials.

False

The variable overhead efficiency variance measures how efficiently variable manufacturing overhead resources were used

False

A favorable materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period.

True

A materials price variance is unfavorable if the actual price exceeds the standard price

True

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

True

An unfavorable labor rate variance can occur if workers with high hourly wage rates are assigned to work on products with standards that assume workers have low hourly wage rates.

True

Budgets are used to plan and to control operations

True

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

On a cash budget, the total amount of budgeted cash payments for manufacturing overhead should not include any amounts for depreciation on factory equipment.

True

Purchase of poor quality materials may cause a favorable materials price variance and an unfavorable labor efficiency variance.

True

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

True

The materials price variance is computed by multiplying the difference between the actual price and the standard price by the actual quantity of materials purchased.

True

The number of units to be produced in a period can be determined by adding the expected sales to the beginning inventory and then deducting the desired ending inventory.

True

The sales budget is usually prepared before the production budget.

True

The sales budget often includes a schedule of expected cash collections

True

The standard labor rate per hour defines the company's expected direct labor wage rate per hour, including employment taxes and fringe benefits.

True

Waste on the production line will result in an unfavorable materials quantity variance.

True

When preparing a direct materials budget, the units of raw material needed to meet production should be added to desired ending inventory and the beginning inventory for raw materials should be subtracted to determine the amount of raw materials to be purchased.

True


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