ACC202 FINAL

An unfavorable labor quantity variance may be caused by:

worker fatigue or carelessness.

The standard rate of pay is $12 per direct labor hour. If the actual direct labor payroll was $23520 for 2000 direct labor hours worked, the direct labor price (rate) variance is:

$23520 / 2000 = $11.76 ($12 - $11.76) × 2000 = $480 F

Waterway Industries had average operating assets of $6000000 and sales of $3000000 in 2016. If the controllable margin was $360000, the ROI was: 6% 24% 12% 50%

$360000 / $6000000 = 0.06 or 6%

In Sunland Company's income statement, they report gross profit of $50000 at standard and the following variances: Materials price $420 F Materials quantity 600 F Labor price 420 U Labor quantity 1000 F Overhead 900 F

$50000 + $420 + $600 - $420 + $1000 + $900 = $52500

Rihanna Company is considering purchasing new equipment for $567,000. It is expected that the equipment will produce net annual cash flows of $63,000 over its 10-year useful life. Annual depreciation will be $56,700. Compute the cash payback period. (Round answer to 1 decimal place, e.g. 10.5.)

$567,000 ÷ $63,000 =9.0 years

Sheffield Corp. expects direct materials cost of $6 per unit for 200000 units (a total of $1200000 of direct materials costs). Sheffield's standard direct materials cost and budgeted direct materials cost is

$6 per unit $1200000 per year

Bramble Corp.budgeted manufacturing costs for 65000 tons of steel are: Fixed manufacturing costs$50000 per monthVariable manufacturing costs$12 per ton of steel Brambleproduced 55000 tons of steel during March. How much is the flexible budget for total manufacturing costs for March? $710000 $830000 $660000 $700000

($12 x 55000) + $65000 = $710000

Sheffield Corp. expects to purchase $120000 of materials in July and $140000 of materials in August. Three-fourths of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. How much will August's cash disbursements for materials purchases be?

($140000 x 0.75) + ($120000 x 0.25) = $135000 (August Direct Materials Purchase + July Direct Materials Purchase = August's cash disbursement)

Oriole's standard quantities for 1 unit of product include 3 pounds of materials and 1.5 labor hours. The standard rates are $5 per pound and $7 per hour. The standard overhead rate is $8 per direct labor hour. The total standard cost of Oriole's product is:

($5 × 3) + ($7 × 1.5) = $25.50 + ($8 × 1.5) = $37.50

Bramble Corp. planned to use 1 yard of plastic per unit budgeted at $96 a yard. However, the plastic actually cost $95 per yard. The company actually made 5100 units, although it had planned to make only 4300 units. Total yards used for production were 5160. How much is the total materials variance?

($5160) × ($96 - $95) = $5160 F; ($5160 - $5100) × $96 = $5760 U; $5760 U - $5160 F = $600 U *(5100*1*96)-(5160*95)

...all sales are on credit. Customer amounts on account are collected 50% in the month of sale and 50% in the following month. How much is the November 30, 2016 budgeted Accounts Receivable?

($960000 x 0.50) = $480000 (November Budgeted Sales x % on Account (Not collected) = November 30th budgeted Accounts Receivable)

A company's planned activity level for next year is expected to be 100000 machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs: Variable Fixed Indirect materials$40000 Depreciation$37500Indirect labor70000 Taxes7500Factory supplies8000 Supervision30000 A flexible budget prepared at the 90000 machine hours level of activity would show total manufacturing overhead costs of $181200. $173700. $106200. $118000.

(($40000 + $70000 + $8000) / 100000) x 90000 = $106200 + $37500 + $7500 + $30000 = $181200

Swifty Corporation uses flexible budgets. At normal capacity of 17000 units, budgeted manufacturing overhead is: $68000 variable and $174000 fixed. If Swifty had actual overhead costs of $247800 for 19000 units produced, what is the difference between actual and budgeted costs? $2200 unfavorable. $6600 unfavorable. $8800 favorable. $2200 favorable.

(($68000 / 17000) x 19000) + $174000 = $250000 - $247800 = $2200 favorable (Variable manufacturing overhead / budgeted units) x actual units produced) + Fixed manufacturing overhead = Budgeted Costs; Budgeted Costs - Actual = Difference (Favorable))

Swifty Corporation plans to sell 3000 purple lawn chairs during May, 7700 in June, and 3000 during July. The company keeps 15% of the next month's sales as ending inventory. How many units should Swifty produce during June?

(0.15 x 3000) + 7700 - (0.15 x 7700) = 6995 (Units to be produced in June = Ending inventory + Estimated units sold - Beginning inventory)

Sunland Company has a materials price standard of $2.00 per pound. 6300 pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 6300 pounds, although the standard quantity allowed for the output was 6000 pounds. Sunland Company's materials quantity variance is

(6300 - 6000) × $2.00 = $600 U

Expenses are paid in the month incurred. If the company has budgeted to sell 54000 widgets in October, how much is the total budgeted selling and administrative expenses for October?

(Variable Cost per unit (Sales commission, Shipping, Advertising, and Other) x widgets) + Monthly Fixed Cost (Sales commission, Executive salaries, Depreciation on office equipment and Other) (($1 + $3 + 4 + $2) x 54000) + ($10000 + $120000 + $4000 + $6000) = $680000

-Budget reports compare actual results with planned objectives. - All budget reports are prepared on a weekly basis. - Management uses budget reports to analyze differences between actual and planned results and to determine their causes. - As a result of analyzing budget reports, management may either take corrective action or modify future plans. -Budgetary control works best when a company has an informal reporting system. - The primary recipients of the sales report are the sales manager and the production supervisor. - The primary recipient of the scrap report is the production manager. - A static budget is a projection of budget data at a single level of activity. -Top management's reaction to unfavorable differences is not influenced by the materiality of the difference. -A static budget is not appropriate in evaluating a manager's effectiveness in controlling costs unless the actual activity level approximates the static budget activity level or the behavior of the costs is fixed.

- true - false - true - true - false - false - true - true - false - true

What is the proper preparation sequencing of the following budgets? 1. Budgeted Balance Sheet 2. Sales Budget 3. Selling and Administrative Budget 4. Budgeted Income Statement

2, 3, 4, 1

The following information is taken from the production budget for the first quarter: Beginning inventory in units 800 Sales budgeted for the quarter. 396000 Capacity in units of production facility. 442000 How many finished goods units should be produced during the quarter if the company desires 2800 units available to start the next quarter?

2800 + 396000 - 800 = 398000 (Desired units available next quarter + Sales budgeted for the quarter - Beginning inventory in units = Finished goods to be produced during the quarter)

Crane Company is preparing its direct labor budget for May. Projections for the month are that 31000 units are to be produced and that direct labor time is three hours per unit. If the labor cost per hour is $16, what is the total budgeted direct labor cost for May?

31000 x $16 x 3 = $1488000 (Units to be produced x Hours per unit x labor cost per hour = total budgeted direct labor cost)

Coronado Industries recorded operating data for its auto accessories division for the year. Sales$960000Contribution margin280000Total direct fixed costs90000Average total operating assets400000 -How much is ROI for the year if management is able to identify a way to improve the contribution margin by $20000, assuming fixed costs are held constant? 75% 48% 9% 53%

53%

A company purchases 20000 pounds of materials. The materials price variance is $6000 favorable. What is the difference between the standard and actual price paid for the materials?

6,000/20,000=0.30

The direct materials budget shows: Desired ending direct materials. 50000 poundsTotal materials required. 65000 poundsDirect materials purchases. 60200 pounds The total direct materials needed for production is

65000 - 50000 = 15000 (Total materials required - Desired ending direct materials = Total direct materials needed for production)

Which of the following will increase the net present value of a project?

A decrease in the discount rate

On the basis of the budget reports: management analyzes differences between actual and planned results. management may take corrective action. management may modify the future plans. All of these answers are correct.

All of these answers are correct. management analyzes differences between actual and planned results. management may take corrective action. management may modify the future plans.

Which of the following statements about budget acceptance in an organization is true? Budgets have a greater chance of acceptance if all levels of management have provided input into the budgeting process. Budgets are hardly ever accepted by anyone except top management. The most widely accepted budget by the organization is the one prepared by top management. The most widely accepted budget by the organization is the one prepared by the department heads.

Budgets have a greater chance of acceptance if all levels of management have provided input into the budgeting process.

Which of the following does not appear as a separate section on the cash budget? Cash disbursements Capital expenditures Financing Cash receipts

Capital expenditures

Which of the following ignores the time value of money?

Cash payback

Which one of the following items would never appear on a cash budget? Office salaries expense Interest expense Travel expense Depreciation expense

Depreciation expense

Which of the following items does not follow from the adoption of a budget? Guarantee of accomplishing the profit objective. Promote efficiency. Deterrent to waste. Basis for performance evaluation.

Guarantee of accomplishing the profit objective.

Which is the last step in developing the master budget? Preparing the budgeted income statement. Preparing the cash budget. Preparing the budgeted balance sheet. Preparing the cost of goods manufactured budget.

Preparing the budgeted balance sheet.

Which of the following is not considered an advantage of using standard costs? Standard costs can be used as a means of finding fault with performance. Standard costs can be useful in setting prices for finished goods. Standard costs can make employees "cost-conscious." Standard costs can reduce clerical costs.

Standard costs can be used as a means of finding fault with performance.

Swifty Corporation prepared a 2019 budget for 135000 units of product. Actual production in 2019 was 145000 units. To be most useful, what amounts should a performance report for this company compare? The actual results for 145000 units with a new budget for 145000 units. It doesn't matter. All of these choices are equally useful. The actual results for 145000 units with last year's actual results for 149500 units. The actual results for 145000 units with the original budget for 135000 units.

The actual results for 145000 units with a new budget for 145000 units.

Which is not one of the four most commonly used perspectives on a balanced scorecard? The learning and growth perspective The customer perspective The external process perspective The financial perspective

The external process perspective

What is the primary difference between a static budget and a flexible budget? The static budget contains only fixed costs, while the flexible budget contains only variable costs. The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels. The static budget is constructed using input from only upper level management, while a flexible budget obtains input from all levels of management. The static budget is prepared only for units produced, while a flexible budget reflects the number of units sold.

The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels.

Why are budgets useful in the planning process? They guarantee the company will be profitable if it meets its objectives. They enable the budget committee to earn their paycheck. They help communicate goals and provide a basis for evaluation. They provide management with information about the company's past performance.

They help communicate goals and provide a basis for evaluation.

The purchasing agent of the Poplin, Inc. ordered materials of lower quality in an effort to economize on price. What variance will most likely result? Unfavorable materials price variance Favorable materials quantity variance Unfavorable labor quantity variance Favorable total materials variance

Unfavorable labor quantity variance

When is a variance considered to be 'material'? When it is infrequent When it is unfavorable When it is large compared to the actual cost When it could have been controlled more effectively

When it is large compared to the actual cost

In many companies, responsibility for coordinating the preparation of the budget is assigned to the company's independent certified public accountants. a budget committee. the company's internal auditors. the company's board of directors.

a budget committee.

What is the difference between a budget and a standard?

a budget expresses a total amount, while a standard expresses a unit amount.

If a company has adopted continuous budgeting, the budget will show plans for the current year and the next year. at least five years. every day. a full year ahead.

a full year ahead.

As one moves up to each higher level of managerial responsibility: a greater number of costs are controllable. performance evaluation becomes less important. fewer costs are controllable. the responsibility for cost incurrence diminishes.

a greater number of costs are controllable.

A profit center is: a responsibility center that always reports a profit. referred to as a loss center when operations do not meet the company's objectives. a responsibility center that incurs costs and generates revenues. evaluated by the rate of return earned on the investment allocated to the center.

a responsibility center that incurs costs and generates revenues.

The discount rate is referred to by all of the following alternative names except the

accounting rate of return.

Net annual cash flow can be estimated by

adding depreciation expense to net income.

The foreign subsidiary of a large corporation is: a profit center. a cost center. an investment center. not a responsibility center.

an investment center.

Most of the capital budgeting methods use:

cash flow numbers.

The maintenance department of a manufacturing company is a(n): segment. cost center. profit center. investment center.

cost center.

If a payback period for a project is greater than its expected useful life, the

entire initial investment will not be recovered.

An unrealistic budget is more likely to result when it has been developed in a top down fashion. has been developed by all levels of management. is developed with performance appraisal usages in mind. has been developed in a bottom up fashion.

has been developed in a top down fashion.

The most rigorous of all standards is the realistic standard. ideal standard. normal standard. conceivable standard.

ideal standard.

If a project has a salvage value greater than zero, the salvage value will

increase the net present value.

A master budget consists of an interrelated long-term plan and operating budgets. financial budgets and a long-term plan. interrelated financial budgets and operating budgets. all the accounting journals and ledgers used by a company.

interrelated financial budgets and operating budgets.

Given below is an excerpt from a management performance report: BudgetActualDifferenceContribution margin$550000$540000$10000 UControllable fixed costs$150000$160000$10000 U The manager's overall performance: is 5% below expectations. is equal to expectations. cannot be determined from the information provided. is 5% above expectations.

is 5% below expectations.

The flexible budget: is relevant both within and outside the relevant range. is a series of static budgets at different levels of activity. eliminates the need for a master budget. is prepared before the master budget.

is a series of static budgets at different levels of activity.

If standard costs are incorporated into the accounting system: it may simplify the costing of inventories and reduce clerical costs. it can eliminate the need for the budgeting process. the accounting system will produce information which is less relevant than the historical cost accounting system. approval of the shareholders is required.

it may simplify the costing of inventories and reduce clerical costs.

If a project's profitability index is less than 1, then

it should be rejected.

The standard unit cost is used in the calculation of which of the following variances?

materials price variance: yes/ materials usage variance: yes

Allowance for spoilage is part of the direct labor quantity standard. materials price standard. materials quantity standard. labor price standard.

materials quantity standard.

The cash payback technique

may be useful as an initial screening device.

Costs incurred indirectly and allocated to a responsibility level are considered to be: nonmaterial. mixed. controllable. noncontrollable.

non-controllable

Capital budgeting is the process

of making capital expenditure decisions.

Controllable margin is most useful for: preparing the master budget. external financial reporting. performance evaluation of profit centers. break-even analysis.

performance evaluation of profit centers.

The profitability index is computed by dividing the

present value of cash flows by the initial investment.

A total materials variance is analyzed in terms of: price and quantity variances. buy and sell variances. tight and loose variances. quantity and quality variances.

price and quantity variances.

The investigation of a materials quantity variance usually begins in the purchasing department. controller's department. production department. sales department.

production department.

The first step in the capital budgeting evaluation process is to

request proposals for projects.

When a capital budgeting project generates a positive net present value, this means that the project earns a return higher than the

required rate of return.

The starting point in preparing a master budget is the preparation of the production budget. purchasing budget. sales budget. personnel budget.

sales budget.

A responsibility report should: only show variable costs. only be prepared at the highest level of managerial responsibility. show only those costs that a manager can control. be prepared in accordance with generally accepted accounting principles.

show only those costs that a manager can control.

All of the following are involved in the capital budgeting evaluation process except a company's

stockholders

A major element in budgetary control is: the valuation of inventories. approval of the budget by the stockholders. the preparation of long-term plans. the comparison of actual results with planned objectives.

the comparison of actual results with planned objectives.

Top management's reaction to a difference between budgeted and actual sales often depends on: whether management anticipated the difference. the materiality of the difference. the personality of the top managers. whether the difference is favorable or unfavorable.

the materiality of the difference.