Managerial Accounting 2

A company's expected receipts from sales and planned disbursements to pay bills is commonly called a: A. cash budget B. master budget C. profit plan budget D. financial budget E. pro-forma budget

A. cash budget

A company's plan for the issuance of stock or incurrence of debt is commonly called a: A. financial budget B. master budget C. capital budget D. pro-forma budget E. profit plan budget

A. financial budget

A static budget: A. is based on one anticipated activity level B. is based totally on prior year's costs C. is preferred over a flexible budget in the evaluation of performance D. is based on a range of activity E. presents a clear measure of performance when planned activity differs from actual activity

A. is based on one anticipated activity level

What are some possible reasons for a direct labor time variance? A. less qualified workers B. utility usage decrease C. sales decline D. office supplies spending

A. less qualified workers

What are some reasons for a material quantity variance? A. more qualified workers B. labor rate decreases C. building rental charges increase D. change in the actual cost of materials

A. more qualified workers

The direct materials budget is prepared using which budget's information? A. production budget B. cash payments budget C. cash receipts budget D. raw materials budget

A. production budget

Which of the following is a possible cause of an unfavorable material quantity variance? A. purchasing substandard material B. hiring higher qualified workers C. purchasing too much material D. paying higher wages for workers

A. purchasing substandard material

What is the main difference between static and flexible budgets? A. the variable costs are adjusted in a flexible budget B. the variable manufacturing overhead is adjusted in the static budget C. there is no difference between the budgets D. the fixed manufacturing overhead is adjusted for units sold in the flexible budget

A. the variable costs are adjusted in a flexible budget

When is the material quantity variance favorable? A. when the actual quantity used is less than the standard quantity B. when the actual price paid is greater than the standard price C. when the actual price paid is less than the standard price D. when the actual quantity used is greater than the standard quantity

A. when the actual quantity used is less than the standard quantity

What is the proper sequencing of the following budgets? A Budgeted Balance Sheet B Selling and Administrative Budget C Sales Budget D Budgeted Income Statement A. D, C, B, A B. C, B, D, A C. D, C, A, B D. C, D, B, A E. A, B, C, D

B. C, B, D, A

The difference between the actual price and the standard price, multiplied by the actual quantity of materials purchased, is the A. direct labor quantity variance B. direct materials price variance C. direct labor price variance D. direct materials quantity variance

B. direct materials price variance

A standard cost: A. is the "true" cost of a unit of production B. is a budget for the production of one unit of a product or service C. can be useful in calculating equivalent units D. is normally the avergae cost within an industry E. is almost always the actual cost from previous years

B. is a budget for the production of one unit of a product or service

Which of the following is a possible cause of an unfavorable material quantity variance? A. paying higher wages for workers B. purchasing substandard material C. purchasing too much material D. hiring higher qualified workers

B. purchasing substandard material

Which of the following statements is not correct? A. the production budget begins with the sales estimated for each period B. the direct materials budget begins with the sales estimated for each period C. the sales budget is computed by multiplying estimated sales by the sales price D. the sales budget is typically the first budget prepared

B. the direct materials budget begins with the sales estimated for each period

The comprehensive set of budgets that serves as a company's overall financial plan is commonly known as: A. the financing budget B. the master budget C. the capital budget D. the sales budget E. the cash budget

B. the master budget

This variance is the difference involving spending more or using more than the standard amount. A. simple variance B. unfavorable variance C. no variance D. favorable variance

B. unfavorable variance

Which of the following is not an operating budget? A. direct labor budget B. sales budget C. cash budget D. production budget

C. cash budget

Which of the following is a possible cause of an unfavorable material price variance? A. purchasing too much material B. hiring unqualified workers C. purchasing higher-quality material D. purchasing too much material

C. purchasing higher-quality material

Which of the operating budgets is prepared first? A. purchasing budget B. cash budget C. sales budget D. production budget E. expenditures budget

C. sales budget

Which of the following is a predetermined estimated cost that can be used in the calculation of a variance? A. actual cost B. marginal cost C. standard cost D. differential cost E. product cost

C. standard cost

What are some possible reasons for a material price variance? A. labor rate increases B. labor efficiency C. substandard material D. labor rate decreases

C. substandard material

The comprehensive set of budgets that serves as a company's overall financial plan is commonly known as: A. the cash budget B. the sales budget C. the master budget D. the financing budget E. the capital budget

C. the master budget

When is the material quantity unfavorable? A. when the actual quantity used is less than the standard quantity B. when the actual price paid is less than the standard price C. when the actual quantity used is greater than the standard quantity D. when the actual price paid is greater than the standard price

C. when the actual quantity used is greater than the standard quantity

What is the primary difference between a static budget and a flexible budget? A. The static budget contains only fixed costs, while a flexible budget contains only variable costs B. The static budget is adjusted for different activity levels, and a flexible budget is adjusted for different activity levels C. Both the static and flexible budgets are fixed at predetermined activity levels D. The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels

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

Which variance is created when actual labor hours worked exceed standard hours allowed? A. Favorable labor efficiency variance B. Unfavorable direct labor rate variance C. Favorable direct labor rate variance D. Unfavorable labor efficiency variance E. Favorable direct materials price variance

D. Unfavorable labor efficiency variance

A budget serves as a benchmark against which A. actual results become inconsequential B. allocated results become inconsequential C. allocated results can be interpreted D. actual results can be compared E. cash balances can be compared to expense tools

D. actual results can be compared

Which system(s) use a predetermined overhead rate? A. normal costing B. variable costing C. both standard and variable costing D. both normal and standard costing E. standard costing

D. both normal and standard costing

With respect to overhead, what is the difference between normal costing and standard costing? A. use of a predetermined overhead rate B. use of a standard rate versus an actual rate C. the choice of an activity measure D. use of standard hours versus actual hours

D. use of standard hours versus actual hours

When is the material quantity variance favorable? A. when the actual price paid is less than the standard price B. when the actual quantity used is greater than the standard quantity C. when the actual price paid is greater than the standard price D. when the actual quantity used is less than the standard quantity

D. when the actual quantity used is less than the standard quantity

When is the material quantity variance favorable? A. when the actual quantity used is greater than the standard quantity B. when the actual price paid is less than the standard price C. when the actual price paid is greater than the standard price D. when the actual quantity used is less than the standard quantity

D. when the actual quantity used is less than the standard quantity

Which type of variance has occurred, if actual material costs are less than projected material costs? A. a favorable direct labor rate variance B. an unfavorable direct-materials quantity variance C. a favorable direct-materials quantity variance D. an unfavorable direct-materials quantity variance E. a favorable direct-materials price variance

E. a favorable direct-materials price variance

A company's plan for the acquisition of long-lived assets, such as buildings and equipment, is commonly called a: A. financial budget B. profit plan budget C. master budget D. pro-forma budget E. capital budget

E. capital budget

A company's plan for the issuance of stock or incurrence of debt is commonly called a: A. pro-forma budget B. capital budget C. master budget D. profit plan budget E. financial budget

E. financial budget

The direct materials budget is prepared using which budget's information? A. cash receipts budget B. labor budget C. raw materials budget D. cash payments budget E. production budget

E. production budget

Variances are computed by taking the difference between the product cost and standard cost. True False

False

The activity-based flexible budget provides a more accurate benchmark against which to compare actual costs than does a conventional flexible budget. True False

True