Accounting Final

Which of the following is a benefit of participative budgeting?

Employees tend to be more motivated to achieve the budget.

Select the correct equation format for the purchases budget.

Expected Sales + Desired Ending Inventory - Beginning Inventory = Required Purchases

Which of the following items is not needed to prepare an inventory purchases budget for a merchandising business?

Expected unit selling price

The master budget normally covers

1 year.

Which of the following is a product cost for a construction company?

Cost of transporting raw materials to the job site

Which of the following costs typically include both fixed and variable components?

Factory overhead

Which of the following statements is true?

Information does not have to be exactly accurate to be relevant to decision making.

All of the following are features of managerial accounting except:

Information is historically based and reported annually

Which of the following statements is true with regard to product costs versus general, selling, and administrative costs?

Product costs associated with units appear on the Income Statement as cost of goods sold expense.

Which of the following budgets would be prepared by a manufacturing company but not a merchandising company?

Raw materials budget

For a manufacturing company, product costs include all of the following except:

Research and development costs

Which of the following would represent the order in which most master budgets are prepared?

Sales, Inventory Purchases, Cash, Income Statement

Relevant costs are often referred to as

avoidable costs

Select the correct statement regarding fixed costs.

The fixed cost per unit decreases when volume increases. There is a contradiction between the term "fixed cost per unit" and the behavior pattern implied by the term. Fixed cost per unit is not fixed. Total fixed cost remains constant when volume changes.

Bottling Company pays its production manager a salary of $5000 per month. Salespersons are paid strictly on commission, at $2 for each case of product sold. For Hico Bottling Company, the salespersons' commissions are an example of

a variable cost

The person MOST likely to use management accounting information is a(n):

assembly department supervisor

Budgeted depreciation expense would not appear on a

cash budget

The excess of a product's selling price over its variable costs is referred to as

contribution margin

Once sales reach the breakeven point, each additional unit sold will

increase profit by an amount equal to the per unit contribution margin

A company's numerous specific budgets (sales and inventory purchases, for example) together are referred to as the

master budget

A cost that contains both fixed and variable elements is referred to as a

mixed cost

Budgeting that involves the development of a master budget to direct the firm's activities over the short-term is referred to as

operations budgeting

The benefits sacrificed when one alternative is chosen over another are referred to as

opportunity costs.

All of the following statements describe qualities of the relevance of information except:

relevance of information requires a high degree of precision

Planning concerned with long-range decisions such as defining the scope of the business is referred to as

strategic planning

All of the following are factors that could be considered in a decision to outsource a component that is currently being produced in house. Which of the following is not likely to be relevant?

the book value of equipment used in making the component

Costs associated with holding inventory often include

theft, damage, and obsolescence lower motivation of employees increased production time