Acct 210 exam 3

Average Operating Assets Equation:

(Beg. Operating Assets + End. Operating Assets) / 2

Present Value of 1 Table is used with:

A single sum

Direct Labor Price Variance:

AH x (AR - SR)

Direct Materials Price Variance:

AQ x (AP - SP)

Total Fixed Overhead Variance:

Actual MOH - (Standard Direct Labor Hours x POR)

Borrow Cash Equation:

Beg. Cash Balance + Collections ----------------------- Available Cash - Disbursements ---------------------- Cash Balance + BORROW NEEDED ---------------------- Desired Ending Balance

Whats a Financial Budget?

Budget focusing on cash funding (Ex. Capital Expenditure, Cash, Balance Sheet budgets)

Whats a MOH Budget?

Budget that includes all indirect items, factory.

Whats a Selling & Admin Budget?

Budget that includes office expenses, sales commission, freight, advertising.

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.

Whats a Operating Budget?

Budgets that form the income statement. (Ex. Sales, Production, Direct Materials...)

Which of the following is not a true statement? a. All costs are controllable at some level within a company. b. Responsibility accounting applies to both profit and not-for-profit entities. c. Fewer costs are controllable as one moves up to each higher level of managerial responsibility. d. The term segment is sometimes used to identify areas of responsibility in decentralized operations.

C. Fewer costs are controllable as one moves up to each higher level of managerial responsibility.

Which of the following is not an operating budget?

Cash budget

ROI Equation:

Controllable Margin / Average Operating Assets

What are the three responsibility centers?

Cost Center, Profit Center, Investment Center

Which one of the following would not be classified as manufacturing overhead?

Direct materials

POR Equation:

Est. FMOH Costs / Est. DL Hours

Production Budget Equation:

Expected Unit Sales + Desired End. Finished Goods Inv -------------------------------------- Total Finished Goods Required - Beg. Finished Goods Inv -------------------------------------- Required Production Units

Sales Budget Equation:

Expected Unit Sales x Sales Price per unit ------------------------ Budgeted Sales $

Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets?

Fixed manufacturing overhead

The profit center:

Incurs costs/expenses and generates revenues.

The cost center:

Incurs costs/expenses but not revenues.

The investment center:

Incurs costs/expenses, generates revenue, and controls investments/assets

Which of the following expenses would not appear on a selling and administrative expense budget?

Indirect labor

Which of the following is a disadvantage of the cash payback technique?

It ignores the expected profitability of a project

Top Management has more or less authority over costs?

More

Target cost equation

Price - Desired Profit per unit

Direct Labor Budget Equation:

Required Production Units x Direct Labor Hours per unit --------------------------------- Direct Labor Hours Required x Wage Rate per hour -------------------------------- Total Direct Labor Cost

Direct Materials Budget:

Required Production Units x Raw Materials per unit ----------------------------------------- Raw Materials Needed for production + Desired End. Raw Materials Inventory ----------------------------------------- Total Raw Materials Needed - Beg. Raw Materials Inventory ----------------------------------------- Raw Materials to Purchase

Direct Materials Quantity Variance:

SP x (AQ - SQ)

Direct Labor Quantity Variance:

SR x (AH - SH)

Controllable Margin Equation:

Sales - Variable Cost ----------------------- Contribution Margin - Fixed Cost ----------------------- Controllable Margin

Controllable Margin Equation:

Sales - Variable Costs - Controllable Fixed Costs

First step of a Master Budget:

Sales Budget & Sales Forecast

Present Value of Annuity is used when:

The investment has regular payments for a set time period

What is the primary difference between a static budget and a flexible budget?

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

When is a budget unfavorable?

When Standard/Budgeted Production < Actual Production

When is a budget favorable?

When Standard/Budgeted Production > Actual Production

An unfavorable materials quantity variance would occur if:

actual pounds of materials used were greater than the standard pounds allowed.

Activity-based costing:

allocates overhead to activity cost pools, and it then assigns the activity cost pools to products and services by means of cost drivers

A company's discount rate is based on the:

cost of capital and the risk element.

A manager of a cost center is evaluated mainly on:

his or her ability to control costs.

A manufacturing company would include setup and downtime in their direct:

labor quantity standard.

Another name for the static budget is:

master budget.