Managerial Acct Chapter 9

Central corporate administrative costs are fixed and considered to be which of the following?

facility-level activities.

Marketing costs include expenditures for salaries, advertising, and sales office costs would be classified as which of the following type of activity?

facility-level activities.

Manufacturing Overhead costs such as maintenance, rent, insurance, and depreciation should be categorized as which of the following?

fixed overhead costs and facility-level activities.

If a company wishes to establish a factory overhead budget system in which estimated costs can be derived directly from estimates of activity levels, which type of budget should it prepare?

flexible budget.

What is often the most difficult aspect of budgeting?

forecasting sales because it involves considerable subjectivity.

Observers of Japanese industry report that Japanese managers and owners have created team orientation or esprit de corps with considerable

goal congruence

Which of the following describe the broad objectives management establishes and company employees work to achieve?

organizational goals.

If direct labor cost is variable, then it is considered to be which type of cost in the cost hierarchy?

unit-level cost.

In using the budget for performance evaluation, accountants compare actual results achieved with budgets to derive

variances.

Which statement is true concerning direct materials? a.are materials traceable to individual units produced. b.costs are almost always variable. c.costs are almost always fixed. d."a" and "b"

"a" and "b"

Which of the following statements is true regarding the master budget? a.The master budget is a blueprint of the planned operations of a firm for a period. b.The master budget begins with the production budget. c.The master budget does not require a sales forecast.

The master budget is a blueprint of the planned operations of a firm for a period.

Which of the following statements is true concerning the operating budget?

The operating budget is a formal short-run plan of action.

Which of the following would be a responsibility of a manager in a cost centers?

costs only.

Based on the types of costs incurred, what are the two categories of cost centers?

engineered cost centers and discretionary cost centers.

What cost centers have input-output relationships sufficiently well established so that a particular set of inputs will provide a predictable and measurable set of outputs?

engineered cost centers.

In what type of responsibility centers are the managers responsible for revenues, only?

Revenue.

Which of the following costs are the responsibility of revenue center managers?

revenues only.

Which of the following costs are the responsibility of investment center managers? a.costs only. b.revenues only. c.both costs and revenues. d.revenues, costs, and assets.

revenues, costs, and assets

Which of the following departments would not be a cost center? a.advertising department b.city police department c.building and grounds department d.sales department

sales department

In what type of responsibility centers are the managers responsible for costs, only?

Cost.

In profit planning and budgeting, which statement is true concerning a favorable variance?

A favorable variance would increase operating profit, holding all other things constant

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

A fixed budget is a plan for a single level of sales (or other measure of activity), while a flexible budget consists of several plans, one for each of several levels of sales (or other measure of activity).

Which statements is correct concerning a flexible budget?

A flexible budget is appropriate for any relevant level of activity.

Which of the following departments would not be classified as a profit center?

Accounting department

In profit planning and budgeting, which statement is true concerning an unfavorable variance?

An unfavorable variance would decrease operating profit, holding all other things constant.

Which of the following statements is true concerning budgeting?

Budgeting is a dynamic process that ties together goals, plans, decision making, and employee performance evaluation.

How can budgets motivate people to perform because?

Budgets are standards or targets for people to achieve.

A flexible budget is appropriate for a which of the following types of costs? Direct-Labor Budget Marketing Budget a.No No b No Yes c.Yes No d.Yes Yes

Direct-Labor Marketing Budget Budget Yes Yes

When production levels are expected to increase within a relevant range, and a flexible budget is used, what effects would be anticipated with respect to each of the following?

Fixed Costs Variable Costs Per Unit Per Unit Decrease No Change

Which of the following departments is likely to be an investment center?

Food products division

In what type of responsibility centers are the managers responsible for revenues, costs, and assets?

Investment.

Which of the following are not controlled by a manager of a profit center? a.Revenues b.Costs c.Investments d.Profits

Investments

Who are responsible for (1) costs in cost centers, (2) revenues in revenue centers, (3) both costs and revenues in profit centers, and (4) revenues, costs, and assets in an investment center?

Managers.

Which of the following statements is correct regarding marketing travel costs?

Marketing travel costs are incurred for customer-related activities.

Which of the following is not a benefit of participative or grassroots budgeting?a.The process of participative budgeting can be time consuming.b.Participating budgeting enhances employee motivation and acceptance of goals.c.Participative budgeting provides information that enables employees to associate rewards and penalties with performance.d.Participative budgeting yields information that employees know but managers do not know.

The process of participative budgeting can be time consuming.

For an organizational unit to be considered a responsibility center, what must be true?

The unit must be separable and identifiable.

If management desires finished goods inventory to decrease over the period, what can be said about the relationship between units produced and units sold?

Units produced < units sold.

In determining the Production Budget, what is the formula for computing the quantity of each product to be produced?

Units to Be Produced = Number of Units to Be Sold + Desired Units in Ending Inventory - Units in Beginning Inventory

Which statement is true concerning variable manufacturing overhead costs?

Variable manufacturing costs vary with units produced.

Which of the following describes the difference in operating profits from the flexible budget to the master budget results from the difference between budgeted sales volume and actual sales volume?

a sales volume variance.

Variable manufacturing overhead costs such as power are considered to be which of the following?

a semivariable, or mixed, cost having both variable and fixed components.

A comprehensive master budget does not include individual schedules for which of the following budgets?

a work-in-process budget.

What is the cultural impact on budgeting?

a.Lower-level managers in Mexico, Singapore, and Hong Kong are more likely to accept top-down budgets.b. Lower-level managers in Germany, the United Kingdom, the United States, New Zealand, Canada, and Australia are more likely to not accept top-down budgets. c.Lower-level managers in Germany, the United Kingdom, the United States, New Zealand, Canada, and Australia are more likely to want to participate in budgeting,

Which of the following statements is true concerning the flexible budget?

a.The flexible budget shows the expected relation between costs and volume. b.The flexible budget has a fixed cost component which is expected to be incurred regardless of the level of activity. c.The flexible budget has a variable cost per unit of activity component where variable costs change in total as the level of activity changes. ALL OF THE ABOVE

Which of the following statements is true concerning the variable component of power cost?

a.This cost would be categorized as a unit level activity. b.This cost would be categorized as a cost which varies in total with the unit level of output. c.This cost would be categorized as a facility-related cost. d. BOTH A AND B

Which of the following statements is true concerning the fixed component of power cost?

a.This would be categorized as a unit level activity. b.This is a cost that would be incurred regardless of the level of output. c.This would be categorized as a facility-related cost. d. BOTH B AND C

A comprehensive master budget includes individual schedules for which of the following budgets?

a.a materials purchase budget. b.a capital budget. c.a cash outlays budget. all of the above

An investment center's performance is most likely to be affected by which of the following?

a.an increase is sales volume. b.a decrease in expenses. c.an increase in interest rates. d.all of the above.

To reduce subjectivity in the budgeting process and gather as much information as possible, management often uses which of the following method(s)?

a.asking sales staff and/or market researchers for an estimate of the future period's sales. b.using the Delphi technique and trend analysis. c.entering past sales data into a regression model to obtain a statistical estimate of factors affecting sales (econometric model). ALL OF THE ABOVE

Which statement is true concerning direct labor?

a.is work traceable directly to particular units of production. b.uses estimates which allow for normal, periodic rest periods, yet motivates employees to perform efficiently. c.could be fixed, if the firm is a high-tech company having only a few workers, or variable d.ALL OF THE ABOVE

Planning capital expenditures involves which of the following?

a.making the capital budget decision. b.identifying opportunities for capital expenditures. c.identifying alternative options. d.ALL OF THE ABOVE.

What is the cultural impact on budgeting?

aLower-level managers in Germany, the United Kingdom, the United States, New Zealand, Canada, and Australia are less willing to accept the "fact" that top managers are more powerful than they. b. Lower-level managers in Germany, the United Kingdom, the United States, New Zealand, Canada, and Australia are more likely to not accept top-down budgets. c.Lower-level managers in Germany, the United Kingdom, the United States, New Zealand, Canada, and Australia are more likely to want to participate in budgeting

When is the flexible budget is prepared?

after the budget period ends.

Which of the following is included in an organizational plan?

all of the above. a.organizational goals.b.the strategic long-range profit plan. c.the master budget or tactical short-range profit plan.d.all of the above.

Which of the following represents a general framework for guiding management's operating decisions containing projected activity levels for the next year?a.master budget.b.tactical short-range profit planc.static budgetd.all of the above.

all of the above.a general framework for guiding management's operating decisions containing projected activity levels for the next year?a.master budget.b.tactical short-range profit planc.static budgetd.all of the above.

When is the master budget prepared?

before the budget period begins.

What is the continuous process of measuring products, services, or activities against competitors' performance?

benchmarking.

Which of the following costs are the responsibility of profit center managers? a.costs only. b.revenues only. c.both costs and revenues. d.revenues, costs, and assets.

both costs and revenues.

What is the final component of a comprehensive master budget?

budgeted balance sheet.

Which of the following is not a component of a comprehensive master budget?

budgeted statement of cash flows.

What forms the basis for analyzing the differences between planned and actual results?

comparing actual results with the flexible and master budgets.

A manufacturing division of a company would most likely be evaluated as a(n)

cost center

What cost centers do not have input-output relationships sufficiently well established so that a particular set of inputs will provide a predictable and measurable set of outputs?

discretionary cost centers.

Which cost can be cut for a period of time because their reduction presents no serious short-term threats to production and marketing?

discretionary costs.

To reduce subjectivity in the budgeting process and gather as much information as possible, management often enters past sales data into which of the following regression models to obtain a statistical estimate of factors affecting sales?

econometric model.

If direct labor cost is fixed, then it is considered to be which type of cost in the cost hierarchy? a.product-level cost. b.facility-level cost. c.unit-level cost. d.either "a" or "b"

either "a" or "b"

Many companies have streamlined the budget process, developed business plans, and allowed analysts to be proactive in monitoring results by

implementing a web-based enterprise-wide budgeting solution

An incentive plan model for accurate reporting should not have which of the following components?

it penalizes the sales manager when sales are more than forecasted

An incentive plan model for accurate reporting should have which of the following component(s)?

it relates rewards positively to forecasted sales.

The master budget for governmental organizations differs from that of public companies because the budget for governmental organizations provides the

legal authorization for expenditures.

What is a short-term operating budget?

management's quantitative action plan for the coming year.

Who often encounter ethical dilemmas in the budgeting process because they are involved in the creation of the budget, and their performances are subsequently evaluated by comparing the budget to actual results?

managers

Why are incentive compensation plans often criticized?

managers may take actions to improve short-run performance only.

For which types of operations do firms design operational planning and control systems?

manufacturing, marketing, and other activities

Which of the following represents a general framework for guiding management's operating decisions containing projected activity levels for the next year?

master budget.

Which of the following terms describes a method of yielding information for developing budgets that employees know but managers do not?

participative budgeting.

Which of the following terms describes the use of input from lower-management and middle-management employees in developing budgets?

participative budgeting.

What is the income statement portion of the master budget known as?

profit plan.

An incentive model for accurate reporting having three components (1) it relates rewards to positively forecasted sales, (2) it provides incentives to increase sales beyond the forecast, and (3) it penalizes when sales fall lower than forecasted, should be developed for the firm's

sales manager

Which of the following represent the specific, detailed steps required to achieve the goals of an organization including cost control and market share?

strategic long-range profit plan.

Which of the following represents a general framework for guiding management's operating decisions containing projected activity levels for a series of years?

strategic long-range profit plan.

A new managerial application for budgeting focuses on how multinational corporations exchange budget data electronically through the World Wide Web by using

the Internet

Goal congruence occurs if members of an organization have incentives to perform in who's interest?

the firm's interest.

Marketing costs include expenditures for sales commissions (2% of sales dollars) and shipping costs (20 cents per unit) are variable marketing costs and considered to be which of the following?

unit-level activities.