ACCT 526 - Ch. 9

Actual Costs Budgeted Costs Units produced 1,500 1,500 Direct materials cost $5,690 $5,040 Direct labor cost 1,640 1,460 VOH: Maintenance 715 620 Power 290 180 FOH: Grounds keeping 1,410 1,250 Depreciation 540 540 Calculate the flexible budget variance. a. $1,195U b. $160F c. $110F d. $1,035U

a. $1,195U

Silver Inc. has budgeted production costs of $2,600,000, budgeted beginning finished goods inventory of $360,000, and budgeted ending finished goods inventory of $240,000 for the month. Silver's budgeted cost of goods sold for this month is: a. $2,720,000. b. $2,960,000. c. $2,480,000. d. $3,200,000.

a. $2,720,000.

After examining the records of Theta Company for the month of October, the following information is obtained: Beginning cash balance $2,800 Cash receipts 53,000 Cash payments 31,000 Minimum cash balance 2,000 Loan repayments 11,000 Based on the given information, calculate Theta's cash surplus (deficiency) for the month of October. a. $22,800 b. $(20,800) c. $24,800 d. $(15,800)

a. $22,800

After examining the records of Gamma Inc. for the month of December, the following information is obtained: Beginning cash balance $3,000 Cash receipts 50,000 Cash payments 36,000 Loan repayments 10,000 Based on the given information, compute Gamma's ending cash balance for the month of December. a. $7,000 b. $(17,000) c. $(3,800) d. $10,000

a. $7,000

_____ is an example of a monetary incentive used to control a manager's tendency to shirk and waste resources. a. A promotion b. A recognition program c. Increased responsibility d. Job enrichment

a. A promotion

_____ budgets detail the inflows and outflows of cash. a. Financial b. Sales c. Capital d. Operating

a. Financial

A flexible budget variance is the difference between: a. the actual amount and the flexible budget amount. b. the static budget amount and the flexible budget amount. c. the variable budget amount and the flexible budget amount. d. the master budget amount and the flexible budget amount.

a. the actual amount and the flexible budget amount.

_____ are excluded from the cash disbursements section of a cash budget. a. Distribution expenses b. Advertisement expenses c. Manufacturing expenses d. Depreciation expenses

d. Depreciation expenses

After examining the records of Theta Company for the month of October, the following information is obtained: Beginning cash balance $2,600 Cash receipts 59,000 Cash payments 36,000 Minimum cash balance 1,000 Loan repayments 12,000 Based on the given information, calculate Theta's cash surplus (deficiency) for the month of October. a. $(15,600) b. $(23,600) c. $24,600 d. $25,600

b. $(23,600)

Assume that the salespeople of Excellent Corp. are paid 3% of sales as commission. The level of sales is $280,000 for this month, and the only fixed selling costs are $20,000. Excellent's budgeted selling costs for this month are: a. $20,000. b. $28,400. c. $11,600. d. $38,400.

b. $28,400.

A company is planning to sell 2,600 tables in the first quarter. Desired ending inventory is 200 tables, and beginning inventory is 500 tables. How many tables need to be produced during the first quarter? a. 2,900 tables b. 2,300 tables c. 2,500 tables d. 2,600 tables

b. 2,300 tables

An overhead budget shows the expected cost of all production costs: a. including direct materials and direct labor. b. other than direct materials and direct labor. c. including selling and administrative expenses. d. other than fixed overhead items.

b. other than direct materials and direct labor.

Budgets can be improved as performance measures by: a. using fixed budgeting. b. using participative budgeting. c. setting standards that are either too high or too low. d. holding managers accountable for noncontrollable costs.

b. using participative budgeting.

The actual and budgeted costs for Synergy Inc.'s actual level of activity are as follows: Actual Costs Budgeted Costs Units produced 1,500 1,500 Direct materials cost $5,670 $5,040 Direct labor cost 1,720 1,440 VOH: Maintenance 730 620 Power 300 230 FOH: Grounds keeping 1,480 1,300 Depreciation 550 550 Calculate the flexible budget variance. a. $70F b. $1,090U c. $1,270U d. $180F

c. $1,270U

Which of the following budgets is a financial budget? a. A production budget b. A sales budget c. A cash budget d. A cost of goods sold budget

c. A cash budget

Which of the following is true of a continuous budget? a. A continuous budget is a plan that is updated annually. b. A continuous budget is synonymous with a master budget. c. A continuous budget is a plan where one month or quarter is dropped as it expires and another future period is added. d. A continuous budget is a comprehensive financial plan for an organization as a whole.

c. A continuous budget is a plan where one month or quarter is dropped as it expires and another future period is added.

Which of the following budgets enables a firm to compute expected costs for a range of activity levels? a. A static budget b. A master budget c. A flexible budget d. A fixed budget

c. A flexible budget

Which of the following budgets serves as the basis for all other operating budgets and most financial budgets? a. A production budget b. A direct labor budget c. A sales budget d. An overhead budget

c. A sales budget

Which of the following is true of a static budget? a. A static budget allows managers to develop financial results for a number of potential scenarios. b. A static budget allows management to compute what the costs should have been for the level of output that actually occurred. c. A static budget is a budget created in advance that is based on a particular level of activity. d. A static budget enables a firm to compute expected costs for a range of activity levels.

c. A static budget is a budget created in advance that is based on a particular level of activity.

Assume that the salespeople of Excellent Corp. are paid 2% of sales as commission. The level of sales is $250,000 for this month, and the only fixed selling costs are $30,000. Excellent's budgeted selling costs for this month are: a. $45,000. b. $30,000. c. $25,000. d. $35,000.

d. $35,000.

Which of the following is true of flexible budgets? a. Flexible budget formulas are often based on number of units instead of direct labor hours. b. Flexible budgets are created in advance and are based on a particular level of activity. c. Flexible budgets enable firms to compute expected costs for a range of activity levels. d. Flexible budgets are usually not a good choice for benchmarks in preparing a performance report.

c. Flexible budgets enable firms to compute expected costs for a range of activity levels.

Which of the following is true of a direct materials purchases budget? a. It is a financial budget prepared by an organization. b. It is prepared before preparing a production budget. c. It must be separately prepared for every type of raw material used. d. It does not depend on the raw materials inventory needs of a firm.

c. It must be separately prepared for every type of raw material used.

The actual and budgeted costs for Learner Corp.'s actual level of activity are as follows: Actual Costs Budgeted Costs Units produced 1,500 1,500 Direct materials cost $5,600 $5,090 Direct labor cost 1,700 1,500 VOH: Maintenance 720 635 Power 280 150 FOH: Grounds keeping 1,470 1,240 Depreciation 580 580 Which of the following conclusions can be made based on the provided data? a. There is a favorable variance for direct materials cost. b. There is an unfavorable variance for maintenance. c. There is an unfavorable variance for grounds keeping. d. There is a favorable variance for direct labor cost.

c. There is an unfavorable variance for grounds keeping.

_____ are included in the cash disbursements section of a cash budget. a. Depreciation expenses b. Unpaid rent expenses c. Wages paid to laborers d. Interest payments on short-term borrowings

c. Wages paid to laborers

An overhead budget shows the expected cost of all production costs: a. including direct materials and direct labor. b. including selling and administrative expenses. c. other than direct materials and direct labor. d. other than fixed overhead items.

c. other than direct materials and direct labor.

Which of the following is true of flexible budgets? a. Flexible budget formulas are often based on number of units instead of direct labor hours. b. Flexible budgets are usually not a good choice for benchmarks in preparing a performance report. c. Flexible budgets are created in advance and are based on a particular level of activity. d. Flexible budgets enable firms to compute expected costs for a range of activity levels.

d. Flexible budgets enable firms to compute expected costs for a range of activity levels.

Which of the following is true of a direct materials purchases budget? a. It is a financial budget prepared by an organization. b. It does not depend on the raw materials inventory needs of a firm. c. It is prepared before preparing a production budget. d. It must be separately prepared for every type of raw material used.

d. It must be separately prepared for every type of raw material used.

_____ budgets describe the income-generating activities of a firm: sales, production, and finished goods inventories. a. Capital b. Cash c. Financial d. Operating

d. Operating

Which of the following formulas is used to compute units to be produced while preparing a production budget? a. Units to Be Produced = Expected Units Sales + Units in Desired Ending Inventory + Units in Beginning Inventory b. Units to Be Produced = Expected Production Units + Ending Inventory Units - Beginning Inventory Units c. Units to Be Produced = Expected Production Units - Ending Inventory Units + Beginning Inventory Units d. Units to Be Produced = Expected Units Sales + Units in Desired Ending Inventory - Units in Beginning Inventory

d. Units to Be Produced = Expected Units Sales + Units in Desired Ending Inventory - Units in Beginning Inventory

In an overhead budget, _____. a. expected costs of direct materials and direct labor are shown b. only expected cost of direct materials is shown c. only variable overhead items are included d. both variable and fixed overhead items are included

d. both variable and fixed overhead items are included

A budgeted income statement is the ultimate outcome of the: a. financial budgets. b. cash budgets. c. capital budgets. d. operating budgets.

d. operating budgets.

A flexible budget variance is the difference between: a. the master budget amount and the flexible budget amount. b. the variable budget amount and the flexible budget amount. c. the static budget amount and the flexible budget amount. d. the actual amount and the flexible budget amount.

d. the actual amount and the flexible budget amount.