ACCT EXAM 2 BLACKBOARD

"A measure of profitability computed by dividing the average annual operating income by the amount of the investment" is best described by which of the following terms?

Accounting rate of return

Which of the following is NOT a benefit of budgeting?

Budgeting forces managers to work in a silo, promoting only the goals of their department.

Which of the following is not part of the operating budget?

Cash budget

Which of the following items would be considered a capital asset?

Construction of a new store building

A manager can increase return on investment (ROI) by doing which of the following?

Decrease operating expenses

A potential disadvantage of decentralization is which of the following?

Duplication of costs

In which of the following company types does a manager use an operating expenses budget?

Manufacturing Merchandising Service -All of the above-

If selling and administrative expenses decrease while other expenses remain constant, what will happen to return on investment (ROI)?

ROI will increase.

________ is a what-if technique that asks what a result will be if a predicted amount is not achieved or if an underlying assumption changes.

Sensitivity analysis

How would you describe the Standard Hours Allowed?

Standard Hours Allowed is the number of hours it should have taken given the standard hours and the actual number of units produced.

How is the fixed overhead budget variance calculated?

The difference between the actual fixed overhead costs incurred and the budgeted fixed overhead costs

The term ________ is best described as "a stream of equal installments made at equal time intervals."

annuity

A performance report compares actual revenue and expenses with _____________ revenues and expenses.

budgeted

Another name for the minimum desired rate of return is

hurdle rate. discount rate. required rate of return. -All of the above-

An unfavorable variance causes operating income to be _______________ the budgeted operating income?

lower than

A favorable volume variance for sales revenue would indicate that:

more units were actually sold than the company had originally budgeted to sell.

The standard cost of direct materials per unit is calculated by

multiplying the standard quantity of direct materials by the standard price of direct materials.

On the direct materials budget, the total quantity of direct materials to purchase is computed as

quantity needed for production + desired end inventory of DM - beginning inventory of DM.

Disadvantages of using standard costs and variances include all of the following except

those manufacturing costs that enter Work in Process Inventory are recorded at standard cost, rather than actual cost.