Managerial Acct Exam 3
Planning involves gathering feedback to ensure that the plan is being properly executed or modified as circumstances change.
False
The basic idea underlying responsibility accounting is that each manager should be held responsible for the overall profit of the company to ensure that all managers are acting together
False
A quantity standard indicates how much output should have been produced
False
A direct materials quantity standard generally includes an allowance for waste
True
A continuous or perpetual budget is a budget that almost never needs to be revised.
False
A benefit of self-imposed budgeting is that it may allow lower-level managers to create budgetary slack.
False
Both variable and fixed manufacturing overhead costs are included in the selling and administrative expense budget.
False
In a merchandising company, the required merchandise purchases for a period are determined by subtracting the desired ending inventory from the sum of the units to be sold during the period and the units in beginning inventory
False
In business, a budget is a method for putting a limit on spending
False
One disadvantage of a self-imposed budget is that budget estimates prepared by front-line managers are often less accurate and reliable than estimates prepared by top managers
False
Only variable manufacturing overhead costs are included in the manufacturing overhead budget.
False
The budgeted selling and administrative expense is calculated by multiplying the budgeted unit sales by the selling and administrative expense per unit
False
The cash budget is typically prepared before the direct materials budget
False
The cash budget is usually prepared after the budgeted income statement.
False
The direct labor budget shows the direct labor-hours required to produce the desired ending inventory.
False
The direct materials budget is typically prepared before the production budget
False
The first budget a company prepares in a master budget is the production budget.
False
The manufacturing overhead budget is typically prepared before the production budget
False
The manufacturing overhead budget lists all costs of production other than selling and administrative expenses
False
The standard cost per unit is computed by dividing the standard quantity or hours by the standard price or rate.
False
The standard price per unit for direct materials should not include the cost of delivering the materials.
False
The variable overhead efficiency variance measures how efficiently variable manufacturing overhead resources were used
False
A favorable materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period.
True
A materials price variance is unfavorable if the actual price exceeds the standard price
True
A self-imposed budget is a budget that is prepared with the full cooperation and participation of managers at all levels
True
An unfavorable labor rate variance can occur if workers with high hourly wage rates are assigned to work on products with standards that assume workers have low hourly wage rates.
True
Budgets are used to plan and to control operations
True
In companies that do not have "no lay-off" policies, the total direct labor cost for a budget period is computed by multiplying the total direct labor hours needed to make the budgeted output of completed units by the direct labor wage rate.
True
On a cash budget, the total amount of budgeted cash payments for manufacturing overhead should not include any amounts for depreciation on factory equipment.
True
Purchase of poor quality materials may cause a favorable materials price variance and an unfavorable labor efficiency variance.
True
Self-imposed budgets prepared by lower-level managers should be scrutinized by higher levels of management
True
The materials price variance is computed by multiplying the difference between the actual price and the standard price by the actual quantity of materials purchased.
True
The number of units to be produced in a period can be determined by adding the expected sales to the beginning inventory and then deducting the desired ending inventory.
True
The sales budget is usually prepared before the production budget.
True
The sales budget often includes a schedule of expected cash collections
True
The standard labor rate per hour defines the company's expected direct labor wage rate per hour, including employment taxes and fringe benefits.
True
Waste on the production line will result in an unfavorable materials quantity variance.
True
When preparing a direct materials budget, the units of raw material needed to meet production should be added to desired ending inventory and the beginning inventory for raw materials should be subtracted to determine the amount of raw materials to be purchased.
True
