test #3 managerial accounting
an adaption of residual income that has been adopted by many companies is called
economic value added
A budget that takes into account how costs are affected by changes in level of activity is a _____ budget.
flexible
Estimates of what revenues & costs should have been based on the actual level of activity are shown on the _____ budget.
flexible
the net operating income that an investment center earns about the minimum required return on its average operating assets is its _____ income
residual
ROI can be calculated as:
margin x turnover & net operating income/average operating assets
Unfavorable variance
Actual revenue is less than budgeted revenue
Favorable variance
Actual revenue is more than budgeted revenue
When considering ROI, excessive operating expenses is always a greater concern to managers than excessive operating assets. (true/false)
False
when making a decision, only relevant items are included in the analysis of the alternatives when using:
the differential cost approach only
A cost that has already been incurred & cannot be avoided regardless of what a manager decides to do is referred to as a(n) _____ cost.
sunk
When preparing a flexible budget, the level of activity
affects variable costs only
If the planned budget revenue for 5,000 units is $120,000, what is the flexible budget revenue if the actual activity is 4,500 units?
$120,000/5,000 = $24 per unit x 4,5000 = $108,000
The planning budget calls for total variable costs for supplies to be $6,250 based on 1,000 units with planned revenue at $24,000. A total of 1,200 units were actually produced & sold. What amounts should appear on the flexible budget?
$7,500 for supplies & $28,000 revenue.
A planning budget called for 500 units to be produced & total direct labor cost of $7,500. Actual production was 600 units & actual direct labor cost was $9,300. The spending variance is
$7,500/500 = $15 standard rate per hour x 600 = $9,000 flexible budget - $9,300 actual budget = $300 U
In order to increase margin, a company must (1) sales, and/or (2) operating expenses and/or (3) selling price. (increase/decrease)
1) increase 2) decrease 3) increase
Given a margin of 12%, sales of $150,000, & average operating assets of $90,000, the ROI is ___%
12% x $150,000/$90,000 = 20%
Given sales of $250,000, NOI of $25,000 & Average Operating Assets of $125,000.
Margin= $25,000/$200,000 (NOI/sales) = 10% Turnover= $250,000/125,000 (sales/average operating assets) = 2.
What ratios are part of the ROI formula?
NOI/sales & sales/average operating assets
The calculation of the budget variance uses
budgeted fixed overhead & actual fixed overhead.
when a constraint exists, companies need to focus on maximizing
contribution margin per unit of constraint
When making a decision to either buy a movie ticket or rent a DVD, the cost of the movie ticket is an example of a(n) ______ cost
incremental & avoidable
Poor supervision is one possible cause of an unfavorable ______ variance.
labor efficiency
A static budget is suitable for
planning only
SP(AQ-SQ) is the formula for the materials ______ variance.
quantity