Accounting Chapters 7-9 Multiple Choice

incremental or differential analysis

The decision making approach in which a manager considers only costs and benefits that differ for alternatives is called 

contact competitors who have made similar decisions 

Which of the following is NOT a step of the management decision-making progress?

irrelevant

Sunk costs are always

the cost will be incurred regardless of the decision

When making a one time special order decision, a company can ignore fixed overhead because

alternate uses for any facility currently being used to make the item, the costs of direct materials included in making the item, qualitative factors such as whether the supplier can deliver the item on time and to the company’s quality standards

when making make or buy decisions, managers should consider

the common fixed costs allocated to that product line 

which of the following costs is not likely to be completely eliminated by a decision to drop a product line?

operating at full capacity

which of the following causes opportunity costs to become relevant to managers decisions?

machine hours, direct materials, factory space

which of the following could be a constrained resource

contribution margin per unit of the constrained resource

when resources are constrained, managers should prioritize products in order to maximize

cost per unit

which of the following is not an important qualitative factor

meet short and long term objectives

budgets help companies

planning, directing/leading, controlling

which phases of the management process are impacted by budgeting

most companies would benefit from budgeting 

which of the following statements is true 

long term objective 

shasta company plans to double its profits in five years. this is an example of 

developing new product lines

which of the following is NOT considered a direct benefit of budgeting

production budget 

which of the following budgets would be prepared earliest in a companys budgeting process?

direct labor budget, cash receipts and payments budget, selling and administrative budget 

which of the following budgets is affected by sales budget?

125,000

ABC company expects to sell 100,000 units of its primary product in january, expected beginning and ending finished goods inventory for january are 20,000 and 45,000 units. how many units should ABC produce?

cash budget

which of the following is NOT considered an operating budget

credit sales made during july 

Raya company is calculating its expected cash receipts for the month of june. this should NOT include

whether budgeted goals are being achieved

in general, variances tell managers,

standards are used to develop budgets 

in distinguishing between budgets and standards, which of the following is true?

whether actual results are more or less than standard or budgeted amounts 

variances are always noted favorable or unfavorable. what do these terms indicate?

master budget, flexible budget 

what type of budget is an integrated set of operating and financial budgets that reflect managements expectations for a given sales level, and what type shows how budgeted costs and revenues will change across different levels of sales volume?

the flexible budget

when computing spending variances, actual results are compared to

price and quantity variances

spending variances may be separated into

the purchases manager bought less expensive raw materials, but they were of lower quality 

Temecula company has calculated its direct materials price variance to be $1,000 favorable and its direct materials quantity variance to be $3,000 unfavorable. which of the following could explain both of these variances

$1.500 unfavorable 

in producing its product, Ranger company used 1,500 hours of direct labor at an actual cost of $15 per hour. the standard for rangers production level is 1,400 hours at $14 per hour. what is ranger’s direct labor rate variance

$140 unfavorable 

in producing its product, ranger company used 1,500 pounds of direct materials at an actual cost of $1.50 per pound. the standard for rangers production level was 1,400 pounds at $1.40 per pound. what is rangers direct materials quantity variance?

manufactured fewer units than it expected 

an unfavorable fixed overhead volume or capacity variance indicates that a company