Managerial Accounting Chapters 8, 9, 10 MCQ

Which of the following refers to quantitative plans for the future, stated in either physical terms or financial terms or both?

A budget

Which of the following factors is NOT an advantage of preparing operating budgets?

It saves time and resources

The budgets that are concerned with the income-generating activities of a firm are called the:

Operating budgets

Zeal Company produces and sells bikes. It expects to sell 15,000 bikes in June for the current year and had 1,000 bikes in finished goods inventory at the end of May. Zeal Company would like to complete operations in June with at least 1,700 completed bikes in inventory. The bikes sell for $250 each. What would be the total sales for June?

$3,750,000

Burgandy Company produces and sells mattresses. It expects to sell 7,000 mattresses in the current year and had 800 mattresses in finished goods inventory at the end of the previous year. Burgandy would like to complete operations in the current year with at least 900 completed mattresses in inventory. There is no ending work-in-process inventory. The mattresses sell for $500 each. How many mattresses will be produced in the current year?

7,100

Olga's Company has a sales budget for next month of $150,000. Cost of goods sold is expected to be 40 percent of sales. All goods are purchased in the month used and paid for in the month following purchase. The beginning inventory of merchandise is $5,000, and an ending inventory of $6,000 is desired. Beginning accounts payable is $38,000. The cost of goods sold for next month is expected to be:

$60,000

Discus Productions needs to know its anticipated cash inflows for the next quarter by month. Cash sales are 10 percent of total sales each month. Historically, sales on account have been collected as follows: 60 percent in the month of sale, 30 percent in the month after the sale, and the remaining 10 percent two months after the sale. Sales for the quarter are projected as follows: April, $120,000; May, $100,000; and June, $80,000. Accounts receivable on March 31 were $60,000. The expected cash collections of Discus Productions for June are:

$89,000

Which of the following is NOT a key feature of an ideal budgetary system?

accountability for noncontrollable costs

The comprehensive financial plans made up of departmental and activity budgets are the master budgets

True

Cash disbursements and cash excess or deficiency are components of the petty cash budget.

False

The unit standard cost is

the product of the standard price times the standard quantity for each unit

f the standard quantity (SQ), actual quantity (AQ), standard price (SP), and actual price (AP) are 350 units, 400 units, $12, and $13 respectively, then the total budget variance is _____.

$1,000 unfavorable

During September, 40,000 units were produced. The standard quantity of material allowed per unit was 5 pounds at a standard cost of $2.50 per pound. If there was a favorable usage variance of $25,000 for September, the actual quantity of materials used must have been

190,000 pounds

During January, 7,175 direct labor hours were worked at a standard cost of $20 per hour. If the direct labor rate variance for January was $17,500 favorable, the actual cost per direct labor hour must be

$17.56

Which is NOT an acceptable method of disposing of variances?

closing them to raw materials, work-in-process, and finished goods

Which of the following is true about the variable overhead spending variance?

The variable overhead spending variance measures the aggregate effect of differences in the actual variable overhead rate and the standard variable overhead rate

Croissant Company's standard fixed overhead cost is $6 per direct labor hour based on budgeted fixed costs of $600,000. The standard allows one direct labor hour per unit. During the current year, Crawford produced 110,000 units of product, (within the relevant range of activity) incurred $630,000 of fixed overhead costs, and recorded 212,000 actual hours of direct labor. What is Croissant's fixed overhead spending variance for the current year?

$30,000 (U)

The factors where actual performance differs from planned are called: variances

True

The costing that establishes price and quantity standards for inputs is called standard costing

True

The variances that focus on the difference between actual quantity and standard quantity are called the usage variances

True

Responsibility accounting is defined as a system that

measures the results of each responsibility center and compares those results with some measure of expected or budgeted outcome

Which of the following responsibility centers would have a manager responsible for revenues, costs, and investments?

investment center

The delegation of decision-making authority to successively lower management levels in an organization is called:

Decentralization

Patron Corporation had sales of $350,000, income of $10,000, and an asset base of $100,000. The turnover is

3.50

The Women's Wear of Bigelow Department Store had a net income of $560,000, a net asset base of $4,000,000, and a required rate of return of 12 percent. Sales for the period totaled $3,000,000. The residual income for the period is

$80,000

Economic value added is calculated by which of the following formulas?

EVA = After-tax operating income – (Weighted average cost of capital × Total capital employed)

Which of the following would be a reason why managers would NOT provide good service?

All of these are reasons

Division 'A' produces a component and wants to sell it to Division 'B'. The transfer price is

revenue to Division A and a cost to Division B

When there is an outside market for an intermediate product that is perfectly competitive, the most equitable method of transfer pricing is

market price

Transfer prices are the prices charged

when transferring goods to international divisions