Managerial Accounting; Test 4 (Ch 24-25); Practice
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| 1.) Budgetary control involves all but one of the following: | show 🗑
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| show | All of the above. (daily; weekly; monthly)
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| 3.) A production manager in a manufacturing company would most likely receive a: | show 🗑
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| 4.) A static budget is: | show 🗑
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| 5.) A static budget is useful in controlling costs when cost behavior is: | show 🗑
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| show | $30,000 fixed plus $6 per direct labor hour variable.
($90,000 – $30,000) / 10,000
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| 7.) @ 9,000 direct labor hours, the flexible budget for indirect materials is $27,000. If $28,000 of indirect materials costs are incurred at 9,200 direct labor hours, the flexible budget report should show the following difference for indirect materials: | show 🗑
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| 8.) Under responsibility accounting, the evaluation of a manager's performance is based on matters that the manager: | show 🗑
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| 9.) Responsibility centers include: | show 🗑
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| 10.) Responsibility reports for cost centers: | show 🗑
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| 11.) The accounting department of a manufacturing company is an example of: | show 🗑
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| 12.) To evaluate the performance of a profit center manager, upper management needs detailed information about: | show 🗑
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| 13.) In a responsibility report for a profit center, controllable fixed costs are deducted from contribution margin to show: | show 🗑
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| 14.) In the formula for return on investment (ROI), the factors for controllable margin and operating assets are, respectively: | show 🗑
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| 15.) A manager of an investment center can improve ROI by: | show 🗑
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| show | Managers must use responsibility accounting.
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| 17.) Ace Company monitors its managers’ performance using a static budget. Which one of the following situations will provide the fairest evaluation for those managers? | show 🗑
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| show | True
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| show | True
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| 20.) Responsibility reports for cost centers | show 🗑
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| 21.) Boyce Manufacturing Co.'s operates 3 profit centers. What variance will appear on the performance report for controllable margin? | show 🗑
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| 22.) The primary basis for evaluating the performance of a manager of an investment center is return on investment. | show 🗑
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| show | True
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| 24.) Which of the following does not impact the amount of residual income? | show 🗑
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| 25.) Sand Company had sales of $400,000, variable costs of $200,000, and direct fixed costs totaling $100,000. The company’s operating assets total $800,000, and its required return is 10%. How much is the residual income? | show 🗑
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| show | budgets are a total amount and standards are a unit amount.
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| show | are predetermined unit costs which companies use as measures of performance.
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| show | management must use a static budget.
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| 4.) Normal standards: | show 🗑
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| 5.) The setting of standards is: | show 🗑
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| show | Materials price variance = (Actual quantity x Actual price) – (Standard quantity x Standard price)
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| show | $300 unfavorable
[(6,300 x $1.10) -- (6,000 x $1,00)]
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| show | quantity variance is $1,600 favorable
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| show | Standard hours allowed for the work done is the measure used in computing the variance.
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| 10.) The formula for computing the total overhead variance is: | show 🗑
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| 11.) Which of the following is incorrect about variance reports? | show 🗑
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| show | both favorable and unfavorable variances that exceed a predetermined quantitative measure such as a percentage or dollar amount.
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| show | report inventory and cost of goods sold at standard cost as long as there are no significant differences between actual and standard cost.
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| 14.) Which of the following would not be an objective used in the customer perspective of the balanced scorecard approach? | show 🗑
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| 15.) Which of the following is incorrect about a standard cost accounting system? | show 🗑
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| show | Fixed overhead rate x (Normal capacity hours – Standard hours allowed)
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| show | A budget is a total amount, while a standard expresses only a unit amount.
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| 18.) Which one of the following is not an advantage of standard costing? | show 🗑
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| 19.) The standard manufacturing overhead rate per unit is the predetermined overhead rate times the activity index quantity standard. | show 🗑
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| show | False
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| show | True
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| show | They should only be sent to the top level of management.
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| show | Inventories and cost of goods sold.
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| show | It links performance measures to a company’s strategic goals.
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| show | debit to Raw Materials Inventory for 12,750, debit to Materials Price Variance for $750 and credit to Accounts Payable for $13,500.
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| show | $592U.
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| show | Activity level
Direct labor hrs
Var. Cost
Indirect labor (x)
Indirect mater. (x)
Util. (x)
Tot. var. costs
Fix costs
Sup. (same)
Dep. (same)
Prop. Tax (same)
Tot. fix costs
Tot. costs
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| show | Sales
Var. costs
COGS (d)
S&A (d)
Tot. (d)
Contribution margin (Sales - Tot.)
Control. fix costs
COGS (d)
S&A (d)
Tot. (d)
Controllable margin (Contri. mar - Tot.)
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| show | # - # = + (Unfavorable)
# - # = - (Favorable)
0 = Neutral
COGS, S&E, & T for Responsibility Report is different!!
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