Question 1

The first budget to be prepared is usually the sales budget.

Accepted Answer

A) True 
 B)False

Question 2

Refer to the information provided for MetalHead Inc.What is the direct materials quantity variance?

Accepted Answer

A)  $650 unfavorable
B)  $650 favorable
C)  $700 favorable
D)  $700 unfavorableE) None of the above
F) A) and B)

Question 3

The standard fixed factory overhead rate is based on 100% capacity of 135,000 machine hours for Interile Inc.The standard costs and the actual costs of factory overhead for the production of 32,000 units during March were as follows:

Accepted Answer

A)  $2.00
B)  $2.50
C)  $3.00
D)  $3.50E) None of the above
F) B) and C)

Question 4

For which of the following reasons,management accountants usually provide for a minimum cash balance in their cash budgets?

Accepted Answer

A)  Stockholders demand a minimum cash balance
B)  It is an important way of effectively managing cash.
C)  It provides a safety buffer for variations in estimates.
D)  It makes funds available for major capital expenditures.E) All of the above
F) A) and B)

Question 5

The formula to compute direct materials price variance is:

Accepted Answer

A)  actual costs - (actual quantity × standard price) .
B)  actual cost + standard costs.
C)  actual cost - standard costs.
D)  (actual quantity × standard price) - standard costs.E) A) and B)
F) C) and D)

Question 6

The difference between the budgeted fixed overhead at 100% of normal capacity and the standard fixed cost for the actual units produced is termed volume variance.

Accepted Answer

A) True 
 B)False

Question 7

Goal conflict can be avoided if budget goals are carefully designed for consistency across all areas of the organization.

Accepted Answer

A) True 
 B)False

Question 8

Refer to the information provided for Benjamin Corporation.The cash collections from accounts receivable in September are:

Accepted Answer

A)  $175,000.
B)  $140,000.
C)  $190,000.
D)  $168,000.E) A) and B)
F) B) and C)

Question 9

Department managers plan lower goals than possible in order to build in a cushion for unexpected events.This result in:

Accepted Answer

A)  budgetary slack.
B)  zero-based budgeting.
C)  goal conflict.
D)  flexible budgeting.E) B) and D)
F) A) and C)

Question 10

Periodic comparisons between planned objectives and actual performance are reported in:

Accepted Answer

A)  zero-base reports.
B)  budget performance reports.
C)  master budgets.
D)  budgets.E) B) and D)
F) A) and B)

Question 11

Refer to the information provided for Standard Inc.The amount of the direct materials quantity variance is:

Accepted Answer

A)  $875 favorable.
B)  $875 unfavorable.
C)  $800 favorable.
D)  $800 unfavorable.E) A) and C)
F) All of the above

Question 12

Based on the following production and sales estimates for May,determine the number of units expected to be manufactured in May.

Accepted Answer

A)  85,000 units $10
B)  90,000 units
C)  95,000 units
D)  105,000 unitsE) A) and D)
F) B) and D)

Question 13

Using a standard costing system for nonmanufacturing expenses is easily administered because the expenses generally relate to a repetitive,measurable output.

Accepted Answer

A) True 
 B)False

Question 14

Standard Corporation uses a standard cost system.The following information was provided for the period that just ended:

Accepted Answer

A)  $6,000 favorable.
B)  $3,000 favorable.
C)  $3,000 unfavorable.
D)  $6,000 unfavorable.E) All of the above
F) A) and B)

Question 15

Which of the following budgets provides the starting point for the preparation of the direct labor cost budget?

Accepted Answer

A)  Direct materials purchases budget
B)  Cash budget
C)  Production budget
D)  Factory overhead budgetE) A) and C)
F) B) and C)

Question 16

As a device for measuring efficiency,standard cost systems enables management to determine the causes of differences between what a product should cost and how much it actually costs to produce.

Accepted Answer

A) True 
 B)False

Question 17

Standard costs serve as a device for measuring efficiency.

Accepted Answer

A) True 
 B)False

Question 18

Refer to the information provided for Octofic Cans Inc.Budgeted sales for the month are:

Accepted Answer

A)  $97,550.
B)  $123,000.
C)  $82,750.
D)  $81,550.E) A) and D)
F) None of the above

Question 19

It would be most appropriate to develop direct labor time standards for use in administrative activities when the activity involves:

Accepted Answer

A)  repetitive task that produces common output.
B)  nonrepetitive task that produces common output.
C)  top-level management.
D)  task related to nonmeasurable output.E) B) and D)
F) A) and B)

Question 20

If Division Inc.expects to sell 200,000 units in 2015,desires ending inventory of 24,000 units,and has 22,000 units on hand as of the beginning of the year,the budgeted volume of production for 2015 is 198,000 units.

Accepted Answer

A) True 
 B)False

Exam 13: Budgeting and Standard Cost Systems

Goal conflict can be avoided if budget goals are carefully designed for consistency across all areas of the organization.

Correct AnswerverifiedShow Answer

Using a standard costing system for nonmanufacturing expenses is easily administered because the expenses generally relate to a repetitive,measurable output.

Correct AnswerverifiedShow Answer

If Division Inc.expects to sell 200,000 units in 2015,desires ending inventory of 24,000 units,and has 22,000 units on hand as of the beginning of the year,the budgeted volume of production for 2015 is 198,000 units.

Correct AnswerverifiedShow Answer

Standard costs serve as a device for measuring efficiency.

Correct AnswerverifiedShow Answer

Refer to the information provided for Standard Inc.The amount of the direct materials quantity variance is:

Correct AnswerverifiedShow Answer

It would be most appropriate to develop direct labor time standards for use in administrative activities when the activity involves:

Correct AnswerverifiedShow Answer

Periodic comparisons between planned objectives and actual performance are reported in:

Correct AnswerverifiedShow Answer

Which of the following budgets provides the starting point for the preparation of the direct labor cost budget?

Correct AnswerverifiedShow Answer

Refer to the information provided for Octofic Cans Inc.Budgeted sales for the month are:

Correct AnswerverifiedShow Answer

The standard fixed factory overhead rate is based on 100% capacity of 135,000 machine hours for Interile Inc.The standard costs and the actual costs of factory overhead for the production of 32,000 units during March were as follows:

Correct AnswerverifiedShow Answer

Department managers plan lower goals than possible in order to build in a cushion for unexpected events.This result in:

Correct AnswerverifiedShow Answer

As a device for measuring efficiency,standard cost systems enables management to determine the causes of differences between what a product should cost and how much it actually costs to produce.

Correct AnswerverifiedShow Answer

For which of the following reasons,management accountants usually provide for a minimum cash balance in their cash budgets?

Correct AnswerverifiedShow Answer

Refer to the information provided for Benjamin Corporation.The cash collections from accounts receivable in September are:

Correct AnswerverifiedShow Answer

Refer to the information provided for MetalHead Inc.What is the direct materials quantity variance?

Correct AnswerverifiedShow Answer

The difference between the budgeted fixed overhead at 100% of normal capacity and the standard fixed cost for the actual units produced is termed volume variance.

Correct AnswerverifiedShow Answer

Standard Corporation uses a standard cost system.The following information was provided for the period that just ended:

Correct AnswerverifiedShow Answer

Based on the following production and sales estimates for May,determine the number of units expected to be manufactured in May.

Correct AnswerverifiedShow Answer

The first budget to be prepared is usually the sales budget.

Correct AnswerverifiedShow Answer

The formula to compute direct materials price variance is:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified