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A static budget is appropriate for
A Variable overhead costs
B Direct materials costs
C Fixed overhead costs
D None of these
Neal Merchandising Company expects to purchase $90,000 of materials in July and $105,000 of materials in August. Three-quarters of all purchases are paid for in the month of purchase, and the other one-fourth are paid for in the month following the month of purchase. How much will August’s cash disbursements for materials purchases be?
A $67,500
B $78,750
C $101,250
D $105,000
Why are budgets useful in the planning process?
A They provide management with information about the company’s past performance
B They help communicate goals and provide a basis for evaluation
C They guarantee the company will be profitable if it meets its objectives
D They enable the budget committee to earn their paychecks
The most common budget period is
A One month
B Three months
C Six months
D One year
A cost is considered controllable at a given level of managerial responsibility if
A The manager has the power to incur the cost within a given time period
B The cost has not exceeded the budget amount in the master budget
C It is a variable cost, but it is uncontrollable if it is a fixed cost
D It changes in magnitude in a flexible budget
All of the following statements are correct about controllable costs except
A All costs are controllable at some level of responsibility within a company
B All costs are controllable by top management
C Fewer costs are controllable as one moves up to each higher level of managerial responsibility
D Costs incurred directly by a level of responsibility are controllable at that level
Budget reports should be prepared
A Daily
B Monthly
C Weekly
D As frequently as needed
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If a company has adopted continuous budgeting, the budget will show plans for
A Every day
B A full year ahead
C The current year and the next year
D At least five years
Accounting generally has the responsibility for
A Setting company goals
B Expressing the budget in financial terms
C Enforcing the budget
D Administration of the budget
Not-for-profit entities
A Do not use responsibility accounting
B Utilize responsibility accounting in trying to maximize net income
C Utilize responsibility accounting in trying to minimize the cost of providing services
D Have only noncontrollable costs
The total direct labor hours required in preparing a direct labor budget are calculated using the
A Sales forecast
B Production budget
C Direct materials budget
D Sales budget
At 9,000 direct labor hours, the flexible budget for indirect materials is $18,000. If $18,700 is incurred at 9,200 direct labor hours, the flexible budget report should show the following difference for indirect materials
A $700 unfavorable
B $700 favorable
C $300 favorable
D $300 unfavorable
Walton Company determines that 27,000 pounds of direct materials are needed for production in July. There are 1,600 pounds of direct materials on hand at July 1 and the desired ending inventory is 1,400 pounds. If the cost per unit of direct materials is $3, what is the budgeted total cost of direct materials purchases?
A 79,200
B 80,400
C 81,600
D 82,800
Which statement is true?
A An investment center is responsible for revenues and expenses, as well as earning a return on assets
B An investment center is only responsible for its investments
C An investment center is only responsible for revenues and expenses
D A profit center is evaluated using contribution margin, while an investment center is evaluated using ROI