Multiple Choice Questions
1.________________ is a technique used to filter cost information contained in performance reports to each manager within the organization at an appropriate level of detail or summarization:
A. Managerial reporting
B. Responsibility reporting
C. Financial reporting
D. Segment reporting
2.The term noncontrollable cost:
A. implies that there is really nothing the manager can do to influence the amount of cost.
B. only applies to long-term costs.
C. never applies to short-term costs.
D. is another term for discretionary cost.
3.An example of a cost that is noncontrollable in the short run is:
A. direct labor.
B. property taxes.
C. raw materials.
D. supervisors salaries.
4.The key difference between a controllable cost and a noncontrollable cost is:
A. the large amount of the cost.
B. the frequency of cost incurrence.
C. the short term ability to influence the cost by the manager.
D. whether the cost is fixed or variable.
5.The principal objective of a performance report is to:
A. highlight activities than need management attention.
B. direct blame to those managers who did not meet goals.
C. provide a basis for rewarding effective managers.
D. highlight budgets that have been incorrectly established.
6.For performance reports to be most effective for management by exception, they should:
A. be issued at the same time for all responsibility centers.
B. be held until the financial statements for the month have been issued.
C. be issued as soon after the activity or period covered as possible.
D. show all of the costs associated with the responsibility center being reported about.
7.The best reason for flexing a budget is to:
A. permit a more accurate determination of variances.
B. revise a budget at the beginning of a period.
C. adjust actual results so they are closer to budgeted amounts.
D. recognize the cost behavior pattern of budgeted amounts.
8.A budget adjusted to reflect a budget allowance based on actual activity achieved rather than the planned level of activity in the original budget is a:
A. static budget.
B. rolling budget.
D. flexible budget.
9.If the actual level of activity is different from the budgeted level, a _________ budget is prepared for the actual level of activity:
10.When analyzing end of period production cost variances, which of the following product cost components will not need "flexing"?
A. Direct material.
B. Direct labor.
C. Variable manufacturing overhead.
D. Fixed manufacturing overhead.