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Study Resources (Accounting)

116) The cash budget is prepared before the operating budget. 117) The cash budget is prepared before the budgeted balance sheet is prepared. 118) The cash budget helps managers determine whether or not the company requires financing in a given month. 119) Budget committee is a what-if technique that asks what a result.
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81) Fosnight Enterprises prepared the following sales budget: MonthBudgeted Sales March$6,000 April$13,000 May$12,000 June$14,000 The expected gross profit rate is 30% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold. What is the desired ending inventory on.
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1) There are two types of responsibility centers. 2) Responsibility accounting performance reports compare plans (budgets) with actual results in each responsibility center. 3) Goal congruence is a system that evaluates the performance of each responsibility center and its manager. 4)  A profit center is the responsibility center that is only responsible for.
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66) All favorable variances are investigated when using management by exception. 67) Which type of variance causes operating income to be lower than the budgeted operating income? A) Favorable variance B) Neutral variance C) Unfavorable variance D) Reverse variance 68) Management by exception would dictate that the manager investigate which of the following variances? A) Variances which.
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106) Carlton Cookie Company produces a hand-processed gourmet cookie that is made with organic sugar. Five (5) pounds of organic sugar are required per batch of gourmet cookies. The organic sugar costs $2.40 per pound. The company needs to have 20% of the following month's production needs of organic sugar.
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194) Becky's Bakery produces two products, cake and pie. Becky's Bakery sells each cake for $15.00 and each pie for $10.00. Variable costs for cakes and pies are respectively, $7.00 and $6.00. There are 3,200 direct labor hours per month available for producing one of the two products. Fixed manufacturing.
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177) Mama's Favorite Appliances manufactures two products: Food Processors and Espresso Machines. The following data are available: Food ProcessorsEspresso Makers Sales price$125$225 Variable costs$50$150   The company can manufacture two food processors per machine hour and three espresso machines per machine hour. The company's production capacity is 1,200 machine hours per month. What is the contribution.
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199) In most circumstances, all fixed costs can be eliminated by outsourcing a product. 200) An opportunity cost is a past cost. 201) Qualitative factors play an important part in make or buy decisions. 202) Outsourcing decisions are best made by comparing the total manufacturing costs, both fixed and variable, allocated to the.
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57) Discuss potential problems and disadvantages to an organization that decentralizes its operations. 58) The performance reports of cost centers only include those costs incurred within each individual cost center. 59) A performance report compares expected revenues and expenses against budgeted figures for each responsibility center that the manager evaluates in an.
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21) Managers may intentionally build slack into the budget A) because they are uncertain about the future. B) to make their performance appear better. C) to acquire the resources they need in the event the organization implements a budget cut. D) because all of the above are true. 22) The budget committee A) rarely has.
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187) Brittany Furniture manufactures two products: Couches and Beds. The following data are available: CouchesBeds Sales price$500.00$700.00 Variable costs$350.00$375.00   The company can manufacture two couches per machine hour and one bed per machine hour. The company's production capacity is 900 machine hours per month. What is the contribution margin per machine hour for couches? A) $1,700 B).
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71) Bruner Stores wants to have 500 shovels in ending inventory on December 31. Budgeted sales for December are 1,950 shovels. The November 30 inventory was 320 shovels. How many shovels should Benson Stores purchase for December? A) 2,770 B) 1,770 C) 2,450 D) 2,130 72) Crafty Carpentry Company produces and sells a shelf for.
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146) Expected purchases for June and July are $80,000 and $92,000, respectively. Purchases for May were $60,000. All purchases are paid 45% in the month of purchase and 55% the following month. At what amount are June payments for purchases budgeted? A) $69,000 B) $71,000 C) $86,600 D) $110,400 147) McEwen Company has budgeted.
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91) Warshaw Company budgets payroll at $3,600 per month plus a percentage of monthly sales. The June operating expenses budget includes total payroll of $13,200 with budgeted sales of $160,000. Sales for July are budgeted at $180,000 while purchases of inventory for July are budgeted at $95,000. Depreciation and insurance.
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11) Decentralization allows top management to concentrate on long-term strategic planning. 12) Decentralization allows top management to hire workers with expert knowledge in each business unit. 13) Decentralization may duplicate a company's costs because each business unit can contain its own purchasing department. 14) Decentralized companies often struggle to achieve goal congruence in.
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126) "Capital expenditures budget" is best described by which of the following concepts? A) Details that reveal how the company expects to move out of the beginning cash balance and into the desired ending cash balance B) A system to evaluate the performance of each responsibility center and its manager C) A company's.
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172) Peddlin' Pete's Cycles sells its entry-level bicycles for $400 each. Its variable cost is $250 per bicycle. Fixed costs are $35,000 per month for volumes up to 1,200 bicycles. Above 1,200 bicycles, monthly fixed costs are $55,000. What is the budgeted operating income at a level of 900 bicycles.
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41)  Frito-Lay's Casa Grande plant that controls expenses using lean thinking to eliminate waste may be classified as a(n) A) cost center. B) investment center. C) profit center. D) revenue center. 42) Sales territories, such as geographic areas within the country may be classified as a(n) A) cost center. B) investment center. C) revenue center. D) profit center. 43).
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61) Loyal Pet Company expects to sell 5,000 beefy dog treats in January and 9,000 in February for $3 each. What will be the total sales revenue reflected in the sales budget for those months? A) January $15,000; February $27,000 B) January $1,667; February $3,000 C) January $3,000; February $1,667 D) January $27,000; February.
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229) Define the term constraints and give an example. What product should be made first when resource constraints exist? 230) Patty's Mailbox Company produces a standard mailbox with variable manufacturing costs of $18 per unit. The selling price of the standard mailbox is $25 per unit. The fixed manufacturing overhead cost.
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21) A manager is only accountable for expenses in a(n) ________ center. A) cost B) revenue C) profit D) investment 22) To evaluate the performance of a(an) ________, a top manager is responsible for revenues, costs, and the efficient use of the assets invested in the division. A) cost center B) investment center C) profit center D).
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184) In which of the following company types does a manager use an operating expenses budget? A) Manufacturing B) Merchandising C) Service D) All of the above 185) In which of the following company types does the manager use a "cost of goods sold, inventory, and purchases" budget? A) Merchandising B) Manufacturing C) Service D) All of.
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  1) Strategic planning involves setting short-term goals that extend three to four months into the future. 2) Budgets are helpful because managers can plan the cash inflows and outflows in an organization. 3) A budget is a quantitative expression of a plan that helps managers coordinate and implement the plan. 4) Budgets do.
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31) Which of the following is an advantage of the budgeting process? A) Coordinates the activities of the organization B) Assures that the lowest cost materials will be obtained C) Assures the company will achieve its objectives D) Guarantees that a profit will be achieved 32) Regarding the budgeting process, which of the.
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170) Byerly Corporation anticipates the following sales revenue over a five month period: Byerly Corporation's sales are 40% cash and 60% credit. The Byerly Corporation's collection history indicates that credit sales are collected as follows: Month of sale20% Month after sale50% Two months after sale25% Uncollectible5% Required: Prepare a cash collections budget for each month in the.
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76) The performance evaluation of a profit center is typically based on its A) segment margin. B) static budget variance. C) return on investment. D) return on assets. 77) Rider Company had the following financial results for last month. Which type of responsibility center do these financial results reflect? Gretzel Subunit Actual Flexible BudgetFlexible Budget Variance (U or F) %.
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116) What are the total assets reported by Sparrow Enterprises if operating income is $650,000, its return on investment (ROI) is 40%, and its target rate of return is 10%? A) $260,000 B) $1,625,000 C) $6,500,000 D) $650,000 117) Pigeon Forges' stakeholders require a 10% rate of return. The company currently has an ROI of.
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101) Beloved Baby Company manufactures and sells children's strollers. Each stroller requires eight screws. For September, Beloved Baby Company will begin September with 380 screws in its beginning inventory. Beloved Baby Company has budgeted stroller sales of 530 strollers, while 570 strollers are scheduled to be produced. How many screws.
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136) Sharon Corporation collects 15% in the second month following sale, 45% in the month following sale and 35% of a month's sales in the month of sale. The company has found that 5% of their sales are uncollectible. Budgeted sales for the upcoming four months are: August budgeted sales$300,000 September budgeted.
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126) Izzy Division of Marine Boats Corporation had the following results last year (in thousands). Sales$4,500,000 Operating income$700,000 Total assets $4,000,000 Current liabilities $250,000 Management's target rate of return is 10% and the weighted average cost of capital is 8%. What is the Izzy Division's Residual Income (RI)? A) $70,000 B) $400,000 C) $700,000 D) $300,000 127) Pendant Publishing.
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106) The Box Manufacturing Division of the Allied Paper Company reported the following results from the past year. Shareholders require a return of 7%. Management calculated a weighted-average cost of capital (WACC) of 5%. Allied's corporate tax rate is 30%. Sales$700,000 Operating income $175,000 Total assets$1,500000 Current liabilities 600,000 What is the division's Return.
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194) Merchandising companies prepare a direct materials budget. 195) Merchandising companies prepare a manufacturing overhead budget. 196) The managerial accountant at the Holly and Ivy Tree Store reported that the company anticipates sales of $600,000 in September and October, $625,000 in November, $635,000 in December, and note that the sales figure.
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11) Strategic planning enables the organization to establish long-term goals that extend 5-10 years into the future. 12) A rolling budget is useful because the organization can continue to budget its operations 12 months into the future. 13) The financial budget projects the collection and payment, of cash, and the forecast.
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166) Lough Company prepared the following purchases budget: MonthBudgeted Purchases June$40,000 July$43,000 August$39,600 September$46,000 October$49,100 All purchases are paid for as follows: 20% two months after purchase, 55% in the following month, and 25% in the month of purchase. What are the total cash disbursements in August to account for the purchase of merchandise at Lough Company? A).
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219) Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 6,000 units, are as follows: Direct materials$4.00 Direct labor$4.00 Variable manufacturing overhead$3.00 Fixed manufacturing overhead$1.00 Total cost$12.00 The fixed overhead costs are unavoidable. Assuming Cruise Company can purchase.
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156) Two Brothers Moving prepared the following sales budget: MonthCash SalesCredit Sales March$20,000$10,000 April$36,000$16,000 May $42,000$40,000 June$54,000$48,000 Credit collections are 25% in the month of sale, 60% in the month following the sale, and 10% two months following the sale. The remaining 5% is expected to be uncollectible. What is the total cash received in April to.
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86) Sales margin is a component of the Return on Investment (ROI) calculation. 87) The weighted average cost of capital is a component of the Return on Investment (ROI) calculation. 88) Total assets is the denominator in the formula managers use to compute ROI. 89) Sales margin is defined as operating income divided.
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162) Flexible budgets are budgets that summarize cost and revenue information for a single volume level. 163) Both the static budget and the flexible budget used for performance evaluation are developed before the period of actual production. 164) The difference between the actual revenues and expenses and the master budget is known.
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136) The following data relates to Logan Electric and its Light Bulb Division. Light Bulb Division sales$7,500,000 Light Bulb Division operating income$750,000 Light Bulb Division total assets $3,000,000 Light Bulb Division current liabilities $550,000 Corporate target rate of return15% Corporate weighted average cost of capital11% Corporate effective tax rate35% What is the Light Bulb Division's sales margin? A).
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152) Hill Manufacturing is a large manufacturer that produces a part that inserts into diesel engines. The company has several large divisions and the managerial accountant reported the part is currentlyproduced in the assembly department. The managerial accountant reported that the variable selling expenses and manufacturing costs related to the.
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31) Lubrizol is a large chemical company that specializes in producing lubricants. Lubrizol was acquired in 2011 for $9 billion by investment holding company Berkshire Hathaway. Lubrizol may be classified as a(n) A) cost center. B) investment center. C) profit center. D) revenue center. 32) The reservations department that has self-contained sales operations at a.
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174) The master budget of a service company has fewer individual budget components compared to the master budget of a manufacturing company. 175) The operating budgets of retailers and manufacturers are virtually identical. 176) Merchandisers use a "cost of goods sold, inventory, and purchases budget" to calculate the amount of merchandise.
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146) Selected financial data for the Photocopies Division of Elizabeth's Business Machines is as follows: Sales$6,800,000 Operating income$2,040,000 Total assets $2,720,000 Current liabilities $350,000 Required rate of return13% Weighted average cost of capital8% What is the Photocopier Division's sales margin? A) 250.00% B) 75.00% C) 5.15% D) 30.00% 147) Selected financial data for the Photocopies Division of Elizabeth's Business Machines is as.
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109) Sally Scooters manufactures and sells scooters. Each scooter requires two rear view mirrors. For September, Sally Scooters has budgeted sales of 415 scooters, while 450 scooters are scheduled to be produced. Sally Scooters will begin September with 220 rear view mirrors in its beginning inventory. How many rear view.
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