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7) The financial budget is used by managers to ________. A) manage financial affairs B) manage employee hiring patterns C) manage the cash balance D) plan for future stock dividends 8) The total amount of cash collections from customers by month appears on the ________. A) sales budget B) operating expense budget C) cash budget D) budgeted balance sheet 9).
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21) Opportunity costs apply to resources that a company has committed to purchase. 6.2   Questions 1) In a make-or-buy decision for a part for a product, which of the following qualitative factors play a role? A) quality of purchased part B) credit terms offered by supplier of part C) timeliness of delivery of purchased part.
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40) The following data was obtained for a company that makes statues: Standard Inputs ExpectedStandard Price                     For Each Unit of Output              Per Unit of Input Direct material5 pounds$12 per pound Direct labor1.5 hours$12 per hour During the month of July, the company actually produced 1,000 statutes, which is 100 units less than expected. Direct material purchased.
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10) Benton Company manufactures a part for its production cycle. The costs per unit for 38,000 units of the part are as follows: Per Unit Direct materials$3.00 Direct labor5.00 Variable factory overhead3.00 Fixed factory overhead4.00 Total costs$15.00 The fixed factory overhead costs are unavoidable. Assume no other use for the facilities. What is the highest price Benton.
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31) If the total sales-activity variance and the static-budget variance are equal, there is no flexible budget variance. 32) The following data are for the month of January for the Soloway Company. Assume the cost driver is the number of units sold. Static budget data: Sales of 9,000 pairs at $90 per pair Variable.
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8.4   Questions 1) The activity-level variance for fixed costs equals zero when ________. A) the actual level of output equals the static budget level of output B) the actual level of output is greater than the static budget level of output C) the actual level of output is less than the static budget level.
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9) Gray Lake Company is considering the replacement of a machine that is presently used in production. The following data are available: Old Machine         New Machine Original cost$57,000$35,000 Useful life in years175 Current age in years120 Book value$39,000- Disposal value now$8,000- Disposal value in 5 years00 Annual cash operating costs$7,000$4,000 Adding all five years together, the total relevant costs to.
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11) A proposed project will require the use of ten machines in a company. Each machine has five alternative uses. What is the simplest way to evaluate the desirability of the project? A) incremental analysis B) cost-volume-profit analysis C) opportunity cost approach D) scarce resource approach 12) The key to determining the financial difference between.
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15) In deciding whether to add or delete a product, the salary of the plant manager is an ________. Assume the plant manager supervised the production of several products. A) avoidable fixed cost B) avoidable variable cost C) unavoidable fixed cost D) unavoidable variable cost 16) Variable expenses are divided into avoidable and unavoidable costs. 17).
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19) An equipment's book value is the original cost plus accumulated depreciation. 20) The cost of new equipment is relevant in deciding whether to keep or replace old equipment. 21) Past costs are irrelevant in equipment replacement decisions. 22) Jorgensen Company is considering the replacement of equipment used in operations. The following data.
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7) The ________ budget focuses on the budgeted income statement and the supporting schedules. A) financial B) operating C) operating expense D) purchases and cost of goods sold 8) Which of the following is NOT a component of the operating budget? A) sales budget B) operating expense budget C) capital budget D) budgeted income statement 9) Which of the following.
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23) Olson Company has three departments. Data for the most recent year is presented below: Dept. C      Dept. A      Dept. T Sales$4,000$1,920$2,240 Variable expenses3,2801,420520 Unavoidable fixed expenses480180440 Avoidable fixed expenses555265360 Operating income (loss) $(315) $55$920 Olson Company is considering eliminating Dept. C because it is operating at a loss. Required: A) Compute the change in operating income if Olson Company eliminates.
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11) Potter Company has the following information: Actual operating loss at 5,000 units$(11,000) Budgeted operating income at 5,000 units$5,000 Budgeted operating income at 10,000 units$12,000 Planned level of operations10,000 units Actual level of operations5,000 units Assume the cost driver of product costs is units of production. What is the flexible budget variance for operating income? A) $5,000.
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  8.1   Questions 1) An example of a favorable variance is ________. A) actual revenues are less than expected revenues B) actual expenses are less than expected expenses C) actual material prices are greater than expected material prices D) expected labor costs are less than actual labor costs 2) Spending less than budgeted for maintenance costs will.
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7) The flexible budget variance for variable overhead costs is composed of a(n) ________ variance and a(n) ________ variance. A) efficiency; effective B) spending; rate C) quantity; efficiency D) spending; efficiency 8) The variable overhead efficiency variance depends on whether the quantity of the cost driver used is more or less than ________. A) the standard.
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12) Cornell Company had the following information available for its specialty product: Standards for one unit of product: Direct Materials: 5 pounds at $2 per pound Direct Labor: 0.50 hour at $16 per hour Materials and Labor Used to produce 8,500 units: Direct Materials: 46,000 pounds at $3 per pound Direct Labor: 4,000 hours at ?.
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6) Which of the following cost is relevant to the decision whether to process joint products beyond the split-off point? A) joint costs B) allocated joint costs C) separable costs D) additional revenue from further processing beyond split-off point 7) Joint products should be processed beyond the split-off point if ________. A) sale of the products.
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6) A flexible budget is different from a variable budget. 7) A flexible budget adjusts for changes in sales volume and other cost-drivers. 8.3   Questions 1) To calculate the numbers in a flexible budget, managers use ________. A) cost functions developed from regression analysis B) flexible budget formulas C) cost functions obtained from the high-low method D).
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5) Central Industries has three product lines: A, B and C. The following information is available: Product A       Product B       Product C Sales$100,000$90,000$44,000 Variable costs76,00048,00035,000 Contribution margin24,00042,0009,000 Avoidable fixed costs9,00018,0003,000 Unavoidable fixed costs6,0009,0007,700 Operating income(loss) $9,000$15,000$(1,700) Central Industries is thinking about dropping Product C because it is reporting a loss. Assume Central Industries drops Product C and does not replace.
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16) Lisle Corporation has a joint process that produces three products: P, G and A. Each product may be sold at split-off or processed further and then sold. Joint-processing costs for a year amount to $25,000. The production level for each product is 10,000 units. Other data follows: Sales ValueSeparable ProcessingSales.
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11) Budgeted performance goals generally provide a better basis for evaluating actual performance than past performance. 12) A major drawback of using historical results for judging current performance is that inefficiencies may be concealed in past performance. 13) An effective budget process communicates from the top down, but not from the bottom.
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14) Ideal standards make no provision for waste, spoilage and machine breakdowns. 15) Ideal standards have an adverse effect on employee motivation. 16) As the terms are used in the budgeting process, it is possible for a company to be efficient at the same time it is ineffective. 17) Efficiency is the degree.
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17) Sebring Company has the following data: Month       Budgeted Sales April$40,000 May44,000 June50,000 July52,000 August48,000 The cost of goods sold percentage is 70% of sales and the desired ending inventory level is 25% of next month's sales at cost. ________ was the beginning inventory on May 1. A) $3,300 B) $7,700 C) $8,750 D) $11,000 18) Segal Company has the following data: Month       Budgeted Sales May$46,000 June50,000 July52,000 August49,000 The.
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5) Barber Company has budgeted sales of $30,000 with the following budgeted costs: Direct materials$6,300 Direct labor$4,100 Variable factory overhead$3,700 Fixed factory overhead$5,600 Variable selling and administrative costs$2,400 Fixed selling and administrative costs$3,200 What is the average target markup percentage for setting prices as a percentage of total variable costs? A) 45% B) 57% C) 82% D) none of the above 6).
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17) The activity-based budgeting system emphasizes ________. A) the resources needed by a company B) the preparation of budgets by function C) the attainment of long-range goals D) activities and their consumption of resources 18) ________ models are mathematical models that can react to any set of assumptions about sales, costs and product mix. A) Strategic B).
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2) Managers may ________ their budgeted costs or ________ their budgeted revenue to create a budget target that is easier to achieve. A) understate; overstate B) overstate; understate C) understate; understate D) overstate; overstate 3) Which of the following is NOT a reason for budgetary slack? A) to buffer managers from budget cuts imposed by top.
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2) The following information is available for Maher Manufacturing Company. -- Direct materials price standard is $3.25 per pound. -- Direct materials quantity standard is six pounds per finished unit. -- Budgeted production is 25,000 finished units. -- 175,000 pounds of direct materials were purchased for $525,000. -- 175,000 pounds of direct materials were used.
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20) Madison Company produces a part that is used in the manufacture of one of its products. The costs associated with the production of 5,000 units of this part are as follows: Direct materials$108,000 Direct labor156,000 Variable factory overhead72,000 Fixed factory overhead168,000 Total costs$504,000 Of the fixed factory overhead costs, $72,000 are avoidable. Middleton Company has.
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14) Sales forecasts are usually prepared under the direction of the top sales executive. 15) The sales budget should be the responsibility of line management. 16) The most forward-looking and least detailed budget is the strategic plan. 17) A decision made during long-range planning includes whether to delete a product from a company's.
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12) Companies use cost-plus pricing for products where management actions can influence the market price. 13) Target costing is most effective at reducing costs if used during the product design phase. 14) Product design affects a small amount of costs in the value chain. 15) Market focus group studies and surveys may be.
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47) Cash collections from customers in any given month include the current month's cash sales and expected collections on credit sales. 48) The first step in preparing the master budget is the preparation of the budgeted income statement. 49) The Pinsky Company has the following information available: Month         Budgeted Sales March$150,000 April153,000 May151,000 June254,500 July252,500 The gross profit rate is.
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27) Corbin Company has prepared the following sales budget: Month          Cash Sales         Credit Sales September$99,000$250,000 October225,000180,000 November310,000210,000 December94,000170,000 Collections of credit sales are 50% in the month of sale, 40% in the month following sale, and 10% two months following sale. No uncollectible accounts are expected. What is the expected balance in Accounts Receivable at November 30? A) $77,500 B).
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53) Olson Company has the following data: Month        Budgeted Purchases January$225,000 February190,000 March200,000 April220,000 May150,000 Purchases are paid as follows: 10% in the month of purchase 80% one month after purchase 10% two months after purchase Required: Prepare a schedule of cash disbursements for purchases for March, April and May. 54) Jorgensen Company has the following data: Month                  Budgeted Sales April$154,000 May160,000 June142,000 July136,000 Budgeted Operating Expenses Per Month Wages$12,600 Advertising27,200 Depreciation19,000 Rent20,400 Freight-out20% of sales Sales.
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  7.1   Questions 1) Which of the following statements about budgets and budgeting is FALSE? A) Budgets help coordinate financial and operational activities. B) The vast majority of managers use budgeting as an effective cost management tool. C) Budgeting is the process of formulating an organization's plans. D) Managers do not use budgets for performance evaluation. 2).
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9) A scarce resource restricts or constrains the production or sale of a product. 10) Scarce resources include labor hours. 11) In retail sales, the limiting resource is often floor space. 12) If the limiting factor is demand, the most profitable product is the one with the highest contribution margin per unit. 13) Inventory.
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4) Yellow Cake Company planned to produce and sell 900 units at a total cost of $180,000. Actual production and sales were 900 units at a cost of $170,000. The company was ________. A) efficient and ineffective B) inefficient and ineffective C) inefficient and effective D) efficient and effective 5) ________ is the degree to.
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  6.1   Questions 1) Differential cost is the difference in ________ between two alternatives. A) average cost B) marginal cost C) median cost D) total cost 2) Differential revenue is the difference in ________ between two alternatives. A) average revenue B) marginal revenue C) median revenue D) total revenue 3) Incremental costs are the ________ generated by a proposed alternative. A) additional revenues B).
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37) Paul Company's expected sales for April are $27,600. Other information follows: Budgeted Operating Expenses       Amount Wages$2,000 Advertising1,680 Patent amortization1,440 Rent2,560 Marketing5% of sales Which of the following operating expenses is a noncash expense? A) Advertising B) Rent C) Patent amortization D) Wages 38) Mark Company has the following information: Month          Budgeted Purchases January$40,000 February29,000 March30,520 April29,480 May27,680 Purchases are paid as follows: 10% in the month of purchase 50% one month after.
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26) Sealy Company has a joint process, which produces three products called A, B and C. Each product may be sold at split-off or processed further and then sold. Joint processing costs for a year are $20,000. Other relevant data are: Sales ValueSeparable ProcessingSales Value Product          at Split-Off        Costs After Split-Off       at Completion A$94,000$28,000$115,000 B60,00010,00082,000 C66,00014,00079,000 Required: A) Which products.
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4) Which schedule gives the expected sales under a given set of conditions? A) sales goal B) sales budget C) sales forecast D) master budget 5) Important factors used to forecast sales for a company include all of the following items EXCEPT ________. A) changes in firm's prices B) general economic conditions C) changes in product mix D) layout.
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21) The following data are for Sandy Corporation: Flexible Budget for Actual     Static Budget     Actual Sales Activity Units18,00016,00018,000 Sales$360,000$320,000$360,000 Variable costs234,000192,000216,000 Contribution margin$126,000$128,000$144,000 Fixed costs76,00080,00080,000 Operating income$50,000$48,000$64,000 The static budget variance for operating income is ________. A) $2,000 Favorable B) $2,000 Unfavorable C) $16,000 Favorable D) $16,000 Unfavorable 22) If the flexible budget variance was $6,000 Favorable and the sales activity variance was $3,000 Favorable, then.
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27) Donald Company has the following information: Cash Balance, May 31$45,000 Dividends paid in June12,000 Cash paid for operating expenses in June36,800 Equipment depreciation expense in June4,500 Patent amortization expense in June2,000 Cash collections on sales in June99,000 Merchandise purchases paid in June56,200 Purchase equipment for cash in June17,500 Donald Company wants to keep a minimum cash balance of.
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28) Andrea Company manufactures a part for its production cycle. The annual costs per unit for 20,000 units of this part are as follows: Direct materials$15 Direct labor12 Variable indirect production costs19 Fixed indirect production costs16 Total cost$62 Andrea Company has been approached by a supplier who will sell 20,000 units of the same part for.
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2) The final output of the financial budget is ________. A) budgeted statement of stockholders' equity B) budgeted balance sheet C) budgeted income statement D) budgeted statement of cash flows 3) What is the sequence of steps(order of preparation) for the operating budget? A) sales budget, operating expense budget, purchases and cost of goods sold budget B).
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7) When preparing the budgeted income statement, which of the following is the source for the amount of operating expenses? A) schedule of disbursements for operating expenses B) purchases budget C) schedule of disbursements for purchases D) operating expense budget 8) When preparing the budgeted income statement, which of the following is the source for.
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