Question Details

Accounting 101 PART 3 Budgetary CONTROL AND RESPONSIBILITY ACCOUNTING


51.	A flexible budget can be prepared for which of the following budgets comprising the master budget?
		a.	Sales
		b.	Overhead
		c.	Direct materials
		d.	All of these

52.	Another name for the static budget is
		a.	master budget.
		b.	overhead budget.
		c.	permanent budget.
		d.	flexible budget.

	53.	If a company plans to sell 16,000 units of product but sells 20,000, the most appropriate comparison of the cost data associated with the sales will be by a budget based on
		a.	the original planned level of activity.
		b.	18,000 units of activity.
		c.	20,000 units of activity.
		d.	16,000 units of activity.

	54.	Within the relevant range of activity, the behavior of total costs is assumed to be
		a.	linear and upward sloping.
		b.	linear and downward sloping.
		c.	curvilinear and upward sloping.
		d.	linear to a point and then level off.

	55.	Sales results that are evaluated by a static budget might show
			1.	favorable differences that are not justified.
			2.	unfavorable differences that are not justified.
		a.	1
		b.	2
		c.	both 1 and 2.
		d.	neither 1 nor 2.

	56.	The selection of levels of activity to depict a flexible budget
			1.	will be within the relevant range.
			2.	is largely a matter of expediency.
			3.	is governed by generally accepted accounting principles.
		a.	1
		b.	2
		c.	3
		d.	1 and 2

	57.	Management by exception
		a.	causes managers to be buried under voluminous paperwork.
		b.	means that all differences will be investigated.
		c.	means that only unfavorable differences will be investigated.
		d.	means that material differences will be investigated.

	58.	Under management by exception, which differences between planned and actual results should be investigated?
		a.	Material and noncontrollable
		b.	Controllable and noncontrollable
		c.	Material and controllable
		d.	All differences should be investigated

59.	A flexible budget depicted graphically
		a.	is identical to a CVP graph.
		b.	differs from a CVP graph in the way that fixed costs are shown.
		c.	differs from a CVP graph in the way that variable costs are shown.
		d.	differs from a CVP graph in that sales revenue is not shown.

	60.	The activity index used in preparing the flexible budget
		a.	is prescribed by generally accepted accounting principles.
		b.	is only applicable to fixed manufacturing costs.
		c.	is the same for all departments.
		d.	should significantly influence the costs that are being budgeted.

	61.	A static budget is not appropriate in evaluating a manager's effectiveness if a company has
		a.	substantial fixed costs.
		b.	substantial variable costs.
		c.	planned activity levels that match actual activity levels.
		d.	no variable costs.

	62.	The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area is called
		a.	static reporting.
		b.	flexible accounting.
		c.	responsibility accounting.
		d.	master budgeting.

	63.	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.

	64.	As one moves up to each higher level of managerial responsibility,
		a.	fewer costs are controllable.
		b.	the responsibility for cost incurrence diminishes.
		c.	a greater number of costs are controllable.
		d.	performance evaluation becomes less important.

	65.	A responsibility report should
		a.	be prepared in accordance with generally accepted accounting principles.
		b.	show only those costs that a manager can control.
		c.	only show variable costs.
		d.	only be prepared at the highest level of managerial responsibility.

	66.	Top management can control
		a.	only controllable costs.
		b.	only noncontrollable costs.
		c.	all costs.
		d.	some noncontrollable costs and all controllable costs.


67.		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.

	68.	Which of the following is not a true statement?
		a.	All costs are controllable at some level with a company.
		b.	Responsibility accounting applies to both profit and not-for-profit entities.
	c.	Fewer costs are controllable as one moves up to each higher level of managerial responsibility.
	d.	The term segment is sometimes used to identify areas of responsibility in decentralized operations.

	69.	Costs incurred indirectly and allocated to a responsibility level are considered to be
		a.	nonmaterial.
		b.	mixed.
		c.	controllable.
		d.	noncontrollable.

	70.	Management by exception
		a.	is most effective at top levels of management.
		b.	can be implemented at each level of responsibility within an organization.
		c.	can only be applied when comparing actual results with the master budget.
		d.	is the opposite of goal congruence.