A budget should/can do all of the following except:*Be prepared by managers from different

functional areas working independently of each other Help management allocate limited
resources Become the performance standard against which firms can compare the actual results
Be adjusted if new opportunities become available during the year.
Which of the following statements is not true?Budgeting helps to coordinate organization
activities. *Budgeting is done before strategy is set. Budgeting sets targets for future
performance. Budgeting is prepared in advance of the budget period.
In which order are the following developed?
A = Production planB = Materials purchasing planC = Demand forecastD = Sales planFirst to
last: D, C, B, A First to last: C, A, D, B First to last: A, B, C, D *First to last: C, D, A, B
The strategy most likely to reduce the break-even point would be to:Increase both the capacity-
related (fixed) costs and the contribution margin per unit Increase the capacity-related (fixed)
costs and decrease the contribution margin per unit *Decrease the capacity-related (fixed) costs
and increase the contribution margin per unit Decrease both the capacity-related (fixed) costs and
the contribution margin per unit
P&Q Manufacturing produces a single product that sells for $16. Variable (flexible) costs per
unit equal $11.20. The company expects the total fixed (capacity-related) costs to be $7,200 for
the next month at the projected sales level of 20,000 units. What is the current break-even point
in terms of number of units for the next month?None of the above 2,250 units 3,333 units *1,500
units
A favorable efficiency variance for direct labor indicates that:More direct labor hours were used
during production than expected for actual output A higher wage rate than expected was paid for
direct labor *Less direct labor hours were used during production than expected for actual output
A lower wage rate than expected was paid for direct labor
An organization planned to use $44 of material per unit of activity but it actually used $42 of
material per unit of activity, and it planned to make 1,200 units but it actually made 1,000
units.What is the flexible budget amount for materials?$42,000 $48,000 *$44,000 $49,400
Kenosha Industries, Inc., (KII) developed the following standard costs for direct material and
direct labor for one of their major products, the 10-gallon plastic container.
Standard Quantity,Standard Price,Direct materials,0.10 pounds,$30 per pound,Direct labor,0.05
hours,$15 per hourDuring August, KII produced and sold 10,000 containers using 980 pounds of
direct materials at an average cost per pound of $32 and 500 direct labor hours at an average
wage of $15.25 per hour. What is August's direct material price variance? $600 favorable $1,360
unfavorable *$1,960 unfavorable None of the above
Kenosha Industries, Inc., (KII) developed the following standard costs for direct material and
direct labor for one of their major products, the 10-gallon plastic container.
Standard Quantity,Standard Price,Direct materials,0.10 pounds,$30 per pound,Direct labor,0.05
hours,$15 per hour. During August, KII produced and sold 10,000 containers using 980 pounds
of direct materials at an average cost per pound of $32 and 500 direct labor hours at an average
wage of $15.25 per hour. What is August's direct material quantity variance?None of the above
$1,960 unfavorable $1,360 favorable *$600 favorable
Kenosha Industries, Inc., (KII) developed the following standard costs for direct material and
direct labor for one of their major products, the 10-gallon plastic container.Standard
Quantity,Standard Price,Direct materials,0.10 pounds,$30 per pound,Direct labor,0.05 hours,$15
per hour. During August, KII produced and sold 10,000 containers using 980 pounds of direct
materials at an average cost per pound of $32 and 500 direct labor hours at an average wage of
$15.25 per hour. What is August's direct labor rate variance? None of the above $142,375
favorable *$125 unfavorable $125 favorable
Kenosha Industries, Inc., (KII) developed the following standard costs for direct material and
direct labor for one of their major products, the 10-gallon plastic container.Standard
Quantity,Standard Price,Direct materials,0.10 pounds,$30 per pound,Direct labor,0.05 hours,$15
per hour. During August, KII produced and sold 10,000 containers using 980 pounds of direct
materials at an average cost per pound of $32 and 500 direct labor hours at an average wage of
$15.25 per hour. What is August's direct labor efficiency variance $125 unfavorable *None of
the above $125 favorable $142,375 favorable
The following information for the second quarter of 2020 pertains to Washburn
Company:Month,Sales,April,$90,000,May,$120,000,June,$150,000, Cash is collected from
customers in the following manner: Month of sale 30%, Month following the sale 70%. How
much cash will be collected from customers in June?None of the above $150,000*$129,000
$141,000
The following information pertains to the October operating budget for Compass Corporation.
The cash balance on October 1 is $20,000,Budgeted sales for October $100,000 and November
$200,000.Collections for sales will be $50,000 for October.COGS to be paid in the month of the
sale 60% of sales.Administrative costs are $10,000 each month.No loans are outstanding on
October 1.The Company must maintain a minimum cash balance of $20,000.How much will
Compass Corporation need to borrow in October? $0*$20,000 $10,000 None of the above
Which of the following statements is true about the static budget? It is based on standard costs
It is based on planned production It can be used to evaluate and compare actual results *All of
the above
When discussing the roles of budgets, a planning role in the budgeting process includes:
Assessing performance *Developing the master budget Measuring outcomes against planned
amounts Reporting actual amounts at the end of the budgeting period
Which of the following is not a role of the financial budgets in the master budget? To estimate
the financial consequences of production and sales plans *To provide the foundation data for
financial reporting To help predict when there will be cash excesses or shortages To estimate the
financial consequences of capital investment plans
In zero-based budgeting:The budget is prepared by the top managers The prior year's budgeted
amounts or actual results are used to build the new operating budget The budget is never updated
*Managers must justify each item within the operating budget as if it were a new budget item
In incremental budgeting:*The prior year's budgeted amounts or actual results are used to build
the new operating budget The budget is prepared by the top managers Managers must justify
each item within the operating budget as if it were a new budget item The budget is never
updated
Which best describes the purpose of a management accounting and control system (MACS)?A
MACS offers a system of controls to ensure employees are meeting predetermined standards. A
MACS defines the value chain and identifies nonvalue-added activities for a business. *A MACS
helps decision makers determine whether strategies and objectives are being met. A MACS
provides a signal for management attention when areas are out-of-control.
Behavioral considerations of a well-designed management accounting and control system
include all of the following except: *information accuracy. short-term qualitative and
quantitative measures. the organization's ethical code of conduct. incentive compensation.
 Information is relevant in a MACS if: it is late. it is inconsistent. it is inaccurate. * it can be
applied in a flexible manner.
When implementing a new management accounting and control system, it is best: *for
management to involve employees in the implementation. to engage in benchmarking. to
involve consultants and implement their experienced ideas. to allow management to implement
their ideas.
Assumptions of the human resources model of motivation include all of the following except:
* employees prefer to follow highly-detailed, prescribed procedures. individuals are highly
creative, ethical, and responsible. employees are knowledgeable about their jobs. individuals
are motivated by both financial and nonfinancial awards.
An organization develops a code of ethics primarily because:it is required by law. the
management accounting department finds it helpful. * it helps reduce ethical conflict by avoiding
ambiguity and misunderstanding. the code allows for punishment of those who do not follow
organizational ethical standards.
According to the hierarchy of ethical principles presented in the text, an action prohibited by
___________ should also be unacceptable to ____________.*legal rules, societal norms
organizational norms, societal norms personal norms, professional memberships professional
memberships, legal rules
When a subordinate is caught padding an expense report, the supervisor should first:
ignore the incident if it is the first offense. * take action that complies with the organization's
code of ethics. confront the employee and ask him to submit a corrected expense report. report
the incident to the personnel department.
Pressures on managers to act unethically include all of the following except:*pressures to act in
the long-run best interest of the shareholders. requests to falsify reports. requests to bias
information in favor of certain stakeholders. solicitations for confidential information.
__________ occur(s) when a superior simply tells subordinates what their budget will be.
Stretch targets * Authoritative budgeting Consultative budgeting Budget slack
____________ occur(s) when subordinates ask for excess resources above and beyond what
they need to accomplish budget objectives. Participative budgeting *Budget slack Effective
budgeting Pseudo participation
Goal congruence in an organization refers to:*alignment of employee and organizational
objectives. ensuring that appropriate disciplinary actions can be taken against unethical acts.
ensuring that the organization's ethical code of conduct is enforced. so that essential tasks get
accomplished.
Empowering employees in management accounting and control system design requires all of the
following except: enabling employees' comprehension of performance measure computations.
allowing employees to participate in decision making. ensuring that employees understand the
information they are using and generating.*having highly-motivated employees in every
position.
In compensation plans, a cash bonus: does not affect long-term pay. is based on individual or
group performance. is usually triggered when performance exceeds a target. *All of the answer
options are correct.
In compensation plans, profit sharing:is focused on projected long-term performance. * is a
group incentive compensation plan. must distribute an equal share of the profits to each
employee. All of the answer options are correct.
Many intangible assets: are unimportant because they have no physical substance. *do not appear
on the balance sheet since it is difficult to place a reliable financial value on them. should be
evaluated with ROI and other performance measures. can be measured and managed with current
financial control systems.
____________ translate(s) an organization's mission, vision, and strategy into a comprehensive
set of performance measures that provide the framework for implementing its strategy.Critical
success factors Objectives *The balanced scorecard The value proposition
Which of the following statements is true?*Vision and mission statements set the general
direction for the organization. Strategy is a concise, internally-focused statement of how the
organization expects to compete and deliver value to customers. Mission is a concise,
externally-focused statement that expresses how the organization wants to be perceived by the
external world. Vision is about selecting the set of activities to create a sustainable difference in
the marketplace.
Scarlet Corporation plans to grow by offering a device that is superior and unique from the
competition. Scarlet believes that putting additional resources into R&D and staying ahead of the
competition with technological innovations is critical to implementing its strategy. Scarlet's
value proposition is:*product innovation and leadership. complete customer solutions. lowest
total cost. employees recognizing customer needs.
Scarlet Corporation plans to grow by offering a device that is superior and unique from the
competition. Scarlet believes that putting additional resources into R&D and staying ahead of the
competition with technological innovations is critical to implementing its strategy. To further
Scarlet's strategy, measures on the balanced scorecard would MOST likely include: yield. lowest
cost supplier. shorter cycle times. *manufacturing quality.
Customer financial performance:can be improved by offering special features, and highly
responsive customer service. *is improved by focusing on a combination of financial and
nonfinancial metrics. are best measured with financial metrics. are reflected on the balanced
scorecard as part of the learning and growth perspective.
Customer profitability:*are most accurately measured using activity based costing. are most
accurately measured using a combination of traditional costing and activity based costing. are
most accurately measured using traditional costing. is reflected by gross margin.
The 80/20 rule:*finds that 80% of revenues are generated by the top 20% of the customers.
can be graphed as the whale curve. finds that 80% of costs are generated by 20% of the
customers. finds that 80% of profits are generated by the top 20% of the customers.
The whale curve: graphs sales verses customers. graphs the 80/20 rule. finds that 80% of costs
are generated by 20% of the customers. * graphs profits verses customers.
Aggressive customers who demand low prices and customized services:are customers to
eliminate. require high costs and are most profitable to serve. *require high costs to serve. are
most profitable to serve.
Service companies:*focus more on customer costs and profitability than manufacturing
companies. have less variation in demand for organizational resources. None of the options are
correct. are less customer driven than manufacturing companies.
Examining internal operations to see where the company can improve processes to lower costs
of serving customers is an example of: managing relationships. the pricing waterfall. *process
improvements. activity based pricing.
The pricing waterfall:
 charts the multiple sources of revenue by customer. charts multiple list prices offered to
different customers. charts multiple types of customer costs. *charts the multiple revenue leaks
from list price caused by allowances and discounts.
Typical sales person's compensation:is paid in the form of salary. encourages sales only to
profitable customers. is usually based on customer profit. *is usually based on sales revenue.
The theory of constraints: suggests that some component parts should be outsourced. *maintains
that carefully managing production bottlenecks will increase operating income. emphasizes long-
term optimization. helps managers make special one-time decisions.
Constraints from the theory of constraints may include: linear square feet of display space for a
retailer. direct labor in the service industry. the availability of direct materials in manufacturing.
*All of the answers options are correct.
How can the Vice-president of sales encourage the company’s salespeople to promote the more
profitable models?Put all sales persons on salary. Provide higher sales commissions for higher
priced items and items with the greatest contribution margin per constrained resource. Provide
higher sales commissions for higher priced items. *Provide higher sales commissions for items
with the greatest contribution margin per constrained resource.
The implementation of just-in-time production results in all of the following except:decreased
cycle times. structural changes. * a slower pace for employees. reduced amount of waste.
Characteristics of just-in-time manufacturing include all of the following except:
no work-in-process inventories. a problem anywhere can stop production. * the ability to
process items in large batches. making a product only when the customer requires it.
Kaizen costing includes:cost control system concept. comparing actual costs to standard costs.
standards set annually or semiannually. * continuous improvement.
All the statements below are true regarding Kaizen costing except that:cost-variance analysis
compares target Kaizen costs with actual cost reduction amounts. cost reductions apply to all
variable costs. workers are assumed to have the best knowledge to improve processes and reduce
costs. *cost reduction targets are set and applied on an annual basis.
Concerns about Kaizen costing include: focus is on the overall system. *excessive pressures are
put on employees. radical process improvements. grace periods may be granted.
Which of the following is an example of variable manufacturing overhead? Glue used in a
factory that manufactures furniture Thread used in a factory that manufactures clothes Machine
lubricants used in an automobile repair shop *All of the above
Overhead costs such as factory rent and supervisory salaries are allocated to cost objects in a
multi-product facility.*True False
In job order costing, only direct costs are used to determine the cost of a job.True *False:In job
order costing, direct costs and indirect costs are used to determine the cost of a job.
An example of a direct cost for a service provided by an accounting firm, such as a tax return,
would be: rent on the office. labor of file clerk who filed copies of return. depreciation on
computer system. * labor of staff accountant who prepared the return.
An example of a direct cost in a car repair shop would include: * parts used in repair.
depreciation on tools. supervisory labor. property taxes on car repair shop.
In the manufacture of cans of beans, all the following would likely be allocated to a cost object
except:*beans. utilities. supervisory labor. depreciation on equipment used to can multiple
products.
A cost that is always uniquely and unequivocally attributable to a single cost object is a:
consumable resource. capacity related resource. indirect cost. *direct cost.
Depreciation on factory equipment is best characterized as direct cost period cost *fixed
manufacturing overhead. variable overhead.
In a job order costing system, a manufacturing firm typically uses a cost driver rate to estimate
the ________ used for a job.direct materials *variable overhead direct labor total costs
For each cost pool, a(n) ________ is identified that is the primary factor causing overhead costs
to increase during the accounting period. job *activity level process
The predetermined overhead cost driver rate is calculated using ________ overhead costs.
Allocated *estimated direct actual
Management accounting information can be used for all of the following except: project
materials needs. *evaluate the market price of the stock. calculate the cost of a product or
service. evaluate the performance of a company.
Which of the following types of information are used in management accounting? *All of the
choices are correct. nonfinancial information information focused on the long term financial
information
Which of the following descriptors refer to management accounting information? It is only
retrospective, reporting and summarizing in financial terms the results of past decisions and
transactions. It is prepared for shareholders. It is driven by rules. *It is oriented to meeting the
decision making needs of employees and managers inside the organization.
The person MOST likely to use management accounting information is a(n):shareholder
evaluating a stock investment. *assembly department supervisor. governmental taxing authority.
banker evaluating a credit application.
Financial accounting:*is primarily oriented to external stakeholders, such as investors, creditors,
regulators and tax authorities. focuses on the future and includes activities such as preparing next
year's operating budget. does not need to comply with GAAP (generally accepted accounting
principles). is prepared for the use of department heads and other employees.
Financial accounting information:provides a signal that something is wrong. explains what is
wrong. identifies what is wrong. * summarizes information but does not indicate whether
anything is wrong.
Management accounting information is BEST described as:simply summarizing information,
but giving no indication that anything is wrong. providing a signal that something is wrong.
measuring overall organizational performance. *identifying and helping to explain what is
wrong.
Managers are MOST likely to feel outside pressure to influence the numbers favorably when the
information is used for:*compensation and promotions. budgeting. product costing. continuous
improvement.
Which of the following is NOT a function of a management accounting system? control product
costing strategic development *financial accounting
The balanced scorecard is said to be "balanced" because is measures: *all of the answer choices
are correct financial and nonfinancial objectives. short-term and long-term objectives internal
and external objectives
Fixed costs: can be adjusted in the short run to meet actual demands. * may be either direct or
indirect costs. include parts and materials used to manufacture a product. vary with production or
sales volume.
Which of the following describes a variable cost? Variable costs can always be traced directly to
the cost object. Variable cost are always indirect costs. *Variable costs increase in total when
the actual level of activity increases. Variable costs include most personnel costs and
depreciation on machinery.
Cost-volume-profit analysis is used PRIMARILY by management: to establish a target net
income for next year. to attain extremely accurate financial results. * as a planning tool. for
control purposes.
Young and Martin, Inc., sells a single product. This year, 20,000 units were sold resulting in
$130,000 of sales revenue, $60,000 of variable costs, and $17,500 of fixed costs. The
contribution margin per unit is: $1.75 *$3.50 $6.50 $3.00
Young and Martin, Inc., sells a single product. This year, 20,000 units were sold resulting in
$130,000 of sales revenue, $60,000 of variable costs, and $17,500 of fixed costs. The breakeven
point in units for a year is:* 5,000 units 3,000 units 2,000 units 10,000 units
Young and Martin, Inc., sells a single product. This year, 20,000 units were sold resulting in
$130,000 of sales revenue, $60,000 of variable costs, and $17,500 of fixed costs. The number of
units that must be sold annually to achieve $52,500 of profits is: *20,000 units 5,000 units
15,000 units 10,000 units
Young and Martin, Inc., sells a single product. This year, 20,000 units were sold resulting in
$130,000 of sales revenue, $60,000 of variable costs, and $17,500 of fixed costs. If sales increase
by $19,500 in a year, profits will increased by:$35,000 $17,500 * $10,500 $19,500