1.

Budgeting is used to help companies: a. plan to better satisfy customers b. anticipate potential problems c. focus on opportunities *d. All of these answers are correct.

2.

Financing decisions PRIMARILY deal with: a. the use of scarce resources *b. how to obtain funds to acquire resources c. acquiring equipment and buildings d. preparing financial statements for stockholders

3.

A good budgeting system forces managers to examine the business as they plan, so they can: a. detect inaccurate historical records *b. set specific expectations against which actual results can be compared c. complete the budgeting task on time d. get promoted for doing a good job

4.

For next year, Galliart, Inc., has budgeted sales of 60,000 units, target ending finished goods inventory of 3,000 units, and beginning finished goods inventory of 1,800 units. All other inventories are zero. How many units should be produced next year? a. 58,800 units b. 60,000 units *c. 61,200 units d. 64,800 units 60,000 + 3,000 – 1,800 = 61,200 units

5.

The master budget is: a. a flexible budget *b. a static budget c. developed at the end of the period d. based on the actual level of output

6.

Management by exception is the practice of concentrating on:

a. variable cost per unit b. *b. c. work was efficiently scheduled *b. an overskilled workforce c. total fixed costs *c. machines were not properly maintained c. The following items are the same for the flexible budget and the master budget EXCEPT the same: a. units sold d. that lower-quality materials were purchased *b. a lower-priced supplier was used 9. An unfavorable efficiency variance for direct manufacturing labor might indicate that: a. budgeted rate standards are too lax d. the master budget areas not operating as anticipated favorable variances unfavorable variances 7. A favorable efficiency variance for direct materials might indicate: a. more higher-skilled workers were scheduled than planned . d. sales price per unit 8. poor design of products or processes d.

00) = $62. $62. Robb Industries. RII produced and sold 5. $30 x (490 – 500) = $300 F 12. 250 dlh x ($15.811. $980 unfavorable b. $1. In 2004.000 unfavorable. Budgeted quantity Budgeted price Direct materials 0. $3.50 U .25 per hour. $62. None of these answers are correct.10 pounds $30 per pound Direct labor 0. June’s direct material price variance is: a.10. 5000 x ($32 – $30) = $1. Inc. RII estimated the following standard costs for one of their major products.000 U 11. June’s direct manufacturing labor price variance is: *a.05 hours $15 per hour During June. $680 favorable d.25 – $15.50 favorable c. $980 unfavorable *b.75 unfavorable d. the 10-gallon plastic container. $300 favorable c. developed standard costs for direct material and direct labor. Use the information in question 10 (above) for both this question and questions 12 and 13 below. (RII). They used 490 pounds of direct materials and 250 direct manufacturing labor-hours at an average wage of $15. $680 favorable *d. They bought 500 pounds of direct materials at an average cost per pound of $32.000 containers. June’s direct material efficiency variance is: a. None of these answers are correct.50 unfavorable b. $300 favorable c.

lower-quality raw materials were used than were planned c.05)] x $15 = Zero 14.500F Direct manufacturing labor 40. signals the cause of a problem b. June’s direct manufacturing labor efficiency variance is: a. tracing more costs as direct costs with the help of technology d. should be used for performance evaluation Overhead costs have been increasing due to all of the following EXCEPT: a. Flexible ------------Variances------------Budget Price Efficiency Material A $20. a higher price than expected was paid for Material A *b. .000 500U 2. F denotes a favorable variance and U denotes an unfavorable variance. Material A used during September was $2. more complexity in distribution processes *c.13.000F $3. A single variance: a.500F The MOST likely explanation of the above variances for Material A is that: a.000 500U 1.50 unfavorable b. $62. should be evaluated in isolation from other variances *c. product proliferation 16.000 $1. $62.000 less than expected 15.50 favorable c.000U Material B 30.75 unfavorable *d. the company used a higher-priced supplier d. increased automation b. Ruben’s Camera Shop has prepared the following flexible budget for September and is in the process of interpreting the variances. may be the result of many different problems d.000 x 0.811. $3. [250 dlh – (5. Zero.

000 units Machine-hours 6. None of these answers is correct.00 = $1. $2. the denominator level was not accurately determined 19. The following fixed overhead data pertain to March: Actual Static Budget Production 25.000 unfavorable b.00 per machine-hour.800 – 10.450 unfavorable c. The fixed-overhead cost-allocation rate is $20.000 grooming kits for horses during March. the variable overhead cost-allocation base was not used efficiently d.000 units Machine-hours 9. The following variable overhead data pertain to February: Actual Budgeted Production 100.000 actual costs – $120. the price of variable overhead items was less than budgeted *c. $2. $3. $1. $5.000 buckets during February. Jenny’s Corporation manufactured 25.000 favorable *c.000 $120.100 hours 6.000 units 100. [9. Roberts Corporation manufactured 100.450 unfavorable d.000 hours Fixed overhead costs for March $123.25 $5.000 units 24.000 unfavorable .800 hours 10. The overhead cost-allocation base is $5. $1.17.000 What is the fixed overhead spending variance? a.00 What is the variable overhead efficiency variance? *a. $1. variable overhead items were not used efficiently b.000] x $5.000 budgeted cost = $3.00 per machine-hour.000 hours Variable overhead cost per machine-hour $5. An unfavorable variable overhead efficiency variance indicates that: a.000 favorable b.000 favorable $123.000 unfavorable d.000 favorable 18.

20. $2. $1. $5.000 x .25) = 6.250 (6.000 unfavorable b.000-6.000 favorable c.000 favorable AQ = 6.000 SQ = (25.000 unfavorable *d. $3.250) x $20 = $5.000 favorable . Using the information for Jenny in 19 (above) what is the fixed overhead productionvolume variance? a.

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