QUESTION 1   Net sales volume variance will not be favorable:     When actual units sold is greater than budgeted sales volume     When actual units sold are less than budgeted sales volume     When the sales volume variance is favorable     Under any of the above conditions   2.5 points    QUESTION 2   Which of the following is a suggested technique for managing the budgeting process in a manner that increases employee motivation?     Measure the budget against performance only when assessing poor performers     Never alter the budget     Top management should disassociate itself from the budget     Emphasize the budget as a planning device   2.5 points    QUESTION 3   In a manufacturing setting, the purchase budget is based on:     The sales budget     The production budget     The manufacturing labor budget     The cash disbursements   2.5 points    QUESTION 4   Which of the following is not used in the formulation of economic value added (EVA)?     A minimum rate of return set by top management     After tax income     The weighted average cost of capital     Total net assets   2.5 points    QUESTION 5   ______________ is the time a product exists–from conception to abandonment.     Product life cycle     Revenue producing life     Consumable life     Introduction stage   2.5 points    QUESTION 6   Brown Division operates as a revenue center. Data for this year are as follows:     Actual Budget Sales in Units 44,000 40,000 Selling price per unit $190 $200 Variable expenses per unit   $140     What is the total revenue variance?   $220,000 (U)     $360,000 (F)     $180,000 (F)     $220,000 (F)   2.5 points    QUESTION 7   Which of the following situations gives rise to the need for a transfer price?     Two divisions of the same company sell to the same wholesaler     Two divisions of the same company sell competing products to the same customer     Two divisions of the same company sell to one another     Both B and C   2.5 points    QUESTION 8   When determining net present value, this is commonly done to consider higher than normal risk associated with a proposed investment:     Decrease the discount rate used in the analysis     Decrease the expected cash flows     Increase the discount rate used in the analysis     Increase the required payback period   2.5 points    QUESTION 9   Which of the following capital budgeting techniques provides the decision maker with answers expressed in dollars?     Payback method     Internal rate of return     Net present value     None of the above   2.5 points    QUESTION 10   A flexible budget variance for a manufacturing cost is computed as the difference between:     Flexible budget costs and static budget costs     Actual costs and flexible budget costs     Departmental costs and cost center costs     Flexible budget costs and original budget costs   2.5 points    QUESTION 11   A precondition for effective capital budgeting requires having:     A clearly defined mission     A well-defined business strategy     Long-range goals     All of the above   2.5 points    QUESTION 12   Structuring performance reports and addressing them to individuals as group members of an organization in a manner that emphasizes factors that can be controlled by them is accomplished by using which of the following?     Absorption costing     Value chain analysis     Responsibility accounting     Relational concepts   2.5 points    QUESTION 13   Assume that the standard cost to make one unit of product includes 15 units of raw materials at a price of $3 per unit. In July, 34,000 units of raw materials were purchased for $100,800, and 30,600 units of raw materials were used to produce 2,000 units of finished product. What is the materials quantity variance?     $2,400 (U)     $1,800 (U)     $1,200 (F)     $1,200 (U)   2.5 points    QUESTION 14   Budgetary slack refers to:     Intentionally requesting more funds in the budget than needed     The time lag between budget preparation and actual operations.     Overspending the budget allowance     The time lag between budget discussions and actual preparation of budgets   2.5 points    QUESTION 15   A balanced scorecard typically includes:     Financial measures     Customer satisfaction measures     Internal processes measures     All of the above   2.5 points    QUESTION 16   The objective of standard cost variance analysis is:     To identify standard cost variances and to explain the reasons for their occurrences     To explore the reason or reasons for variation in sales prices of products offered in the company’s main line of business     To identify the standard deviation in budgeted numbers over a period of time     To purge cost data of the effects of inflation   2.5 points    QUESTION 17   Which of the following aspects related to budgeting and human behavior is not correct?     Budgets often produce strong reactions in people.     The preparation period for a participative budget is generally longer than that for an imposed budget.     A disadvantage of the use of budgets is that they always decrease employee motivation.     Personnel who do not participate in budget preparation are likely to lack a commitment in achieving their part of the budget.   2.5 points    QUESTION 18   Information for Tube division is as follows:  – Net earnings for division $40,000  – Asset base for division$100,000  – Target rate of return 16%  – Operating income margin 12%  – Weighted average cost of capital 8%.  What is Tube’s residual income?     $26,000     $24,000     $32,000     $95,200   2.5 points    QUESTION 19   Which of the following is not an advantage of ROI?     It encourages managers of departments with high ROIs to invest in average ROI projects.     It encourages managers to pay careful attention to the relationships among sales, expenses, and investment.     It encourages cost efficiency.     It discourages excessive investment in operating assets.   2.5 points    QUESTION 20   Bosworth Boots, Inc. is considering the production of a new line of boots. Based on preliminary market research, management has decided that each pair of boots should be priced at $225. Furthermore, management believes that the profit margin should be 30 percent of sales revenue.  What is the target cost?     $150.75     $225.50     $260.00     $157.50   2.5 points    QUESTION 21   Birchtown Company’s budgeted sales were 5,000 units at $400 per unit. Actual sales were 4,500 units at $420 per unit. Birchtown’s sales price variance was:     $ 34,000 (U)     $100,000 (U)     $ 90,000 (F)     $ 45,000 (F)   2.5 points    QUESTION 22   The Rob Wallace Corporation has a sales budget for next month of $400,000. Cost of goods sold (all of which is merchandise) is expected to be $250,000. All goods are paid for in the month following their purchase. The beginning inventory of merchandise is $16,000, and an ending inventory of $12,000 is desired. Beginning accounts payable is $52,000. How much merchandise inventory will The Rob Wallace Corporation need to purchase next month?     $2,50,000     $1,90,000     $2,46,000     $4,00,000   2.5 points    QUESTION 23   The return on investment is computed as:     Operating income divided by sales     Operating income divided by average operating assets     Sales divided by average operating assets     Operating asset turnover divided by the operating income margin   2.5 points    QUESTION 24   Clarinet Publishing is considering the purchase of a used printing press costing $38,400. The printing press would generate a net cash inflow of $20,000 a year for 5 years. At the end of 5 years, the press would have no salvage value. The company’s cost of capital is 10 percent. The investment’s payback period in years (rounded to two decimal points) is:     2.56     2.13     1.92     3   2.5 points    QUESTION 25   Generally, the first of the following budgets to be prepared is the:     Cash budget     Operations budget     Sales budget     Purchases budget   2.5 points    QUESTION 26   In a segment report for territories, the contribution margin less direct segment fixed costs is typically called the:     Segment sales     Product sales     Territory margin     Fixed costs   2.5 points    QUESTION 27   The internal rate of return:     Does not require a predetermined discount rate     Is often used to rank investment proposals     May be compared to the cost of capital in project evaluation     All of the above   2.5 points    QUESTION 28   Assume that the standard cost to make one finished unit includes 2 hour of direct labor at $8 per hour. During April, 22,000 direct labor-hours were worked, 10,500 units of product were manufactured, and total direct labor cost was $160,000. What is the labor rate variance for April?     $ 2,000 (U)     $ 2,000 (F)     $16,000 (U)     $16,000 (F)   2.5 points    QUESTION 29   Budgets based on the actual level of output, rather than the output originally budgeted, are called:     Activity budgets     Flexible budgets     Operating budgets     Static budgets   2.5 points    QUESTION 30   Cameo Company manufactures boxes. To manufacture a box, it takes 44 units of wood and 2 units of plastic. Scheduled production of boxes for the next two months is 2,100 and 2,500 boxes, respectively. Beginning inventory is 16,000 units of wood and 120 units of plastic. The ending inventory of wood is planned to decrease 4,000 units each of the next two months, and the plastic inventory is expected to increase 20 units each of the next two months. Based on this information, the number of units of wood that Cameo needs to purchase during the first month is:     84,000 units     82,000 units     8,000 units     88,400 units   2.5 points    QUESTION 31   When an outside market exists for an intermediate product that is perfectly competitive, the ideal method of transfer pricing is generally:     The one that creates the highest margin to the selling unit     The price at which the product sells in the external market     One that is higher than what the outside market is quoting     Based on management accounting numbers   2.5 points    QUESTION 32   What is residual income?     Excess income earned after budgeted income has been achieved     The excess of investment center income over the minimum return set by management     A percentage of income received by an organization for its participation in a joint venture     Income beyond the breakeven point determined by the product’s lifecycle   2.5 points    QUESTION 33   Read Publishing is considering the purchase of a used printing press costing $84,200. The printing press would generate a net cash inflow of $37,422 a year for 3 years. At the end of 3 years, the press would have no salvage value. The company’s cost of capital is 10 percent.   Year Present Value of $1.00 @ 10% per year 1 0.909 2 0.826 3 0.751 4 0.683 Determine the net present value for the investment. The investment’s net present value is:   $5,480     $19,200     $76,800     $8,832   2.5 points    QUESTION 34   ______________ is (are) the difference between the sales price needed to capture a predetermined market share and the desired profit per unit.     Gross profit     Target cost     Target price     Contribution margin   2.5 points    QUESTION 35   A project under consideration has a net present value of $10,000 for a required investment of $60,000. There are no other investment options at this time. However, the assumed discount rate used to calculate the net present value is 20%. On the basis of this information alone, this project should:     Definitely be rejected because $10,000 is only 17% of $60,000     Be rejected on the basis that the project loses $50,000     Probably be approved since the net present value is greater than zero     Be accepted if the cost of capital is greater than or equal to 20 percent   2.5 points    QUESTION 36   Which of the following amounts would be classified as part of the disinvestment phase for a project?     Depreciation     Collections of accounts receivable from sales     Expenditure to return plant site to its pre-project condition     Retiring bonds issues to finance the project   2.5 points    QUESTION 37   ________________ is a systematic approach to identifying the best practices to help an organization take action to improve performance.     Target costing     ISO 9000     Activity-based management     Benchmarking   2.5 points    QUESTION 38   Tom Gilgen is considering the production of a new line of jeans. Based on preliminary market research, management has decided that each pair of jeans should be priced at $170. Furthermore, management believes that the profit margin should be 25 percent of sales revenue. What is the target cost?     $62.00     $950.75     $112.00     $127.50   2.5 points    QUESTION 39   An awareness of the impact of today’s actions on tomorrow’s costs is a concept that underlies which of the following notions?     Marginal revenue     Target pricing     Kanban systems     Life-cycle costs   2.5 points    QUESTION 40   What is a transfer price?     The amount charged for a product or service that one division provides another     The amount charged for goods and services offered to the government     An amount charged to cover the costs associated with import/export taxes     The amount charged the final consumer to cover all costs incurred along the value chain   2.5 points    Click Save and Submit to save and submit. Click Save All Answers to save all answers.