The revenue and spending variances are the differences between the static planning budget and the flexible budget.
a. True
b. False
Answer:...
The activity variance for revenue is unfavorable if the actual revenue for the period is less than the revenue in the static planning budget.
The activity variance for revenue is unfavorable if the actual revenue for the period is less than the revenue in the static planning budget.
a....
An unfavorable activity variance for a cost indicates that spending was higher than it should have been for the actual level of activity for the period.
An unfavorable activity variance for a cost indicates that spending was higher than it should have been for the actual level of activity for the period.
a....
A flexible budget is an estimate of what revenues and costs should have been, given the level of activity that had been planned for the period.
A flexible budget is an estimate of what revenues and costs should have been, given the level of activity that had been planned for the period.
a....
A planning budget is prepared before the period begins and is valid for only the planned level of activity.
A planning budget is prepared before the period begins and is valid for only the planned level of activity.
a. True
b. False
Answer:...
A problem with directly comparing a static planning budget to actual costs is that this comparison fails to distinguish between differences in costs that are due to changes in activity and differences that are due to how well costs were controlled.
A problem with directly comparing a static planning budget to actual costs is that this comparison fails to distinguish between differences in costs...
The main difference between a flexible budget and a static budget is that a flexible budget does not contain fixed costs.
The main difference between a flexible budget and a static budget is that a flexible budget does not contain fixed costs.
a. True
b. False
Answer:...
Which of the following comparisons best isolates the impact that changes in prices of inputs and outputs have on performance?
Which of the following comparisons best isolates the impact that changes in prices of inputs and outputs have on performance?
A. static planning...
A flexible budget is a budget that:
A flexible budget is a budget that:
A. is updated with actual costs as they occur during the period.
B. is updated to reflect the actual level...
A flexible budget:
A flexible budget:
A. classifies budget requests by activity and estimates the benefits arising from each activity.
B. presents a statement...
The excess or deficiency of cash available over disbursements on the cash budget is calculated as follows:
The excess or deficiency of cash available over disbursements on the cash budget is calculated as follows:
A. The beginning balance less the...
There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget?
There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production...
Fairmont Inc. uses an accounting system that charges costs to the manager who has been delegated the authority to make decisions concerning the costs. For example, if the sales manager accepts a rush order that will result in higher than normal manufacturing costs, these additional costs are charged to the sales manager because the authority to accept or decline the rush order was given to the sales manager. This type of accounting system is known as:
Fairmont Inc. uses an accounting system that charges costs to the manager who has been delegated the authority to make decisions concerning the costs....
The concept of responsibility accounting means that:
The concept of responsibility accounting means that:
A. Budgetary data should be reviewed and approved by the budget committee.
B. Budgetary...
Which of the following is not a benefit of budgeting?
Which of the following is not a benefit of budgeting?
A. It uncovers potential bottlenecks before they occur.
B. It coordinates the activities...
The cash budget must be prepared before you can complete the:
The cash budget must be prepared before you can complete the:
A. production budget.
B. budgeted balance sheet.
C. raw materials purchases budget.
D....
The master budget process usually begins with the:
The master budget process usually begins with the:
A. production budget.
B. operating budget.
C. sales budget.
D. cash budget.
Answer:...
The budget or schedule that provides necessary input data for the direct labor budget is the:
The budget or schedule that provides necessary input data for the direct labor budget is the:
A. raw materials purchases budget.
B. production...
The materials purchase budget:
The materials purchase budget:
A. is the beginning point in the budget process.
B. must provide for desired ending inventory as well as for...
If variable overhead is applied on the basis of direct labor-hours and the variable overhead rate variance is favorable, then:
If variable overhead is applied on the basis of direct labor-hours and the variable overhead rate variance is favorable, then:
A. actual variable...
If the actual labor hours worked exceed the standard labor hours allowed, what type of variance will occur?
If the actual labor hours worked exceed the standard labor hours allowed, what type of variance will occur?
A. Favorable labor efficiency...
A favorable labor rate variance indicates that
A favorable labor rate variance indicates that
A. actual hours exceed standard hours.
B. standard hours exceed actual hours.
C. the actual...
A labor efficiency variance resulting from the use of poor quality materials should be charged to:
A labor efficiency variance resulting from the use of poor quality materials should be charged to:
A. the production manager.
B. the purchasing...
Under a standard cost system, the materials price variances are usually the responsibility of the:
Under a standard cost system, the materials price variances are usually the responsibility of the:
A. production manager.
B. sales manager.
C....
A favorable materials price variance coupled with an unfavorable material usage variance would MOST likely result from:
A favorable materials price variance coupled with an unfavorable material usage variance would MOST likely result from:
A. problems with processing...
A favorable materials price variance coupled with an unfavorable material usage variance would most likely result from:
A favorable materials price variance coupled with an unfavorable material usage variance would most likely result from:
A. labor efficiency...
The materials price variance should be computed:
The materials price variance should be computed:
A. when materials are purchased.
B. when materials are used in production.
C. based upon the...
An unfavorable materials quantity variance indicates that:
An unfavorable materials quantity variance indicates that:
A. actual usage of material exceeds the standard material allowed for output.
B....
The general model for calculating a quantity variance is:
The general model for calculating a quantity variance is:
A. actual quantity of inputs used x (actual price - standard price).
B. standard...
Which of the following statements concerning practical standards is incorrect?
Which of the following statements concerning practical standards is incorrect?
A. Practical standards can be used for product costing and cash...
The standards that allow for no machine breakdowns or other work interruptions and that require peak efficiency at all times are referred to as:
The standards that allow for no machine breakdowns or other work interruptions and that require peak efficiency at all times are referred to as:
A....
When closing overapplied manufacturing overhead to cost of goods sold, which of the following would be true?
When closing overapplied manufacturing overhead to cost of goods sold, which of the following would be true?
A. Work in process will decrease.
B....
Which of the following situations always results in underapplied overhead?
Which of the following situations always results in underapplied overhead?
A. actual overhead is greater than applied overhead
B. actual overhead...
If a company applies overhead to jobs on the basis of a predetermined overhead rate, a credit balance in the Manufacturing Overhead account at the end of any period means that:
If a company applies overhead to jobs on the basis of a predetermined overhead rate, a credit balance in the Manufacturing Overhead account at the end...
In a job-order costing system, the amount of overhead cost that has been applied to a job that remains incomplete at the end of a period:
In a job-order costing system, the amount of overhead cost that has been applied to a job that remains incomplete at the end of a period:
A....
When applying manufacturing overhead to jobs, the formula to calculate the amount is as follows:
When applying manufacturing overhead to jobs, the formula to calculate the amount is as follows:
A. Predetermined overhead rate divided by the...
Which of the following accounts is debited when indirect labor is recorded?
Which of the following accounts is debited when indirect labor is recorded?
A. Work in Process
B. Salaries and Wages Expense
C. Salaries and...
In a job-order costing system, the entry to record depreciation on manufacturing equipment would include:
In a job-order costing system, the entry to record depreciation on manufacturing equipment would include:
A. a debit to the Work in Process...
In a job-order costing system, direct labor costs usually are recorded initially with a debit to:
In a job-order costing system, direct labor costs usually are recorded initially with a debit to:
A. Manufacturing Overhead.
B. Finished Goods...
In a job-order costing system, the use of indirect materials would usually be recorded as a debit to:
In a job-order costing system, the use of indirect materials would usually be recorded as a debit to:
A. Raw Materials.
B. Work in Process.
C....
In a job-order costing system, the journal entry to record the application of overhead cost to jobs would include:
In a job-order costing system, the journal entry to record the application of overhead cost to jobs would include:
A. a credit to the Manufacturing...
Choice of allocation base should be made based on:
Choice of allocation base should be made based on:
A. the relative size of the base.
B. the base's relation to direct labor.
C. the base's activity.
D....
Which of the following documents is used to specify the type and quantity of materials drawn from the storeroom, and identifies the job to which the costs of the materials are to be charged?
Which of the following documents is used to specify the type and quantity of materials drawn from the storeroom, and identifies the job to which the...
In job-order costing, all of the following statements are correct with respect to labor time and cost except:
In job-order costing, all of the following statements are correct with respect to labor time and cost except:
A. time tickets are kept by employees...
For which situation(s) below would an organization be more likely to use a job-order costing system of accumulating product costs rather than a process costing system?
For which situation(s) below would an organization be more likely to use a job-order costing system of accumulating product costs rather than a process...
Which of the following companies would be most likely to use a job-order costing system rather than a process costing system?
Which of the following companies would be most likely to use a job-order costing system rather than a process costing system?
A. fast food restaurant
B....
Which of the following situations is most likely to explain a net operating asset turnover that is higher than the industry norm?
Which of the following situations is most likely to explain a net operating asset turnover that is higher than the industry norm?
A. The company...
Which of the following situations is most likely to explain an accounts receivable turnover that is lower than the industry norm?
Which of the following situations is most likely to explain an accounts receivable turnover that is lower than the industry norm?
A. The company...
Which of the following statements about the return on shareholders' investment (ROSI) is correct?
Which of the following statements about the return on shareholders' investment (ROSI) is correct?
A. If book value of equity is less than market...
Which of the following statements about the equity growth rate is correct?
Which of the following statements about the equity growth rate is correct?
I. the higher the ROCE the higher equity growth rate, all other things...
Which of the following statements about the relationship between RNOA and ROCE is correct?
Which of the following statements about the relationship between RNOA and ROCE is correct?
A. ROCE is always greater than RNOA
B. ROCE is greater...
Purchases divided by accounts payable provides information about:
Purchases divided by accounts payable provides information about:
A. capital structure
B. management of working capital
C. gross profit margin
D....
When considering the difference between the return on net operating assets (RNOA) and return on common shareholders' equity (ROCE), which of the following statements is incorrect?
When considering the difference between the return on net operating assets (RNOA) and return on common shareholders' equity (ROCE), which of the following...
Cost of goods sold divided by inventory provides information about (choose one answer):
Cost of goods sold divided by inventory provides information about (choose one answer):
A. profitability
B. capital structure
C. management...
If Yutter's dividend payout ratio increased to 50% after year 1 then:
If Yutter's dividend payout ratio increased to 50% after year 1 then:
A. the sustainable equity growth rate would increase
B. the return on...
What is the value of Yutter's stock at the end of Year 1 using the dividend discount model assuming that the dividend payout ratio remains constant and Yutter grows at its sustainable equity growth rate?
What is the value of Yutter's stock at the end of Year 1 using the dividend discount model assuming that the dividend payout ratio remains constant...
Return on operating assets is a measure of which of the following?
Return on operating assets is a measure of which of the following?
A. Profitability
B. Efficiency
C. Solvency
D. Liquidity
Answer:...
Which of the following is the best measure of operating efficiency?
Which of the following is the best measure of operating efficiency?
A. Return on net operating assets
B. Return on equity
C. Return on sales
D....
Which of the following would explain an observed decrease in return on equity, all else equal?
Which of the following would explain an observed decrease in return on equity, all else equal?
A. Decrease in tax rate
B. Increase in interest...
An increase in net operating income (NOPAT) will cause which of the following?
An increase in net operating income (NOPAT) will cause which of the following?
A. Increase in the return on net operating assets
B. Decrease...
Which of the following will increase the sustainable equity growth of a company, all other things equal?
Which of the following will increase the sustainable equity growth of a company, all other things equal?
A. Increase dividend payout
B. Pay...
Which of the following statements is correct concerning changes from year 1 to year 2 at Tricrop?
Which of the following statements is correct concerning changes from year 1 to year 2 at Tricrop?
A. Despite favorable changes in the tax rate...
When calculating return on net operating assets, interest expense net of tax is added back to net income for purposes of calculating the numerator. What tax rate should be used?
When calculating return on net operating assets, interest expense net of tax is added back to net income for purposes of calculating the numerator....
Eyster Corporation reported $10M in earnings and paid dividends of $3M for fiscal 2005.Return on equity and dividend payout are expected to remain constant for the foreseeable future. Net book value at the end of fiscal 2004 was 100M. Cost of equity is 10%. Using the residual income method, the intrinsic value of Eyster's stock at the end of 2005 should be:
Eyster Corporation reported $10M in earnings and paid dividends of $3M for fiscal 2005.Return on equity and dividend payout are expected to remain constant...
Which of the following could cause the return on net operating assets to increase, all things other equal?
Which of the following could cause the return on net operating assets to increase, all things other equal?
A. A decrease in interest rate on...
Err Company has a major lawsuit against them for unsafe products. It recognizes a huge liability in 2004 of $300M. The effect of this liability is to decrease stockholders' equity by 50%. In 2005, the effect of recognizing this liability, all else equal, is:
Err Company has a major lawsuit against them for unsafe products. It recognizes a huge liability in 2004 of $300M. The effect of this liability is to...
Which of the following could explain a decrease in net operating asset turnover for a company?
Which of the following could explain a decrease in net operating asset turnover for a company?
A. Switching from straight line to accelerated...
Which of the following statements is correct?
Which of the following statements is correct?
A. Net operating profit margin divided by net operating asset turnover equals return on net operating...
Which of the following ratios best measures the profitability of a company?
Which of the following ratios best measures the profitability of a company?
A. Return on equity
B. Gross margin
C. Current ratio
D. Net operating...
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