B2 - Techniques for forecasting, budgeting, and analysis

Question 1

A management accountant performs a linear regression of mainenance cost vs. production using a computer spreadsheet. The regression output shos intercept value of $322,897. How should the accountant interpret this information?

Answer 1

Y has a value of $322,897 when X equals zero

Question 2

Which of the following forecasting methods relies mostly on judgement? Economic models, regression, delphi, time-series models

Answer 2

Delphi - The delphi method of forecasting involves the use of multiple teams in geographically remote locations. Information is shared and gathered in a central point and compiled and then redistributed for comment. The method is highly interpersonal and requires significant judgement.

Question 3

Multiple regression differs from simple regression in that it:

Answer 3

has more independent variables

Question 4

Which type of budget is the last budget to be produced during the budgeting process? COGS, Cash, Marketing, or Capital?

Answer 4

CASH
The annual business plan process typically begins w/ op budgets that are driven by sales budgets that, in turn, provide the required v ariables for production, selling, and personnel budgets. Financial budgets including pro forma F/S and cash budgets come at the endd of the process and are prepared last. Cash budgets are typically derived from teh op budgets taht assume accrual basis assumptions s(e.g. credit sales and credit purcahses)

Question 5

What is a static budget?

Answer 5

Budgeted costs for Budgeted output. I.e. A budget based on costs at one level of output.

Question 6

A firm develops an annual cash budget in order to:

a. balance the noncash activities of the company
b. avoid the opportunity costs of noninvested excess cash and minimize the cost of interim financing
c. ascertain which capital expenditure projects are feasible and which capital expenditure projects should be deferred
d. support the preparateion of its cash flow statement for the annual report

Answer 6

b

Question 7

Which of the following is a characteristic of a flexible budget?

a. isolates the impact of variable costs on the overall budget
b. can be utilized by several product divisions
c. allows for modification during the budgeted period
d. provides budgeted numbers for various activity levels

Answer 7

D

Question 8

which of the following budgets provides information for preparation of the owner’s equity section of a budgeted balance sheet?
Capital expenditures budget, sales budget, budgeted income statement, cash budget

Answer 8

Budgeted income statement

It produces anticipated accrual basis net income or loss and is added to beginning owner’s equity to generate the owner’s equity section of the budgeted balance sheet.

Question 9

Which of the following is a disadvantage of participative budgeting?
decreases acceptance, decreases motivation, is more time consuming, is less accurate

Answer 9

It is more time consuming