Final Exam

Question 1

Is prepared before the period begins and is valid for only the planned level of activity

Answer 1

Planning budget

Question 2

suitable for planning but is inappropriate for evaluating how well costs are controlled.

Answer 2

static planning

Question 3

estimate of what revenues and costs should have been, given the actual activity of the period

Answer 3

flexible budget

Question 4

Shows the variance solely based off of the differences in activity from the begging of the period to the end of the period

Answer 4

Activity varience

Question 5

the difference between the actual total revenue and what the total revenue should have been, given the actual level of activity for the period.

Answer 5

Revenue varience

Question 6

difference between the actual amount of cost and how much a cost should have been, given the amount of activity for that period

Answer 6

spending varience

Question 7

Actual results - flexible budget

Answer 7

revenue and spending variences

Question 8

Flexible budget - planning budget

Answer 8

Activity variences

Question 9

defines the amount of direct material that should be used for each unit of finished product, including an allowance for normal inefficiencies, such as scrap and spoilage.

Answer 9

Standard quantity per unit

Question 10

defines the price that should be paid for each unit of direct materials and it should reflect the final, delivered cost of those materials.

Answer 10

Standard price per unit

Question 11

measures the difference between an inputs actual price and its standard price, multiplied by the actual quantity puchased

Answer 11

materials price variance

Question 12

measures the difference between the actual quantity of materials used in production and the standard quantity of materials allowed for the actual output, multiplied by the standard price per unity of materials

Answer 12

materials quantity variance

Question 13

measures the difference between the actual hourly rate and the standard hourly rate, multiplied by the actual number of hours worked during the period

Answer 13

labor rate variance

Question 14

measures the difference between the actual hours used and the standard hours allowed for the actual output, multiplied by the standard hourly rate

Answer 14

labor efficiency variance

Question 15

Actual quantity(Actual price - Standard Price)

Answer 15

Materials price variance

Question 16

Standard price(Actual quantity - Standard Quantity)

Answer 16

Materials quantity variance

Question 17

Actual hours(Actual rate - Standard rate)

Answer 17

labor rate variance

Question 18

Standard rate(Actual hours - Standard hours)

Answer 18

labor efficiency variance

Question 19

has control over costs, but not over revenue or the use of investment funds. service departments such as accounting, finance, general administration, legal, and personnel are usually classified as these

Answer 19

Cost center

Question 20

Has control over cost and revenue, but not over the use of investment funds. these managers are often evaluated by comparing actual profit to targeted or budgeted profit

Answer 20

Revenue center

Question 21

Has control over cost, revenue, and investment funds. Often evaluated using the return on investment or residual income

Answer 21

Investment center

Question 22

Return on investment, Margin, Turnover, Residual income

Answer 22

Performance measures

Question 23

Net operating income/average operating assets

Answer 23

Return on investment

Question 24

the higher a business segments return of investment the greater the profit earned per dollar invested in the segments operating assets

Answer 24

ROI

Question 25

include cash, accounts receivable, inventory, plant and equipment, and all other assets held for operating purpose

Answer 25

operating assets

Question 26

Net operating income - (average operating assets X minimum required rate of return)

Answer 26

Residual income

Question 27

the net operating income that an investment center earns above the minimum required return on its operating assets

Answer 27

Residual income

Question 28

value added time (process time)/throughput (manufacturing cycle) time

Answer 28

Manufacturing cycle efficiency

Question 29

process time + inspection time + move time + queue time

Answer 29

throughput time

Question 30

process time

Answer 30

value added time

Question 31

will not change from the result of a management decision

Answer 31

irrelevant cost

Question 32

The potential benefit that is given up when one alternative is selected over another

Answer 32

opportunity cost

Question 33

a cost that has already been incurred and cannot be avoided regardless of what the manager does

Answer 33

sunk cost

Question 34

investment required/annual net cash inflow

if depreciation occurs has to be added to the net income to get the annual net cash flow

Answer 34

payback period

Question 35

investment required/annual net cash inflow

then find on the table

Answer 35

Factor of the internal rate of return

Question 36

involves analyzing financial data over time, such as computing year to year dollar and percentage changes within a set of financial statements

Answer 36

Horizontal analysis

Question 37

focuses on the relations among financial statement accounts at a given point in time.

Answer 37

vertical analysis

Question 38

sales on account/average accounts receivable balance

Answer 38

accounts receivable turnover

Question 39

365/accounts receivable turnover

Answer 39

average collection period

Question 40

costs of goods sold/average inventory balance

Answer 40

inventory turnover

Question 41

365/inventory tunrover

Answer 41

average sale period

Question 42

average sale period + average collection period

Answer 42

operating cycle

Question 43

sales/average total assets

Answer 43

total asset turnover