Managerial acct exam 3

Question 1

is the process of planning future business actions and expressing them as formal plans.

Answer 1

Budgeting

Question 2

What is an example of a benefit of budgeting

Answer 2

1. Focuses on future opportunities and threats to the organization. Makes management devote time to plan for the future.
2. Control function requires management to evaluate (benchmark) business operations against some norm.
3. Helps coordinate activities so all employees and departments understand and work towards company’s overall goals.
4. Written budget effectively communicate management’s specific action plans to all employees. Informal communication of business plans can create uncertainty and confusion.
5. Budgets can be used to motivate employees. Provide goals to attain or exceed.

Question 3

Which of the following are necessary components of the master budget:

• operating budgets
• historical income statement
• budgeted balance sheet
• prior sales reports
• capital expenditures budget
• financial budget
• sales budget
• operating budget
• historical financial budget

Answer 3

everything besides:
prior
hist

Question 4

We use what to schedule cash payments

Answer 4

direct materials budget and beg bal sheet

Question 5

What is the usual starting point for preparing a master budget

Answer 5

forecasting sales

Question 6

A plan that lists dollar amounts to be recieved from disposin of plant assets and dollar amounts to be spent on purchasing additional plant assets

Answer 6

capital expenditure budget

Question 7

Preset costs for delivering a product or service under normal conditions

Answer 7

standard costs

Question 8

the difference between actual price per unit of iput and standard price per unit of input results in

Answer 8

price variance

Question 9

an analytical technique used by management to focus attention on the most significant variances and give less attention to the areas where performance is reasonable close to standard is

Answer 9

management by exception

Question 10

Static budget is another name for

Answer 10

master budget

Question 11

Actual sales< Budgeted sales

Answer 11

unfavorable vairance

Question 12

Actual sales> budgeted sales

Answer 12

favorable

Question 13

an expense that is readily traced to a department bc it is incurred for that dept sole benefit

Answer 13

direct expense

Question 14

Costs that the manager has the power to determine of affect

Answer 14

controllable costs

Question 15

When preparing a departmental income statement, what steps should we take?

Answer 15

1. identify direct expenses
2. Allocate indirect expenses
3. Allocate service department expenses

Question 16

What is least likely to be considered in preparing a sales budget

Answer 16

capital expenditures budget

Question 17

Incurs costs without directly generating revenues

Answer 17

cost center

Question 18

generates revenues and incurs costs

Answer 18

profit center

Question 19

generates revenues and incurs costs, and its manager is also responsible for the investments made in its operating assets

Answer 19

investment center

Question 20

What does a responsibility performance report list?

Answer 20

actual expenses that a manger is responsible for and their budgeted amounts

Question 21

What type of budgeting does responsibility acct use?

Answer 21

flexible budgeting

Question 22

Which isn't an ex of a cost center?
research dept at microsoft
juice division at coca cola
accounting dept at Warner
advertising dept at Hertz
purchasing dept at best buy

Answer 22

juice

Question 23

regardless of the system in departmental cost analysis

Answer 23

indirect costs are allocated, direct costs are not

Question 24

A challenge in calculating the total costs and expenses of a dept is

Answer 24

allocating indirect expenses to the dept

Question 25

The most useful data for evaluation of a managers cost performance is based on

Answer 25

controllable costs

Question 26

As volume increases, ____ stays the same

Answer 26

fixed overhead

Question 27

When there is a favorable variance what does the journal entry look like?

Answer 27

credit to COGS

Question 28

When there is a unfavorable variance what does the journal entry look like?

Answer 28

debit COGS

Question 29

if there’s a variance in direct materials who should we go to?

Answer 29

purchasing manager

Question 30

if theres a labor variance who should we go to?

Answer 30

production supervisor

Question 31

how do we close factory overhead?

Answer 31

in COGS

Question 32

two parts of fixed overhead

Answer 32

spending variance and volume variance

Question 33

2 parts of variable overhead

Answer 33

spending variance and efficiency variance

Question 34

Rent and utilities are ex of what?

Answer 34

unavoidable costs

Question 35

direct expenses are traced directly to

Answer 35

a department and incurred for their benefit

Question 36

indirect expenses are the costs incurred for

Answer 36

the join benefit; not traced to only 1 dept

Question 37

If contribution margin exceeds avoidable costs it causes income to

Answer 37

decrease

Question 38

Budget that a company continually revises as time passes; revise the old budget by adding a new quarterly budget to place the quarter that just elapsed

Answer 38

rolling budget

Question 39

Operating budget is made up of

Answer 39

sales budget, production budgets, and general admin budget

Question 40

What budget shows number of units to be produced in a period. Is based on the budgeted unit sales in the sales budget and inventory considerations.

Answer 40

production budget

Question 41

Which of the following is not a step in creating operating departmental income statements

prepare the depart income statement
eliminate the uncontrollable costs
allocate service depart expenses
accumulate rev and direct expenses by dept
allocate indirect expenses

Answer 41

eliminate uncontrollable costs

Question 42

actual expenses>budgeted expenses

Answer 42

unfavorable

Question 43

actual expenses

Answer 43

favorable