Theory Questions Flashcards
A manager, who is responsible for costs where the relationship between costs and outputs isn’t easy to specify, is given a budget for total costs with instructions not to exceed it; For which kind of a responsibility center is this typical?
For discretionary cost centers.
Wanneer ervaar je autonome motivatie op je werk? (deze vraag heeft betrekking op het gastcollege over Management Control)
Wanneer je in je werk keuzevrijheid en leuke contacten hebt en kunt doen waar je goed in bent.
Which of the following is an advantage of participative budgeting?
Employees are more motivated because they are more involved in the process.
A scarcity of raw materials makes it difficult to estimate the availability of materials for production. What is in this situation the most reasonable forecast with which to start the master budget for a manufacturing company?
A forecast of purchasing and production
What is an advantage of using multiple measures of performance, instead of a single measure of performance?
This gives a better control by middle or top management.
A balanced scorecard shows measures of performance as they relate to areas of performanc. Which of the following is a measure of performance of the internal business process?
Process cycle time.
Which of the following points does not relate to designing a new cost system for managerial purposes?
Only the most accurate method should be considered.
When a company has a manufacturing plant producing many different products with highly skilled and experienced employees, what is probably the most appropriate basis of applying overhead costs to products?
Direct labor costs.
In computing its predetermined overhead rate which is based on total direct costs, Red Company unintentionally left its direct labor costs out of the computation. Before allocating over- or underapplied Overhead, this mistake will cause:
the ending balance in Work-in-Process to be overstated.
Which of the following organizations would most likely use a job costing system?
Custom-made yacht builder.
Of the following process costing steps, which must be done last?
Assign product costs to batches of work.
When using process costing, the FIFO method provides an advantage over the weighted-average method in that:
the FIFO method provides measurements of work done during the current period.
Which of the following is a weakness of the direct method of service department cost allocations?
All interdepartmental services (between service departments) are ignored.
A favorable materials price variance coupled with an unfavorable materials usage variance would most likely result from:
the purchase of lower-than-standard-quality materials.
What is the purpose of the flexible budget?
To compare actual and budgeted results at virtually any level of production.
Which kind of organization unit is established when managers are held responsible for costs but the input-output relationship is not well specified?
discretionary cost center
What is the main purpose of a Management Control System:
aligning operational execution with company strategy.
Which of the following statements concerning budgeting is true?
Many organizations start with a sales forecast and then plan the activities over which they have more control.
What is a key element in budgeting within service organizations?
Staffing.
What is an advantage of using multiple measures of performance, instead of a single measure of performance?
This gives a better control by middle or top management.
The goal of a shopping mall for furniture is to have no accidents, especially, those which cause harm to customers or employees. To what Balanced Scorecard-perspective does this belong?
Internal processes
A company is considering the use of a single-stage cost allocation process.
Under what conditions would this choice be justified?
The company produces a few products with similar characteristics in a few departments.
When a company has a manufacturing plant producing many different products with relatively many low educated employees, what is probably the most appropriate basis of applying overhead costs to products?
Direct labor hours.
In computing its predetermined overhead rate which is based on total direct costs, Copy-Paste Company unintentionally left a part of its indirect material costs out of the computation. Before allocating over- or underapplied Overhead, this mistake will cause:
the Cost of Goods Manufactured to be understated.
Which of the following organizations would most likely use a job costing system?
Law firm.
Of the following process costing steps, which must be done first?
Measure the physical flow of resources.
When using process costing, the FIFO method provides an advantage over the weighted-average method in that:
the FIFO method provides measurements of work done during the current period.
Which of the following is a weakness of the step method of service department cost allocations?
The order of service department allocation has to be determined.
Which of the following is most likely to occur when a manufacturer faces more waste due to poor quality materials?
An unfavorable efficiency variance
What variances apply to variable overhead?
Price Variances and Efficiency Variances
The main purpose of a Management Control System is to:
more closely align manager and organization goals.
What sort of center are accounting, advertising, and other administrative departments generally considered to be?
Discretionary cost centre
Which of the following is the wright word for a (financial) plan of an organization as a whole for the coming year?
Master budget
Many companies begin preparing the budget with the sales budget because, mostly, sales are most:
uncertain.
Which performance measure is suitable for an employee of a clothing shop?
Customer satisfaction
The goal of a manufacturer is to improve productivity. To what Balanced Scorecard-perspective does this belong?
Internal processes.
With which of the following accounting measures will the calculation of the Return on Investment be constant (assuming that all financial numbers stay the same)?
Current cost gross book value
In which of the following situations is it necessary to choose among possible allocation bases?
When there is no direct relation between activity and overhead cost that is economically realizable to measure.
When a manufacturing company uses a combination of highly skilled staff and less skilled staff for manufacturing different products, what is probably the most appropriate basis of applying overhead costs to work-in-process?
Direct labor dollars.
A company should use process costing, rather than job order costing, if:
the product is composed of mass-produced homogeneous units.
Which of the following organizations would most likely use a process costing system?
Gasoline refinery.
The computation of equivalent units under the FIFO method:
treats units in the beginning work-in-process inventory as if they represent a batch of goods separate and distinct from
goods started and completed during the current period.
Which of the following is a weakness of the reciprocal method of service cost allocations?
Computations are more complex.
When should goods be sold at the split-off point, rather than processed further?
If the sales value at split-off is higher than the sales value after processing, less additional processing costs.
An unfavorable materials price variance would most likely result from:
higher transportation costs for purchases.
Which of these variances is least significant for cost control?
Production volume variance.
