Which statement best describes an advantage of zero-based budgeting?
A.
Zerominus−based
budgeting forces managers to justify each dollar in the budget to ensure that some expenses are lower in a current year compared to what they were in previous years.
This is the correct answer.
B.
Zerominus−based
budgeting is labor intensive.
C.
Zerominus−based
budgeting is time consuming.
D.
All of the above are advantages.
Which of the following best represents how the Standard Quantity (SQ) of direct materials is computed?
A.
the Standard Quantity (SQ) of input per unit times the number of units actually made.
Your answer is correct.
B.
the budgeted quantity of units less the Standard Quantity (SQ) of units.
C.
the Standard Quantity (SQ) of input per unit times the number of units budgeted.
D.
the number of units actually made times the direct materials price standard.
The purchasing department of a company negotiates all of the purchasing contracts for raw materials. In assessing the performance of the purchasing department, which variance is the most useful?
A.
Direct materials price variance
Your answer is correct.
B.
Direct labor efficiency variance
C.
Direct materials quantity variance
D.
Direct labor rate variance
Separate sections for fixed and variable costs are usually shown under which of the following budgets?
A.
Manufacturing overhead budget and production budget
B.
Direct materials and manufacturing overhead budget
C.
Operating expenses budget and manufacturing overhead budget
Your answer is correct.
D.
Production budget and manufacturing overhead budget
The purchasing department of a company negotiates all of the purchasing contracts for raw materials. In assessing the performance of the purchasing department, which variance is the most useful?
A.
Direct materials price variance
Your answer is correct.
B.
Direct labor efficiency variance
C.
Direct materials quantity variance
D.
Direct labor rate variance
If a worker drops the raw material during production and that raw material must be discarded, then which of the following is directly impacted?
A.
Direct materials price variance
B.
Direct materials quantity variance
Your answer is correct.
C.
Direct labor efficiency variance
D.
Direct labor rate variance
Which one of the following shows how to calculate 'direct materials to purchase' on a direct materials budget?
A.
units to be produced
minus−
desired end inventory of DM + beginning inventory of DM.
B.
quantity needed for production + desired end inventory of DM
minus−
beginning inventory of DM.
Your answer is correct.
C.
quantity needed for production
minus−
desired end inventory of DM + beginning inventory DM.
D.
units to be produced + desired end inventory of DM
minus−
beginning inventory of DM.
Which of the following statements explains why managers may intentionally build slack into the budget?
A.
to gain the resources they need in the event of budget cuts.
Your answer is correct.
B.
because they are certain about the future.
C.
to make their performance look worse.
D.
to accomplish all of the above.
The ________ variance "measures how well the business keeps prices of direct labor inputs within standards."
A.
direct labor production volume
B.
direct labor overhead flexible budget
C.
direct labor rate
Your answer is correct.
D.
direct labor efficiency
An advantage to an organization that implements a budget is that...
A.
budgets help managers focus their attention on the future needs in an organization.
B.
bdgets help the manager improve the motivation of employees in the workplace.
C.
budgets help managers improve their
decisionminus−making
processes in an organization.
D.
All of the above
Which of the following is true about a rolling budget?
A.
extends
5minus−10
years into the future.
B.
is executed by upper management.
C.
begins with zero for each expense, and then amounts are added in.
D.
is continuously updated, so that the next 12 months of operations are always budgeted.
Which of the following is the type of standard that provides allowances for normal amounts of waste and inefficiency in the production process?
A.
realistic standard.
B.
practical standard.
Your answer is correct.
C.
ideal standard.
D.
perfection standard.
Of the following budgets, which one is stated only in units, not dollars?
A.
manufacturing overhead
B.
direct materials
C.
sales
D.
production
Which of the following is a possible indication of a favorable direct labor efficiency variance?
A.
lower skilled workers were paid a higher wage than expected.
B.
lower skilled workers were paid a lower wage than expected.
C.
higher skilled workers were used that performed the task faster than expected.
Your answer is correct.
D.
higher skilled workers were used that performed the task slower than expected.
Which of the following might indicate a favorable direct materials price variance and an unfavorable direct materials quantity variance?
A.
Less expensive, inferior materials requiring less than the standard amount were used in production.
B.
Less expensive, inferior materials requiring more than the standard amount were used in production.
Your answer is correct.
C.
More expensive, superior materials requiring less than the standard amount were used in production.
D.
More expensive, superior materials requiring more than the standard amount were used in production.
A(n) ________ is a carefully predetermined cost that is usually expressed on a per unit basis.
A.
flexible cost
B.
allocated cost
C.
standard cost
Your answer is correct.
D.
applied cost
When preparing components of the master budget, which of the following alternatives represents the proper order?
1. Production budget
2. Sales budget
3. Direct materials budget
A.
2, 3, 1
B.
1, 3, 2
C.
2, 1, 3
Your answer is correct.
D.
3, 1, 2
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