ACCT 434 Week 2 Quiz

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ACCT 434 Week 2 Quiz

1.Question :(TCO 2) If initial budgets prove unacceptable, planners achieve the MOST benefit from
Student Answer: planning again in light of feedback and current conditions.
 deciding not to budget this year.
 accepting an unbalanced budget.
 using last year’s budget.

 

Question 2.Question :(TCO 2) The time coverage of a budget should be
Student Answer: shorter rather than longer.
 cover design through manufacture and sale of the product.
 guided by the purpose of the budget.
 one year.

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Question 3.Question :(TCO 2) Financial budgets include the
Student Answer: administrative costs budget.
 capital expenditures budget.
 production budget.
 marketing costs budget.

 

Question 4.Question :(TCO 2) A flexible budget
Student Answer: provides favorable operating results.
 is based on the budgeted level of output.
 is developed at the end of the period.
 is another name for management by exception.

 

Question 5.Question :(TCO 2) A favorable variance indicates that
Student Answer: budgeted costs are less than actual costs.
 actual revenues exceed budgeted revenues.
 the actual amount decreased operating income relative to the budgeted amount.
 All of the above

 

Question 6.Question :(TCO 2) Performance evaluation using variance analysis should guard against
Student Answer: emphasis on a single performance measure.
 emphasis on total company objectives.
 basing effect of a manager’s action on total costs of the company as a whole.
 highlighting individual aspects of performance.

 

Question 7.Question :(TCO 2) Fixed overhead costs include
Student Answer: the cost of sales commissions.
 property taxes paid on plant facilities.
 indirect materials.
 energy costs.

 

Question 8.Question :(TCO 2) Katie Enterprises reports the year-end information from 20X8 as follows: Sales (70,000 units) $560,000; Cost of goods sold 210,000; Gross margin 350,000; Operating expenses 200,000; Operating income $150,000.  Katie is developing the 20X2 budget.  In 20X2, the company would like to increase selling prices by 4%, and as a result expects a decrease in sales volume of 10%.  All other operating expenses are expected to remain constant.  Assume that COGS is a variable cost and that operating expenses are a fixed cost.  What is budgeted cost of goods sold for 20X2?
Student Answer: $189,000
 $196,560
 $218,400
 $210,000

 

Question 9.Question :(TCO 2) Hester Company budgets on an annual basis for its fiscal year.  The following beginning and ending inventory levels (in units) are planned for the fiscal year of July 1, 20×2, through June 30, 20×3.

July 1, 20×2                   June 30, 20×3
Raw material (note)               40,000                          10,000
Work in process                      8,000                            8,000
Finished goods                       30,000                           5,000
(note) Three units of raw material are needed to produce each unit of finished product.

If Hester Company plans to sell 600,000 units during the 20×2-20×3 fiscal year, the number of units it would have to manufacture during the year would be

Student Answer: 625,000.
 575,000.
 540,000.
 640,000.

 

Question 10.Question :(TCO 2) Information pertaining to Brenton Corporation’s sales revenue is presented in the following table:

February              March               April

Cash Sales             $160,000             $150,000           $120,000
Credit Sales             300,000               400,000             280,000
Total Sales         $460,000             $550,000            $400,000

Management estimates that 5% of credit sales are not collectible.  Of the credit sales that are collectible, 60% are collected in the month of sale and the remainder in the month following the sale.  Cost of purchases of inventory each month are 70% of the next month’s projected total sales.  ll purchases of inventory are on account; 25% are paid in the month of purchase, and the remainder is paid in the month following the purchase.

Brenton’s budgeted total cash receipts in March are

Student Answer: $478,000.
 $457,000.
 $492,000.
 $428,000.

 

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