Chapter 8
Factors that can affect pricing decisions include all the following except ...
A) cost considerations B) environment
C) pricing objectives D) All of the above
D) All of the above
The starting point in preparing a master budget is the preparation of the
a) production budget b) sales budget
c) purchasing budget d) personnel budget
b) sales budget
On the basis of the budget reports
a) management analyzes differences between actual and planned results
b) management may take corrective action
c) management may modify the future plans
d) all of these answers are correct
d) all of these answers are correct
a) pounds b) barrels c) dollars d) board feet
c) dollars
a) planning
b) directing
c) motivating
d) controlling
a) planning
Target cost is comprised of ...
A) variable and fixed manufacturing costs only
B) variable manufacturing and selling and admin. only
C) total manufacturing and selling and admin costs
D) Fixed manufacturing and selling and admin only
C) total manufacturing and selling and admin costs
Why are budgets useful in the planning process?
a) it facikitates the coordination of activities
b) it provides definite objectives for evaluating performance
c) it provides assurance that the company will achieve its objectives
d) it requires all levels of management to plan ahead on a recurring basis
c) it provides assurance that the company will achieve its objectives
A static budget
a)should not be prepared
b)is useful in evaluating a manager's performance by comparing actual variable costs and planned variable costs
c) shows planned results at the original budgeted activity level
d) is changed only if the actual level of activity is different than originally budgeted
c) shows planned results at the original budgeted activity level
The most rigorous of all standards is the
a) normal standard
b) realistic standard
c) ideal standard
d) conceivable standard
c) ideal standard
When budgeted and actual results are not the same amount, there is a budget
a) error
b) difference/variance
c) anomaly
d) by-product
b) difference/variance
Bryson Company had just developed a new product. The following data is available for this porduct
Desired ROI $30
Fixed cost per unit $50
Variable cost per unit $75
Total costs per unit $125
The target selling price for this product is
A) $155 B) $125
C) $105 D) $80
A) $155
The financing section of a cash budget is needed if there is a cash deficiency or if the ending cash balance is less than
a) the prior years
b) management's minimum required balance
c) the amount needed to avoid a service charge at the bank
d) the industry average
b) management's minimum required balance
Which of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budget?
a) direct materials costs
b)direct labor costs
c) variable manufacturing overhead
d) fixed manufacturing overhead
d) fixed manufacturing overhead
Which of the following statements is false?
a) a standard cost is more accurate than a budgeted cost
b) a standard is a unit amount
c) in concept, standards and budgets are essentially the same
d) the standard cost of a product is equivalent to the budgeted cost per unit of product.
a) a standard cost is more accurate than a budgeted cost
When is a variance considered to be 'material'?
a) when it is large compared to the actual cost
b) when it is infrequent
c) when it is unfavorable
d) when it could have been controlled more effectively
a) when it is large compared to the actual cost
In time-and-material pricing, the charge for a particular job is the sum of the labor charge and the ...
A) materials charge B) materials loading charge
C) materials charge + desired profit
D) materials charge + material loading charge
D) materials charge + material loading charge
The following information was taken from Southgate Industry's cash budget for the month of July:
Beg. cash balance $480,000
Cash receipts $304,000
Cash disbursements $544,000
If the company has a policy of maintaining a minimum end of the month cash balance of $400,000, the amount the company will have to borrow is
a) $160,000 b) $80,000
c) $240,000 d) $96,000
a) $160,000
Management by exception
a) causes managers to be buried under voluminous paperwork
b)means that all differences will be investigated
c)means that only unfavorable differences will be investigated
d)means that material differences will be investigatd
d)means that material differences will be investigatd
The standard rate of pay is $20 per direct labor hour. If the actual direct labor payroll was $117,600 for 6,000 direct labor hours worked, the direct labor price (rate) variance is
a) $2400 U b) 2400 F c) 3000 U d) 3000 F
(AH x AR) - (AH x SR)
b) 2400 F
The per-unit standards for direct materials are 2 gallons at $4 per gallon. Last month, 11,200 gallons of direct materials that actually cost $42,400 were used to produce 6,000 units of product. The direct materials quantity variance for last month was
a) $3,200 F
b)$2,400 F
c) $3,200 U
d) $5,600 U
a) $3,200 F
Custom Shoes Co. had gathered the following info. concerning one model of shoe
Var. manuf. cost $40,000
Var. Sell and admin cost $20,000
Fixed manuf. costs $160,000
Fixed Sell and admin cost $120,000
Investment $1,700,000
ROI 30%
Planned production and sales 5,000 pairs
What is the total cost per pair of shoes?
A) $40 B) $68 C) $168 D) $96
B)$68
A company has budget direct materials purchases of $300,000 in July and $480,000 in August. The company pays 70% of its purchases in the month of purchase and 30% in the next month. During August, the following items were budgeted:
Wages expense $150,000
Purchase of office equipment 72,000
Selling and admins. expense 48,000
Depreciation expense 36,000
The budgeted cash disbursements for August are
a) $648,000 b) $426,000c) $696,000
Best Shingle's budgeted manufacturing costs for 50,000 squares of shingles are:
fixed manufacturing costs $12,000
variable manufacturing costs $16.00 per square
Best produced 40,000 squares of shingles during March. How much are budgeted total manufacturing costs in March?
a) $640,000 b) $812,000
c)$800,000 d) $652,000
d) $652,000
,Monster Company produces a product requiring 3 direct labor hours at $16.00 per hour. During January, 2,000 products are produced using 6,300 direct labor hours. Monster's actual payroll during January was $98,280.
What is the labor quantity variance?b) $2,520 F d) $4,800 U
d) $4,800 U
Well, Water Inc. wants to produce and sell new flavored water. In order to penetrate the market, the product will have to sell at $2.00 per 12 oz. bottle. The following data has been collected:
Annual sales 50,000 bottles
Projected selling and admin. $8,000
Desired profit $70,000
The target cost per bottle is
a) 0.44
b) 0.60
c) 0.16
d)0.40
b) 0.60