20 MCQ's

1. A sales forecast is _____.
 a. a prediction of sales under a given set of conditions
 b. the result of decisions to create conditions
 c. the same as a sales budget that will generate a desired level of sales
 d. all of these answers are correct

2. Which of the following is not a major benefit of budgeting?
 a. Budgeting compels managers to think ahead.
b. Budgeting provides definite expectations that are the best framework for judging subsequent performance.
c. Budgeting aids managers in coordinating their efforts so the objectives of the organization as a whole match the objectives of its parts.
 d. Budgeting allows managers to operate day-to-day, reacting to current events rather than planning for the future.

3. Preparing the master budget begins by establishing _____.
 a. a targeted balance sheet
 b. a targeted income statement
 c. the expected cash
 d. the expected sales

4. Financial planning models _____.
 a. focus on the budgeted balance sheet
 b. allow managers to assess the predicted impacts of various alternatives before final decisions are selected
 c. attempt to answer “How come?” questions
 d. are extremely accurate, thus lessening the need for management judgment

1. A variance is the difference between _____.
a. a budgeted amount and a benchmark amount
b. the required number of inputs for the number of outputs
c. an actual result and a budgeted amount
d. a budgeted amount and a standard amount

2. Efficiency is indicated by _____.
a.  sales-activity variances
b. static-budget variances
c. flexible-budget variances
d. all of these answers are correct

3.  Flexible budgets help to measure the _____.
a. differences between projected and actual activity levels
b. efficiency of operations at the actual activity level
c. amount by which standard quantity and expected prices differ
d. reasons why projected activity levels were not attained

4  Identify which of the following statements about "perfection standards" is true.
a. It is generally believed that they have a negative influence on employee morale.
b. They are expressions of the most efficient performance possible.
c. They usually result in unfavorable variances.
d. All of these answers are correct.

1. Identify which of the following is not a characteristic of a management control system.
a. A management control system aids and coordinates the process of making decisions.
b. A management control system encourages short term profitability.
c. A management control system motivates individuals throughout the organization to act in concert.
d. A management control system coordinates forecasting sales and cost driver activities, budgeting, and measuring and evaluating performance.

2.  Identify which of the following statements regarding responsibility centers is false.
a. Responsibility centers usually have one objective.
b. Management control systems monitor responsibility center objectives.
c. Responsibility centers are usually classified according to their financial
responsibility.
d. Cost centers, profit centers, and investments centers are all examples of responsibility centers.
  
3. A management control system must _____ to achieve maximum benefits at minimum cost.
a. look at the short term only
b. motivate managers with quarterly bonuses based on performance
c. foster goal congruence and managerial effort
d. be the same as the financial accounting system

4.  An uncontrollable cost _____.
a. should be ignored in evaluating the responsibility center manager's performance
b. is influenced by a manager's decisions and actions
c. tells a great deal about a manager’s decision-making abilities
d. is the same as a sunk cost

1. Improvements in the production process are examples of _____cost.
a. prevention
b. appraisal
c. internal failure
d. external failure

2. Identify which of the following statements is a benefit of decentralization.
a. Top level managers have the best information concerning local conditions.
b. Managers acquire decision making ability and other management skills that help them move upward in the organization, assuring continuity of leadership.
c. Managers make decisions that enhance their segment’s performance.
d. Managers save time dealing with managers from other segments regarding transfer prices.

3. Reciprocal services are services provided by a service department to _____.
a. a producing department
b. another service department
c. external customers
d. all of these answers are correct.

4.Costs are accumulated in traditional and ABC systems by _____.
a. activities and organizational units, respectively
b. organizational units and activities, respectively
c. activities and activities, respectively
d. organizational units and organizational units, respectively

1.   _____ is not a cost driver representing an “ability to bear” philosophy.
 a.  Revenue of each division
 b. Cost of goods sold by each division
 c. Total cost before central cost allocation in later division
 d. Usage

2. _____ is least likely to be a cost driver as a basis for applying overhead costs.
 a. Direct-labor cost
 b. Indirect labor hours
 c. Machine hours 
 d. Production setups

3.  The excess of actual overhead over the overhead applied to products is called _____.
 a. over applied overhead
 b. under applied overhead
 c. overestimated overhead
 d. prorated overhead

4. _____ is (are) used for external reporting.
 a. Absorption costing
 b. Variable costing
 c. Direct costing
 d. Absorption costing and variable costing