ACC561 ACC/561 WEEK 5 QUIZ (SCORE 12/12)

Question 1

Why are budgets useful in the planning process?

They enable the budget committee to earn their paycheck.

They provide management with information about the company's past performance.

They help communicate goals and provide a basis for evaluation.

They guarantee the company will be profitable if it meets its objectives.

Question 2

A common starting point in the budgeting process is

past performance.

a clean slate, with no expectations.

expected future net income.

to motivate the sales force.

Question 3

Which of the following statements about budget acceptance in an organization is true?

The most widely accepted budget by the organization is the one prepared by top management.

The most widely accepted budget by the organization is the one prepared by the department heads.

Budgets are hardly ever accepted by anyone except top management.

Budgets have a greater chance of acceptance if all levels of management have provided input into the budgeting process.

Question 4

What is budgetary control?

The use of budgets in controlling operations

The degree to which the CFO controls the budget

Another name for a flexible budget

The process of providing information on budget differences to lower level managers

Question 5

The comparison of differences between actual and planned results

appears on the company's external financial statements.

is done by the external auditors.

is usually done orally in departmental meetings.

appears on periodic budget reports.

Question 6

A static budget

shows planned results at the original budgeted activity level.

is changed only if the actual level of activity is different than originally budgeted.

should not be prepared in a company.

is useful in evaluating a manager's performance by comparing actual variable costs and planned variable costs.

Question 7

A responsibility report should

only be prepared at the highest level of managerial responsibility.

show only those costs that a manager can control.

only show variable costs.

be prepared in accordance with generally accepted accounting principles.

Question 8

Which responsibility centers generate both revenues and costs?

Profit and cost centers

Cost and investment centers

Investment and profit centers

Only profit centers

Question 9

The linens department of a large department store is

a cost center.

an investment center.

not a responsibility center.

a profit center.

Question 10

What is a standard cost?

The total number of units times the budgeted amount expected

The total amount that appears on the budget for product costs

Any amount that appears on a budget

The amount management thinks should be incurred to produce a good or service

Question 11

Using standard costs

makes management by exception more difficult.

makes employees less "cost-conscious."

increases clerical costs.

provides a basis for evaluating cost control.

Question 12

Unfavorable materials price and quantity variances are generally the responsibility of the

            Price                                                    Quantity

Production department                       Purchasing department

Purchasing department                       Production department

Production department                       Production department

Purchasing department                       Purchasing department