Strayer ACC556 CHAPTER 22 EXERCISE Latest 2019 April Question # 00601713 Course Code : ACC556 Subject: Business Due on: 05/27/2019 Posted On: 05/27/2019 12:09 PM Tutorials: 1 Rating: 4.7/5

ACC556 Financial Accounting for Managers

CHAPTER 22 EXERCISE

Question 1 Management
by exception means that management will investigate areas where actual results
differ from planned results if the items are material and controllable.

Answers:

True

False

Question 2 Budget
reports provide the feedback needed by management to see whether actual
operations are on course.

Answers:

True

False

Question 3 The
manager of an investment center can improve ROI by reducing average operating
assets.

Answers:

True

False

Question 4 What
is budgetary control?

Answers:

Another
name for a flexible budget

The degree
to which the CFO controls the budget

The use of budgets in controlling operations

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

Question 5 What
is the primary difference between a static budget and a flexible budget?

Answers:

The static
budget contains only fixed costs, while the flexible budget contains only
variable costs.

The static budget is prepared for a single
level of activity, while a flexible budget is adjusted for different activity
levels.

The static
budget is constructed using input from only upper level management, while a
flexible budget obtains input from all levels of management.

The static
budget is prepared only for units produced, while a flexible budget reflects
the number of units sold.

Question 6 If
a company plans to sell 48,000 units of product but sells 60,000, the most appropriate
comparison of the cost data associated with the sales will be by a budget based
on

Answers:

the
original planned level of activity.

54,000
units of activity.

60,000 units of activity.

48,000
units of activity.

Question 7 Nikoto
Steel Co. budgeted manufacturing costs for 50,000 tons of steel are:

Fixed
manufacturing costs $50,000
per month

Variable
manufacturing costs $12.00 per ton
of steel

Nikoto
produced 40,000 tons of steel during March. How much is the flexible budget for
total manufacturing costs for March?

Selected
Answer:

$530,000

Answers:

$520,000

$650,000

$480,000

$530,000

Question 8 At
18,000 direct labor hours, the flexible budget for indirect materials is
$36,000. If $37,400 are incurred at 18,400 direct labor hours, the flexible
budget report should show the following difference for indirect materials:

Answers:

$1,400
unfavorable.

$1,400
favorable.

$600
favorable.

$600 unfavorable.

Question 9 Given
below is an excerpt from a management performance report:

Budget
Actual Difference

Contribution
margin
$600,000
$580,000 $20,000 U

Controllable
fixed costs $200,000 $220,000 $20,000 U

The
manager’s overall performance

Answers:

is 10%
above expectations.

is 10%
below expectations.

is equal to
expectations.

cannot be
determined from the information provided.

Question 10
Bogey Co. recorded operating data for its Cheap division for the year. Bogey
requires its return to be 10%.

Sales $ 1,400,000

Controllable
margin
160,000

Total
average assets
4,000,000

Fixed
costs 100,000

What is the
ROI for the year?

Answers:

4%

35%

6%

1.5%

Question 11
A measure frequently used to evaluate the performance of the manager of an
investment center is

Answers:

the amount
of profit generated.

the rate of return on funds invested in the
center.

the
percentage increase in profit over the previous year.

departmental
gross profit.

Question 12
What is the goal of residual income?

Answers:

To maximize
the amount of costs which are controllable

To maximize
profits

To maximize the total amount of residual
income

To maximize
controllable margin

Question 13
Match the items below by entering the appropriate code letter in the space
provided.

The use of budgets to control operations.		Budgetary control
A projection of budget data at one level of activity.		Static budget
A projection of budget data for various levels of activity.		Flexible budget
A part of management accounting that involves accumulating and reporting revenues and costs on the basis of the individual manager who has the authority to make the day-to-day decisions about the items.		Responsibility accounting
Costs that a manager has the authority to incur within a given period of time.		Controllable costs
The review of budget reports by top management directed entirely or primarily to differences between actual results and planned objectives.		Management by exception
The preparation of reports for each level of responsibility shown in the company’s organization chart.		Responsibility reporting system
A measure of the profitability of an investment center computed by dividing controllable margin (in dollars) by average operating assets.		Return on Investment
A responsibility center that incurs costs and also generates revenues.		Profit center
A responsibility center that incurs costs, generates revenues, and has control over the investment funds available for use.		Investment center
Costs which are incurred for the benefit of more than one profit center.		Indirect fixed costs
Costs that relate specifically to a responsibility center and are incurred for the sole benefit of the center.		Direct fixed costs