Chapter 22 Quiz Question 1 Budget reports comparing actual results with planned objectives should be prepared only once a year. Question 2 A static budget is changed only when actual activity is different from the level of activity expected. Question 3 Management by exception means that management will investigate areas where actual results differ from planned results if the items are material and controllable. Question 4 Budget reports provide the feedback needed by management to see whether actual operations are on course. Question 5 The manager of an investment center can improve ROI by reducing average operating assets. Question 6 What is budgetary control? Question 7 A static budget is appropriate in evaluating a manager’s performance if Question 8 What is the primary difference between a static budget and a flexible budget? Question 9 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 Question 10 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? Question 11 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 Question 12 Top management can control Question 13 A manager of a cost center is evaluated mainly on Question 14 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 Question 15 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? Question 16 A measure frequently used to evaluate the performance of the manager of an investment center is Question 17 What is the goal of residual income? Question 18 Which of the following would not be considered an aspect of budgetary control? Question 19 All of the following statements are correct about management by exception except it Question 20 Match the items below by entering the appropriate code letter in the space provided.
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