Hoppy corporation compares monthly

ACC 251 Intro to Managerial Accounting Chapters 9 through 12 Test Due Monday, December 11, 2017

Name___________________________________

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

1) A major weakness of flexible budgets is that: A) they ignore fixed costs. B) they are valid for only a single level of activity. C) they compare actual costs at one level of activity to budgeted costs at a different level of

activity. D) none of these is a major weakness of flexible budgets.

2) Comparing actual results to a budget based on the actual activity for the period is possible with the use of a:

A) master budget. B) monthly budget. C) rolling budget. D) flexible budget.

3) A static planning budget is: A) used only for fixed costs. B) used when the mix of products does not change. C) a budget that ignores inflation. D) a budget for a single level of activity.

Bobe Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $44,580 per month plus $2,390 per flight plus $8 per passenger. The company expected its activity in May to be 68 flights and 211 passengers, but the actual activity was 71 flights and 210 passengers. The actual cost for plane operating costs in May was $215,140.

4) The plane operating costs in the planning budget for May would be closest to: A) $206,050 B) $215,140 C) $215,950 D) $208,788

5) Hoppy Corporation compares monthly operating results to a static budget prepared at the beginning of the month. When the actual level of activity is less than budgeted, which of the following would be true?

A) Fixed costs would show unfavorable variances. B) Variable costs would show favorable variances. C) Variable costs would show unfavorable variances. D) Fixed costs would show favorable variances.

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6) Which of the following comparisons best isolates the impact that changes in operating efficiency have on performance?

A) static planning budget and actual results B) master budget and static planning budget C) static planning budget and flexible budget D) flexible budget and actual results

7) Paradiso Medical Clinic measures its activity in terms of patient-visits. Last month, the budgeted level of activity was 1,060 patient-visits and the actual level of activity was 1,050 patient-visits. The cost formula for administrative expenses is $3.00 per patient-visit plus $17,000 per month. The actual administrative expense was $19,300. In the clinic's flexible budget performance report for last month, the spending variance for administrative expenses was:

A) $220 U B) $850 F C) $30 F D) $880 F

Hairston Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During November, the company budgeted for 7,700 units, but its actual level of activity was 7,720 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for November:

Data used in budgeting:

Actual results for November:

8) The selling and administrative expenses in the planning budget for November would be closest to: A) $21,104 B) $22,140 C) $22,144 D) $21,049

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Vanderhyde Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During May, the kennel budgeted for 3,300 tenant-days, but its actual level of activity was 3,340 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:

Data used in budgeting:

Actual results for May:

9) The administrative expenses in the planning budget for May would be closest to: A) $7,792 B) $8,136 C) $7,886 D) $8,120

10) Biggs Enterprise's flexible budget cost formula for indirect materials, a variable cost, is $0.60 per unit of output. If the company's performance report for last month shows a $200 favorable spending variance for indirect materials and if 9,000 units of output were produced last month, then the actual costs incurred for indirect materials for the month must have been:

A) $5,400 B) $6,000 C) $5,200 D) $5,600

11) The variance that is usually most useful in assessing the performance of the purchasing department manager is:

A) the labor rate variance. B) the labor efficiency variance. C) the materials quantity variance. D) the materials price variance.

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12) Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the labor efficiency variance is unfavorable, the variable overhead efficiency variance will be:

A) either favorable or unfavorable. B) unfavorable. C) zero. D) favorable.

13) The following labor standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

What is the labor rate variance for the month? A) $2,877 F B) $4,246 U C) $1,295 F D) $4,246 F

14) Which of the following would produce a materials price variance? A) An excess number of direct labor-hours worked in completing a job. B) Shipping materials to the plant by air freight rather than by truck. C) An excess quantity of materials used. D) Breakage of materials in production.

15) Poor quality materials could have an unfavorable effect on which of the following variances?

A) Option A B) Option B C) Option C D) Option D

16) Which of the following would produce a labor rate variance? A) Use of persons with high hourly wage rates in tasks that call for low hourly wage rates. B) An unfavorable variable overhead rate variance. C) Excessive number of hours worked in completing a job. D) Poor quality materials causing breakage and work interruptions.

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17) In a company's standard costing system direct labor-hours are used as the base for applying variable manufacturing overhead costs. The standard direct labor rate is twice the variable overhead rate. Last period the labor efficiency variance was unfavorable. From this information one can conclude that last period the variable overhead efficiency variance was:

A) favorable and twice the labor efficiency variance. B) unfavorable and half the labor efficiency variance. C) favorable and half the labor efficiency variance. D) unfavorable and twice the labor efficiency variance.

18) At Cady Corporation, maintenance is a variable overhead cost that is based on machine-hours. The performance report for June showed that actual maintenance costs totaled $9,600 and that the associated rate variance was $400 unfavorable. If 8,000 machine-hours were actually worked during June, the standard maintenance cost per machine-hour was:

A) $1.20 per MH B) $1.30 per MH C) $1.15 per MH D) $1.25 per MH

19) During a recent lengthy strike at Morell Manufacturing Company, management replaced striking assembly line workers with office workers. The assembly line workers had been paid $18 per hour while the office workers are only paid $10 per hour. What is the most likely effect on the labor variances in the first month of this strike?

A) Option A B) Option B C) Option C D) Option D

20) A quantity of a particular raw material was purchased for $43,250. The standard cost of the material was $2.00 per kilogram and there was an unfavorable materials price variance of $3,250. How many kilograms were purchased?

A) 20,000 B) 23,250 C) 24,875 D) 21,625

21) Throughput Time consists of: A) Inspection Time and Move Time. B) Process Time, Inspection Time, and Move Time. C) Process Time. D) Process Time, Inspection Time, Move Time, and Queue Time.

22) Manufacturing Cycle Efficiency (MCE) is computed as: A) Process Time ÷ Delivery Cycle Time. B) Throughput Time ÷ Delivery Cycle Time. C) Value-Added Time ÷ Delivery-Cycle Time. D) Value-Added Time ÷ Throughput Time.

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23) Fruchter Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below:

The throughput time was: A) 11.0 hours B) 37.4 hours C) 4.6 hours D) 32.8 hours

24) Contribution income statements are used to measure the performance of: A) both cost centers and investment centers. B) both profit centers and investment centers. C) both cost centers and profit centers. D) cost centers.

25) A company that is seeking to increase ROI should attempt to decrease: A) margin. B) sales. C) average operating assets. D) turnover.

26) Consider the following three conditions:

I. An increase in sales II. An increase in operating assets III. A reduction in expenses

Which of the above conditions provide a way in which a manager can improve return on investment? A) Only I and II B) Only I C) Only I and III D) Only II and III

27) Net operating income is defined as: A) net income plus interest and taxes. B) sales minus variable expenses and traceable fixed expenses. C) sales minus variable expenses. D) contribution margin minus traceable and common fixed expenses.

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28) Which of the following would be an argument for the use of net book value in the computation of operating assets in return on investment calculations?

A) It eliminates both age of equipment and method of depreciation as factors in ROI computations.

B) It is consistent with how plant and equipment items are reported on the balance sheet. C) It allows ROI to decrease over time as assets get older. D) It allows the manager to replace old, worn-out equipment with a minimum adverse impact on

ROI.

29) Managerial performance can be measured in many different ways including return on investment (ROI) and residual income. A good reason for using residual income instead of ROI is:

A) Managers are more likely to accept projects that are beneficial to the company. B) ROI does not take into account both turnover and margin. C) A minimum rate of return does not have to be specified when the residual income approach is

used. D) Residual income can be computed without having to measure operating assets.

30) Which of the following performance measures will decrease if the minimum required rate of return increases?

A) Option A B) Option B C) Option C D) Option D

31) Residual income: A) will always be greater than zero. B) is the return on investment (ROI) percentage multiplied by average operating assets. C) is the net operating income earned above a certain minimum required return on average

operating assets. D) is the net operating income earned above a certain minimum required return on sales.