All of the following are advantages of decentralizationexcept:
to improve customer relations.
to encourage use of expert knowledge.
to increase employee motivation.
to allow goal congruence to be achieved more easily.
All of the following are responsibility centersexcept:
profit centers.
investment centers.
customer centers.
cost centers.
3. Thedifferences between actual and budgeted figures are known as:
fluctuations.
variances.
overages.
underages.
4. Which of thefollowing is a performance measure commonly used to assess theperformance of investment centers?
Return on investment
Profit margin
Current ratio
Gross income
5. Residualincome is calculated as:
revenues less expenses.
contribution margin less minimum acceptable income.
operating income less minimum acceptable income.
sales less variable costs.
6. Which of thefollowing is NOT a strategy for determining the transfer price of aproduct?
Related party discounted price
Market price
Cost or cost-plus a markup
Negotiated price
7. Employeecapabilities, information system capabilities, and the companyâsâclimate for actionâ are important factors of the:
employee perspective.
customer perspective.
internal business perspective.
learning and growth perspective.
8. AssumeCucumber Company expects each division to earn an 8% target rate ofreturn. Assume the Companyâs Pickle Division had the followingresults:
Sales $24,500,000
Operatingincome 1,250,000
Totalassets 15,500,000
The Divisionâs ROI is:
8.1%.
15.8%.
5.1%.
8.0%.
Assume Ametrine Company expects each division to earn an 8%target rate of return. Assume the Companyâs Division A had thefollowing results:
Sales $24,500,000
Operatingincome 1,250,000
Totalassets 15,500,000
The Divisionâs RI is:
â$10,000.
$10,000.
â$710,000.
$710,000.
10. Which of the followingare examples of KPIs?
Average customer satisfaction ratings
Number of repeat customers
Sales revenue growth
All of the above are examples of KPIs
Which of the following is NOT an advantage of using standardcosts and variances?
Use as a performance benchmark for evaluation of actualcosts
Use as a basis for components of the master budget
Simplification of bookkeeping
Change in behavior of managers to obtain desired variances
One level of a companyâs flexible budget was prepared forproduction of 8,000 units. Total costs were $38,000 and includeddirect materials, direct labor, and variable overhead at $1.50,$2.50, and $0.50 per unit respectively. What is the total cost ofproduction of 8,500 units?
$ 2,000
$38,000
$38,250
$40,250
3. The directlabor price variance was unfavorable and much greater thananticipated. Who would be in the best position to explain why theunfavorable variance occurred?
Both the production and human resource supervisors
The production supervisor
The purchasing manager
Both the purchasing manager and production supervisor
4. A managerpurchased better quality materials for a slightly higher cost thananticipated. However, as a result, there was less spoilage thannormal. What is the effect on the price and quantity variancesrespectively?
Favorable, favorable
Favorable, unfavorable
Unfavorable, favorable
Unfavorable, unfavorable
5. Acompany uses a single raw material in its production process. Thestandard price for a unit of material is $2.00. During the monththe company purchased and used 600 units of this material at aprice of $2.25 per unit. The standard quantity required perfinished product is 2 units and during the month, the companyproduced 310 finished units. How much was the material pricevariance?
$150 favorable
$150 unfavorable
$155 favorable
$155 unfavorable
6. Acompany uses a single raw material in its production process. Thestandard price for a unit of material is $2.00. During the monththe company purchased and used 600 units of this material at aprice of $2.25 per unit. The standard quantity required perfinished product is 2 units and during the month, the companyproduced 310 finished units. How much was the material quantityvariance?
$40 favorable
$40 unfavorable
$45 favorable
$45 unfavorable
7. Acompany produced 2,200 units of output during a production processthat normally requires 2 hours of labor per unit of output. Thestandard labor rate is $16 per hour, but the company paid $15 perhour. Actual hours needed to complete the production process were4,600. How much was the labor efficiency variance?
$3,000 favorable
$3,000 unfavorable
$3,200 favorable
$3,200 unfavorable
8. Acompany produced 2,200 units of output during a production processthat normally requires 2 hours of labor per unit of output. Thestandard labor rate is $16 per hour, but the company paid $15 perhour. Actual hours needed to complete the production process were4,600. How much was the labor rate variance?
$4,400 favorable
$4,400 unfavorable
$4,600 favorable
$4,600 unfavorable
9. Which of thefollowing formulas is used to compute variable overheadrate (or spending) variance?
actual hours à (actual rate â standard rate)
standard hours allowed à (actual rate â standard rate)
actual rate à (actual hours â standard hours allowed)
standard rate à (actual hours â standard hours allowed)
10. Which of the followingis a true statement regarding fixed overhead volume variance?
If production volume is less than anticipated, then fixedoverhead has been underallocated and the fixed overhead volumevariance is favorable.
If production volume is less than anticipated, then fixedoverhead has been underallocated and the fixed overhead volumevariance is unfavorable.
If production volume is greater than anticipated, then fixedoverhead has been underallocated and the fixed overhead volumevariance is favorable.
If production volume is greater than anticipated, then fixedoverhead has been overallocated and the fixed overhead volumevariance is unfavorable.
All of the following are advantages of decentralizationexcept:
to improve customer relations.
to encourage use of expert knowledge.
to increase employee motivation.
to allow goal congruence to be achieved more easily.
All of the following are responsibility centersexcept:
profit centers.
investment centers.
customer centers.
cost centers.
3. Thedifferences between actual and budgeted figures are known as:
fluctuations.
variances.
overages.
underages.
4. Which of thefollowing is a performance measure commonly used to assess theperformance of investment centers?
Return on investment
Profit margin
Current ratio
Gross income
5. Residualincome is calculated as:
revenues less expenses.
contribution margin less minimum acceptable income.
operating income less minimum acceptable income.
sales less variable costs.
6. Which of thefollowing is NOT a strategy for determining the transfer price of aproduct?
Related party discounted price
Market price
Cost or cost-plus a markup
Negotiated price
7. Employeecapabilities, information system capabilities, and the companyâsâclimate for actionâ are important factors of the:
employee perspective.
customer perspective.
internal business perspective.
learning and growth perspective.
8. AssumeCucumber Company expects each division to earn an 8% target rate ofreturn. Assume the Companyâs Pickle Division had the followingresults:
Sales $24,500,000
Operatingincome 1,250,000
Totalassets 15,500,000
The Divisionâs ROI is:
8.1%.
15.8%.
5.1%.
8.0%.
Assume Ametrine Company expects each division to earn an 8%target rate of return. Assume the Companyâs Division A had thefollowing results:
Sales $24,500,000
Operatingincome 1,250,000
Totalassets 15,500,000
The Divisionâs RI is:
â$10,000.
$10,000.
â$710,000.
$710,000.
10. Which of the followingare examples of KPIs?
Average customer satisfaction ratings
Number of repeat customers
Sales revenue growth
All of the above are examples of KPIs
Which of the following is NOT an advantage of using standardcosts and variances?
Use as a performance benchmark for evaluation of actualcosts
Use as a basis for components of the master budget
Simplification of bookkeeping
Change in behavior of managers to obtain desired variances
One level of a companyâs flexible budget was prepared forproduction of 8,000 units. Total costs were $38,000 and includeddirect materials, direct labor, and variable overhead at $1.50,$2.50, and $0.50 per unit respectively. What is the total cost ofproduction of 8,500 units?
$ 2,000
$38,000
$38,250
$40,250
3. The directlabor price variance was unfavorable and much greater thananticipated. Who would be in the best position to explain why theunfavorable variance occurred?
Both the production and human resource supervisors
The production supervisor
The purchasing manager
Both the purchasing manager and production supervisor
4. A managerpurchased better quality materials for a slightly higher cost thananticipated. However, as a result, there was less spoilage thannormal. What is the effect on the price and quantity variancesrespectively?
Favorable, favorable
Favorable, unfavorable
Unfavorable, favorable
Unfavorable, unfavorable
5. Acompany uses a single raw material in its production process. Thestandard price for a unit of material is $2.00. During the monththe company purchased and used 600 units of this material at aprice of $2.25 per unit. The standard quantity required perfinished product is 2 units and during the month, the companyproduced 310 finished units. How much was the material pricevariance?
$150 favorable
$150 unfavorable
$155 favorable
$155 unfavorable
6. Acompany uses a single raw material in its production process. Thestandard price for a unit of material is $2.00. During the monththe company purchased and used 600 units of this material at aprice of $2.25 per unit. The standard quantity required perfinished product is 2 units and during the month, the companyproduced 310 finished units. How much was the material quantityvariance?
$40 favorable
$40 unfavorable
$45 favorable
$45 unfavorable
7. Acompany produced 2,200 units of output during a production processthat normally requires 2 hours of labor per unit of output. Thestandard labor rate is $16 per hour, but the company paid $15 perhour. Actual hours needed to complete the production process were4,600. How much was the labor efficiency variance?
$3,000 favorable
$3,000 unfavorable
$3,200 favorable
$3,200 unfavorable
8. Acompany produced 2,200 units of output during a production processthat normally requires 2 hours of labor per unit of output. Thestandard labor rate is $16 per hour, but the company paid $15 perhour. Actual hours needed to complete the production process were4,600. How much was the labor rate variance?
$4,400 favorable
$4,400 unfavorable
$4,600 favorable
$4,600 unfavorable
9. Which of thefollowing formulas is used to compute variable overheadrate (or spending) variance?
actual hours à (actual rate â standard rate)
standard hours allowed à (actual rate â standard rate)
actual rate à (actual hours â standard hours allowed)
standard rate à (actual hours â standard hours allowed)
10. Which of the followingis a true statement regarding fixed overhead volume variance?
If production volume is less than anticipated, then fixedoverhead has been underallocated and the fixed overhead volumevariance is favorable.
If production volume is less than anticipated, then fixedoverhead has been underallocated and the fixed overhead volumevariance is unfavorable.
If production volume is greater than anticipated, then fixedoverhead has been underallocated and the fixed overhead volumevariance is favorable.
If production volume is greater than anticipated, then fixedoverhead has been overallocated and the fixed overhead volumevariance is unfavorable.
