KA2e_SelfStudy_Ch21

# KA2e_SelfStudy_Ch21 - File:ch21,Chapter21: MultipleChoice 1. a) b) c)usingstaticbudgets d)

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File: ch21, Chapter 21: Budgetary Control and Responsibility Accounting Multiple Choice 1. Budgetary control involves all but one of the following: a) modifying future plans. b) analyzing differences. c) using static budgets. d) determining differences between actual and planned results. Ans: c Response A: Modifying future plans is part of budgetary control. Response B: Analyzing differences between actual results and planned results is part of budgetary control. Response C: Correct! Budgetary control involves the use of flexible, not static budgets, because flexible budgets provide the ability to make comparisons between different levels of activity, not just one level. Response D: Determining differences between actual results and planned results is part of budgetary control. 2. A static budget is useful in controlling costs when cost behavior is: a) mixed. b) fixed. c) variable. d) linear. Ans: b Response A: A static budget is useful for controlling fixed, not mixed, costs. Response B: Correct! A static budget is useful for controlling fixed costs. Response C: A static budget is useful for controlling fixed, not variable costs. Response D: A static budget is useful for controlling fixed, not linear costs. 3. At zero direct labor hours in a flexible budget graph, the total budgeted cost line intersects the vertical axis at \$30,000. At 10,000 direct labor hours, a horizontal line drawn from the total budgeted cost line intersects the vertical axis at \$90,000. Fixed and variable costs may be expressed as: a) \$30,000 fixed plus \$6 per direct labor hour variable. b) \$30,000 fixed plus \$9 per direct labor hour variable. c) \$60,000 fixed plus \$3 per direct labor hour variable. d) \$60,000 fixed plus \$6 per direct labor hour variable. Ans: a Response A: Correct! The intersection point of \$90,000 is total budgeted costs, or budgeted fixed costs plus budgeted variable costs. Total variable costs are \$60,000 [\$90,000 (Total costs) - \$30,000 (Fixed costs)]. Total variable costs (\$60,000) divided by total direct labor hours (10,000) gives the variable cost per unit of \$6 per direct labor hour (\$60,000/10,000 = \$6 per direct labor hour). Response B: The intersection point of \$90,000 is total budgeted costs, or budgeted fixed costs plus budgeted variable costs. Total variable costs are \$60,000 [\$90,000 (Total costs) - \$30,000 (Fixed costs)]. Total variable costs (\$60,000) divided by total direct labor hours (10,000) gives the variable cost per unit of \$6 per direct labor hour (\$60,000/10,000 = \$6 per direct labor hour). Response C: The intersection point of \$90,000 is total budgeted costs, or budgeted fixed costs plus

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## This note was uploaded on 04/22/2009 for the course BCOR 2000 taught by Professor Brush during the Spring '07 term at Colorado.

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KA2e_SelfStudy_Ch21 - File:ch21,Chapter21: MultipleChoice 1. a) b) c)usingstaticbudgets d)

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