Chapter11.Flexible Budgeting and the Management of Overhead and Support Activity Costs

Chapter11.Flexible Budgeting and the Management of Overhead and Support Activity Costs

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 11: Flexible Budgeting and the Management of Overhead and Support Activity Costs MULTIPLE CHOICE QUESTIONS 1. A static budget: A. is based totally on prior year's costs. B. is based on one anticipated activity level. C. is based on a range of activity. D. is preferred over a flexible budget in the evaluation of performance. E. presents a clear measure of performance when planned activity differs from actual activity. Answer: B LO: 1 Type: RC 2. Flexible budgets reflect a company's anticipated costs based on variations in: A. activity levels. B. inflation rates. C. managers. D. anticipated capital acquisitions. E. standards. Answer: A LO: 1 Type: RC 3. A flexible budget: A. parallels a static budget with respect to format and advantages of use. B. is preferred over a static budget in the evaluation of performance. C. gives management flexibility in terms of meeting budget goals. D. can be used to compare actual and budgeted costs at various levels of activity. E. is characterized by choices "B" and "D" above. Answer: E LO: 1 Type: RC 4. Interstate Merchandising anticipated selling 29,000 units of a major product and paying sales commissions of $6 per unit. Actual sales and sales commissions totaled 31,500 units and $182,700, respectively. If the company used a static budget for performance evaluations, Interstate would report a cost variance of: A. $6,300U. B. $6,300F. C. $8,700U. D. $8,700F. E. some other amount not listed above. Answer: C LO: 1 Type: A Chapter 11 47
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
5. Main Street Merchandising anticipated selling 24,000 units of a major product and paying sales commissions of $5 per unit. Actual sales and sales commissions totaled 23,600 units and $120,360, respectively. If the company used a flexible budget for performance evaluations, Main Street would report a cost variance of: A. $360U. B. $360F. C. $2,360U. D. $2,360F. E. some other amount not listed above. Answer: C LO: 1 Type: A 6. Badger Bakeries anticipated making 17,000 fancy cakes during a recent period, requiring 14,000 hours of process time. Each hour of process time was expected to cost the firm $11. Actual activity for the period was higher than anticipated: 18,000 cakes and 15,200 hours. If each hour of process time actually cost Badger $12, what process-time variance would be disclosed on a performance report that incorporated static budgets and flexible budgets? Static Flexible A. $15,200U $15,200U B. $15,200U $28,400U C. $28,400U $15,200U D. $28,400U $28,400U E. None of the above Answer: C LO: 1 Type: A 7. Lantern Corporation recently prepared a manufacturing cost budget for an output of 50,000 units, as follows: Direct materials $100,000 Direct labor 50,000 Variable overhead 75,000 Fixed overhead 100,000 Actual units produced amounted to 60,000. Actual costs incurred were: direct materials, $110,000; direct labor, $60,000; variable overhead, $100,000; and fixed overhead, $97,000. If Lantern evaluated performance by the use of a flexible budget, a performance report would
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/22/2011 for the course ALL 101 taught by Professor Laus during the Spring '11 term at FIU.

Page1 / 35

Chapter11.Flexible Budgeting and the Management of Overhead and Support Activity Costs

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online