13)
A static budget:
7 Points
- should be compared to a flexible budget to assess how costs were controlled.
- is the most effective way to display spending standards.
- is valid for only one level of activity.
- should be compared to standard costs to assess how costs were controlled.
14)
If variable overhead costs change in proportion to the change in direct labor, the variable overhead efficiency variance would primarily be the responsibility of:
7 Points
- the production manager.
- the factory foreman.
- the chief executive officer.
- the human resources manager.
15)
An activity-based flexible budget:
7 Points
- is the prediction of what activity costs will be as related output changes.
- may use more than one driver.
- can be used to reduce cost through the elimination of wasteful activities.
- All of the answers are correct.
16)
Speedy Company has established a flexible budget for manufacturing overhead costs based on direct labor hours. Budgeted costs for 100,000 direct labor hours are as follows:
Variable costs (total)
Packing supplies: $140,000
Indirect labor: $180,000
Fixed costs (total)
Utilities: $100,000
Rent: $40,000
Insurance: $20,000
The flexible budget for factory overhead would show the variable overhead per direct labor hour is:
7 Points
- $3.20.
- $1.80.
- $3.80.
- $4.80.
17)
Speedy Company has established a flexible budget for manufacturing overhead costs based on direct labor hours. Budgeted costs for 100,000 direct labor hours are as follows:
Variable costs (total)
Packing supplies: $140,000
Indirect labor: $180,000
Fixed costs (total)
Utilities: $100,000
Rent: $40,000
Insurance: $20,000
In an activity level of 70,000 direct labor hours, the flexible budget would show the budgeted amount for utilities is:
7 Points
- $100,000.
- $160,000.
- $ 70,000.
- $140,000.
18)
Speedy Company has established a flexible budget for manufacturing overhead costs based on direct labor hours. Budgeted costs for 100,000 direct labor hours are as follows:
Variable costs (total)
Packing supplies: $140,000
Indirect labor: $180,000
Fixed costs (total)
Utilities: $100,000
Rent: $40,000
Insurance: $20,000
If Speedy Company plans to operate at 90,000 direct labor hours during the next period, the flexible budget would show indirect labor costs of:
7 Points
- $180,000.
- $288,000.
- $126,000.
- $162,000.
19)
Decentralization is:
7 Points
- a practice that is not recommended.
- the practice of delegating authority to lower-level managers.
- the practice of allowing lower-level managers to participate in the budget.
- allowing lower-level managers to implement decisions made by top management.
20)
A center where a manager is responsible only for sales is called:
7 Points
- a cost center.
- a profit center.
- an investment center.
- a revenue center.
21)
Which of the following is not a transfer pricing policy?
7 Points
- Cost-based price
- Negotiated price
- Exchange price
- Market price
