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Question;Chapter;15;Planning;and control: budgeting;1.Which of the following is not an essential;feature of a budget?;(a);There is a clearly defined budget period.;(b);It is a combination of financial and non-financial data set by reference to key;budget;assumptions.;(c);It permits managers flexibility in terms of the policies that should be pursued;to meet corporate;objectives.;(d);It has been formally approved and accepted as realistic by managers.;2.Amaster budget comprises;(a);A budgeted balance sheet.;(b);A budgeted balance sheet and profit and loss account.;(c);A budgeted balance sheet, profit and loss account and cash flow statement.;(d);A budgeted balance sheet, profit and loss account, cash flow statement based;upon coordinated;departmental;operating budgets.;3.A flexible budget is;(a);One where departmental functional managers are given discretion over the;application of;spending;limits.;(b);One where the budget is permitted to alter to reflect changes in activity;levels.;(c);One where managers are given discretion as to the investigations which are;carried out into;variances;revealed by budgetary control reports.;(d);One which allows departmental managers to design their own budgetary control;reports.;4.;In a manufacturing company, which of the budgets will normally be prepared;first in the budget;preparation;cycle?;(a);The stock budget.;(b);The production budget.;(c);The cash flow forecast.;(d);The sales budget.;5.The administration of the budget process;in a large organization is normally the responsibility of;(a);The board of directors.;(b);The audit committee.;(c);The chief executive.;(d);A budget committee working in conjunction with the finance function.;6.Which of the following statements is;valid;(a);The Budget Committee should set the budgets for cost centre managers.;(b);Cost centre managers should prepare their own budgets.;(c);Management accountants should prepare budgets for cost centre managers.;(d);Senior management should prepare cost centre budgets.;Chapter;16;Planning;and control: standard costing;1.A standard cost which will be most useful;for control purposes is one which;(a);Contains no allowances for normal losses or other forms of wastage.;(b);Is set in advance of the control period and which then remains unchanged.;(c);Contains a reasonable degree of allowances for operating inefficiencies.;(d);Managers are expected to achieve at all times.;2.Direct material total variances can be;analysed into;(a);Efficiency and price variances.;(b);Price and productivity variances.;(c);Price and usage variances.;(d);Efficiency and usage variances.;3.XYZ Ltd uses standard costing.Variance;analysis has revealed an adverse total direct material variance;at;the end of an operating period.Which of the following combinations of factors;is the most;likely;reason for the adverse variance?;(a);Price reductions and lower wastage.;(b);Price increases and greater wastage.;(c);Employing less skilled workers to lower labour costs.;(d);Over estimation of the material cost built into the standard cost.;4.Which of the following statements would be;a valid explanation of a favourable direct labour rate;variance?;(a);The standard cost overestimated a national wage agreement settlement for the production;operatives;in the factory.;(b);The standard labour time per unit was overstated as it failed to incorporate;production efficiencies;made;possible by new machinery.;(c);There was a cost saving as a result of a strike in the factory during the year.;(d);The standard cost did not take into account changes in the product;specification which meant;that;in practice, less time per unit was needed for assembly.;Chapter;17;Decision;making: contribution analysis;1.A variable cost is?;(a);One which varies in proportion to the level of fixed cost incurred.;(b);One which tends to vary with the level of activity.;(c);One which changes over time.;(d);One which cannot be estimated with any great degree of accuracy.;2.The term ?contribution? refers to?;(a);The actual amount of profit made per unit.;(b);The budgeted profit per unit.;(c);The amount of profit which goes towards meeting the overheads of the business.;(d);The difference between sales revenue and variable costs per unit.;3.The break-even point is that at which;(a);The level of activity at which the business operates most economically.;(b);The level of activity at which the business makes neither a profit nor a loss.;(c);The fixed costs are lowest.;(d);The variable cost per unit is minimized.;4.When a business is faced with a limiting;factor (one which limits the activity of an entity) and there;is;a choice to be made between options to follow, which of the following;statements describes the;optimal;course of action?;(a);Choose the option which gives the highest unit profit.;(b);Choose the option which gives the highest unit contribution.;(c);Aim to achieve a balance of activities covering all of the options.;(d);Choose the option which gives highest contribution per unit of limiting factor.;5.XYZ Ltd has the following alternative;planned activity levels;Level;A Level B Level C;Total;costs ?100 000 ?150 000 ?200 000;Number;of units produced 5 000 10 000 15 000;(Fixed;overhead remains constant over the activity range shown.);The;fixed overhead cost per unit is;(a);?20.;(b);?15.;(c);?13.33.;(d);?10.;6.Which of the following statements;regarding marginal costing is incorrect?;(a);It is a useful long-term planning technique.;(b);It assumes that fixed costs remain fixed over relevant activity ranges.;(c);It assumes that other costs vary in proportion to activity.;(d);It assumes that costs can be classified as variable or fixed.

 

Paper#44992 | Written in 18-Jul-2015

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