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Accounting Principles , Tenth Edition

Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

Chapter 24

Budgetary Control and Responsibility Accounting - all with Video Answers

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Chapter Questions

Problem 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.

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Problem 2

Budget reports are prepared:
a. daily.
c. monthly.
b. weekly.
d. All of the above.

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Problem 3

A production manager in a manufacturing company would most likely receive a:
a. sales report.
b. income statement.
c. scrap report.
d. shipping department overhead report.

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Problem 4

A static budget is:
a. a projection of budget data at several levels of activity within the relevant range of activity.
b. a projection of budget data at a single level of activity.
c. compared to a flexible budget in a budget report.
d. never appropriate in evaluating a manager's effectiveness in controlling costs.

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Problem 5

A static budget is useful in controlling costs when cost behavior is:
a. mixed.
c. variable.
b. fixed.
d. linear.

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01:14

Problem 6

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.

Carson Merrill
Carson Merrill
Numerade Educator

Problem 7

At 9,000 direct labor hours, the flexible budget for indirect materials is $$\$ 27,000$$. If $$\$ 28,000$$ of indirect materials costs are incurred at 9,200 direct labor hours, the flexible budget report should show the following difference for indirect materials:
a. $$\$ 1,000$$ unfavorable.
b. $$\$ 1,000$$ favorable.
c. $$\$ 400$$ favorable.
d. $$\$ 400$$ unfavorable.

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Problem 8

Under responsibility accounting, the evaluation of a manager's performance is based on matters that the manager:
a. directly controls.
b. directly and indirectly controls.
c. indirectly controls.
d. has shared responsibility for with another manager.

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Problem 9

Responsibility centers include:
a. cost centers.
b. protit centers.
c. investment centers.
d. All of the above.

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Problem 10

Responsibility reports for cost centers:
a. distinguish between fixed and variable costs
b. use static budget data.
c. include both controllable and noncontrollable costs.
d. include only controllable costs.

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Problem 11

The accounting department of a manufacturing company is an example of:
a. a cost center.
c. an investment center.
b. a profit center.
d. a contribution center.

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Problem 12

To evaluate the performance of a profit center manager, upper management needs detailed information about
a. controllable costs.
b. controllable revenues.
c. controllable costs and revenues.
d. controllable costs and revenues and average operating assets.

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Problem 13

In a responsibility report for a profit center, controllable fixed costs are deducted from contribution margin to show:
a. profit center margin.
b. controllable margin.
c. net income.
d. income from operations.

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Problem 14

In the formula for return on investment (ROI), the factors for controllable margin and operating assets are, respectively:
a. controlbble margin percentage and total operating assets. b. controllable margin dollars and average operating assets. c. controllable margin dollars and total assets
d. controllable margin percentage and average operating assets.

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Problem 15

A manager of an investment center can improve ROI by:
a. increasing average operating assets.
b. reducing sales.
c. increasing variable costs.
d. reducing variable and/or controllable fixed costs:

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