1 POINT
2 POINTS
3 POINTS
4 POINTS
5 POINTS
BUDGETING
1 POINT 1 POINT 1 POINT 1 POINT
4 POINTS
3 POINTS
2 POINTS2 POINTS
3 POINTS
2 POINTS
5 POINTS
2 POINTS
3 POINTS
4 POINTS
5 POINTS
4 POINTS
3 POINTS
4 POINTS
5 POINTS5 POINTS
COSTALLOCATION
& ABC
DIFFERENTIALANALYSIS
DECENTRALIZEDOPERATIONSVARIANCES
THIS TYPE OF BUDGETING MAINTAINS A 12 MONTH PROJECTION INTO THE
FUTURE
1 POINT
WHAT IS CONTINUOUS BUDGETING?
ONCE A BUDGET HAS BEEN CREATED, THE TASK OF CO-ORDINATING OPERATIONS TO ACHIEVE THE
BUDGET’S GOALS FALLS WITHIN THIS STEP OF THE MANAGEMENT CYCLE –
LIGHTS, CAMERA, ACTION!
2 POINTS
WHAT IS DIRECTING?
THIS BUDGETARY APPROACH REQUIRES MANAGERS TO ESTIMATE
SALES, PRODUCTION, AND OTHER OPERATING DATA AS THOUGH
OPERATIONS WERE BEING STARTED FOR THE FIRST TIME
3 POINTS
WHAT IS ZERO-BASED BUDGETING?
OF THE FOLLOWING, WHICH IS NOT A TYPE OF BUDGET DISCUSSED IN THE
CHAPTER?
• COST OF GOODS SOLD BUDGET• PRODUCTION BUDGET• VARIANCE BUDGET• DIRECT MATERIALS BUDGET• DIRECT LABOR BUDGET• FACTORY OVERHEAD BUDGET
4 POINTS
WHAT IS A VARIANCE BUDGET?
GIVEN THE FOLLOWING, THE AMOUNT OF CASH EXPECTED TO BE COLLECTED IN FEBRUARY:
ACME PRODUCTS HAS THE FOLLOWING BUDGETED SALES FOR THE FIRST QUARTER, 2009:
JANUARY FEBRUARY MARCH
$1,000,000 $1,200,000 $900,000
10% OF EACH MONTH’S SALES ARE FOR CASH. OF THE REMAINING SALES, 60% ARE COLLECTED IN THE MONTH OF SALE, AND THE REMAINDER IN THE MONTH AFTER.
5 POINTS
WHAT IS $1,128,000?
FEBRUARY CASH SALES $1,200,000 * 10% $120,000
FEBRUARY CREDIT SALES COLLECTIONS$1,200,000 * 90% * 60% $648,000
JANUARY CREDIT SALES COLLECTIONS$1,000,000 * 90% * 40% $360,000
$1,128,000
THE VARIANCE COMPUTED BY THE FORMULA:
(ACTUAL PRICE – STANDARD PRICE) * ACTUAL QUANTITY
1 POINT
WHAT IS THE DIRECT MATERIALS PRICE
VARIANCE?
DAILY DOUBLE!
THE TERM USED FOR ACCOUNTING SYSTEMS THAT USE PERFORMANCE
GOALS FOR DIRECT MATERIALS, DIRECT LABOR, AND FACTORY
OVERHEAD
2 POINTS
WHAT ARE STANDARD COST SYSTEMS?
THE TERM USED FOR STANDARDS THAT ARE ACHIEVED UNDER PERFECT OPERATING CONDITIONS – FOR
EXAMPLE, NO MATERIALS SPOILAGE, NO IDLE TIME, NO BREAKDOWNS
3 POINTS
WHAT ARE IDEAL STANDARDS?
THE TERM USED WHEN A COMPANY MEASURES RESULTS SUCH AS
CUSTOMER SATISFACTION
4 POINTS
WHAT IS NON-FINANCIAL PERFORMANCE MEASURE?
GIVEN THE FOLLOWING, THE AMOUNT (AND DIRECTION) OF THE FACTORY OVERHEAD VOLUME
VARIANCE, GIVEN THAT FACTORY OVERHEAD IS APPLIED BASED ON DIRECT LABOR HOURS:
ACTUAL COSTS:VARIABLE FACTORY OVERHEAD $10,400FIXED FACTORY OVERHEAD $12,000
STANDARD FIXED OVERHEAD RATE $2.40/dlhSTANDARD VARIABLE OVERHEAD RATE $3.60/dlh
100% OF NORMAL CAPACITY 5,000 dlhSTANDARD HRS @ ACTUAL PRODUCTION 4,000 dlh
5 POINTS
WHAT IS $2,400 U?
100% OF NORMAL CAPACITY 5,000 dlhSTANDARD HRS @ ACTUAL PROD 4,000 dlhCAPACITY NOT USED 1,000 dlhSTANDARD FIXED OVERHEAD RATE * 2.40 / dlhVOLUME VARIANCE $2,400 U
IN THIS TYPE OF RESPONSIBILITY CENTER, THE MANAGER ONLY HAS THE RESPONSIBILITY AND AUTHORITY FOR CONTROLLING THE COSTS INCURRED
1 POINT
WHAT IS A COST CENTER?
IN A PROFIT CENTER, THE RESPONSIBLE MANAGER’S
PERFORMANCE REPORT INCLUDES NOT ONLY REVENUES AND OPERATING
EXPENSES, BUT CHARGES FROM THESE INTERNAL ORGANIZATIONS
2 POINTS
WHAT ARE SERVICE DEPARTMENTS?
IN AN INVESTMENT CENTER, THE RESPONSIBLE MANAGER IS
RESPONSIBLE FOR PROFITS, COSTS, AND THESE BALANCE SHEET ITEMS
3 POINTS
WHAT ARE ASSETS?
THE ANALYSIS FOR RETURN ON INVESTMENT CAN BE EXPANDED VIA A FORMULA, NAMED FOR THIS COMPANY
THAT DEVELOPED NYLON IN 1935
4 POINTS
WHAT IS DuPONT?
THE NAMES OF THE TWO RATIOS IN THE EXPANDED ROI FORMULA
5 POINTS
WHAT ARE PROFIT MARGIN AND INVESTMENT TURNOVER?
THIS TYPE OF COST IS NOT RELEVANT IN DIFFERENTIAL ANALYSIS, AND
SOUNDS LIKE IT BELONGS IN A GAME OF “BATTLESHIP”
1 POINT
WHAT IS A SUNK COST?
WHEN SETTING NORMAL PRODUCT SELLING PRICES, COMPANIES CAN
CHOOSE BETWEEN COST-PLUS METHODS AND THESE?
2 POINTS
WHAT ARE MARKET METHODS?
IN THIS COST-PLUS METHOD, ONLY THE COSTS OF MANUFACTURING ARE
INCLUDED IN THE COST AMOUNT TO WHICH THE MARKUP IS APPLIED
3 POINTS
WHAT IS THE PRODUCT COST CONCEPT?
DAILY DOUBLE!
THE TERM USED FOR THE AMOUNT OF INCOME FOREGONE FROM AN ALTERNATIVE USE OF AN ASSET
4 POINTS
WHAT IS OPPORTUNITY COST?
THE PRODUCT WHICH WILL MAXIMIZE INCOME UNDER THE FOLLOWING SCENARIO:
STUDGEYSER BREWING MAKES THREE FERMENTED BEVERAGES: RED RIBBON, STALE ALE, AND COLT .47
THE FERMENTING PROCESS HAS LIMITED CAPACITY AND QUALIFIES AS A BOTTLENECK.
RED RIBBON STALE ALE COLT .47
SALES PRICE $20 $15 $30VARIABLE COST $10 $ 8 $15HOURS IN THEFERMENTER 5 7 10
5 POINTS
WHAT IS RED RIBBON?
RED RIBBON STALE ALE COLT .47
SALES PRICE $20 $15 $30VARIABLE COST $10 $ 8 $15CONT. MARGIN $10 $ 7 $15HOURS IN THEFERMENTER ÷ 5 ÷7 ÷10
CM PER BOTTLE-NECK HOUR$2 $1 $1.50
THE THREE FACTORY OVERHEAD ALLOCATION METHODS ARE ACTIVITY-BASED COSTING, A SINGLE PLANTWIDE
RATE, AND THIS
1 POINT
WHAT IS MULTIPLE PRODUCTION DEPARTMENT
RATE?
TERM USED FOR THE TYPE OF COSTING SYSTEM USED TO DETERMINE
THE PROFITABILITY OF A MANUFACTURED ITEM
2 POINTS
WHAT IS PRODUCT COSTING?
USING A MULTIPLE PRODUCTION DEPARTMENT OR ACTIVITY-
BASED COSTING RATE HELPS PREVENT THIS FROM OCCURRING
3 POINTS
WHAT IS DISTORTING THE PRODUCT COST (AND
ULTIMATELY THE SELLING PRICE)?
WHEN USING ACTIVITY-BASED COSTING, FACTORY OVERHEAD
COSTS ARE GROUPED TOGETHER IN THESE
4 POINTS
WHAT ARE ACTIVITY POOLS?
THE SINGLE PLANT-WIDE FACTORY OVERHEAD RATE FOR THE FOLLWING SCENARIO:
ACTIVE ADULTS, INC. MAKES THREE PRODUCTS: ADULT DIAPERS, ADULT NUTRITION DRINK, AND WALKERS. BUDGETED FACTORY OVERHEAD IS $156,800, AND OVERHEAD IS APPLIED BASED ON DIRECT LABOR HOURS. FOLLOWING ARE THE BUDGETED PRODUCTION VOLUMES AND DLH PER UNIT:
VOLUME DLH/UNITDIAPERS 2,800 UNITS 0.6DRINK 700 1.8WALKERS 1,400 1.4
5 POINTS
WHAT IS $32/DLH?
DIAPERS 2,800 * 0.6 = 1,680DRINK 700 * 1.8 = 1,260WALKERS 1,400 * 1.4 = 1,960TOTAL DLH 4,900
FACTORY OVERHEAD RATE:
$156,800 ÷ 4,900 DLH = $32/DLH
CATEGORY:
DIFFERENTIAL ANALYSIS AND ACTIVITY-BASED
COSTING
MAKE YOUR WAGER!
ANSWER:
THE COSTING METHOD THAT COMBINES MARKET-BASED
PRICING WITH A COST-REDUCTION EMPHASIS
QUESTION
WHAT IS TARGET COSTING?
Top Related