Académique Documents
Professionnel Documents
Culture Documents
George
ACCT. 202
Practice Exam.
1. A budget
a. is a substitute for management.
b. is an aid to management.
c. can operate or enforce itself.
d. is the responsibility of the accounting department.
12. If a company has adopted continuous budgeting, the budget will show
plans for
a. every day.
b. a full year ahead.
c. the current year and the next year.
d. at least five years.
18. The total direct labor hours required in preparing a direct labor
budget are calculated using the
a. sales forecast.
b. production budget.
c. direct materials budget.
d. sales budget.
22. In a production budget, total required units are the budgeted sales units
plus a. beginning finished goods units.
b. desired ending finished goods units.
c. desired ending finished goods units plus beginning finished goods units.
d. desired ending finished goods units minus beginning finished goods units.
Practice Exam.--Page 4
24. The production budget shows expected unit sales of 8,000. Beginning finished
goods units are 1,400. Required production units are 8,400. What are the
desired ending finished goods units?
a. 1,000.
b. 1,400.
c. 1,600.
d. 1,800.
25. The production budget shows expected unit sales are 7,500. The required
production units are 7,800. What are the beginning and desired ending
finished goods units, respectively?
Beginning Ending
Units Units
a. 750 450
b. 450 750
c. 300 750
d. 750 300
26. The production budget shows that expected unit sales are 8,000. The total
required units are 9,000. What are the required production units?
a. 1,000
b. 1, 500
c. 2,000
d. cannot be determined from the data provided.
29. If the required direct materials purchases are 6,000 pounds and the
direct materials required for production is three times the direct
materials purchases, and the beginning direct materials are three
and a half times the direct materials purchases, what are the
desired ending direct material in pounds?
a. 15,000
b. 3,000
c. 9,000
d. 6,000
30. Which of the following expenses would not appear on a Selling and
Administrative Expense Budget?
a. Sales commissions
b. Depreciation
c. Property taxes
d. Indirect labor
31. Which of the following would not appear as a fixed expense on the
Selling and Administrative Expense Budget?
a. Freight-out
b. office salaries
c. Property taxes
d. Depreciation
34. Which one of the following is not needed in preparing a production budget?
a. Budgeted unit sales
b. Budgeted raw materials
c. Beginning finished goods units
d. Ending finished goods units
35. A company budgeted unit sales of 34,000 units for January, 1999 and 40,000
units for February, 1999.The company has a policy of having an inventory of
units on hand at the end of each month equal to 30% of next month's budgeted
unit sales. If there were 10,200 units of inventory on hand on December 31,
1998, how many units should be produced in January, 1999 in order for the
company to meet its goals?
a. 35,800 units
b. 34,000 units
c. 32,200 units
d. 46,000 units
36. A company determined that the budgeted cost of producing a product is $20
per unit. On June 1, there were 12,000 units on hand, the sales department
budgeted sales of 45,000 units in June, and the company desires to have
18,000 units on hand on June 30. The budgeted cost of goods manufactured for
June would be
a. $780,000.
b. $1,140,000.
c. $900,000.
d. $1,020,000.
37. The single most important output in preparing financial budgets is the
a. sales forecast.
b. determination of the unit cost of the product.
c. cash budget.
d. budgeted income statement.
a. 1, 2, 3, 4
b. 2, 3, 1, 4
c. 2, 3, 4, 1
d. 2, 4, 1, 3
41. The following information was taken from the Sloan Company cash budget for
the month of July:
If the company has a policy of maintaining a minimum end of the month cash
balance of $50,000, the amount the company would have to borrow is
a. $20,000.
b. $10,000.
c. $30,000.
d. $12,000.
January $ 51,000
February 75,000
March 105,000
April 90,000
The company's past experience indicates that 70% of the accounts receivable
are collected in the month of sale, 20% in the month following the sale, and
8% in the second month following the sale. The anticipated cash inflow for
the month of April is
a. $92,580.
b. $84,000.
c. $90,000.
d. $88,200.
Practice Exam.--Page 8
43. A company's past experience indicates that 60% of its credit sales are
collected in the month of sale, 30% in the next month, and 5% in the second
month after the sale; the remainder is never collected. Budgeted credit
sales were:
January $60,000
February 36,000
March 90,000
51. When budgeted and actual results are not the same amount, there is a
budget
a. error.
b. difference.
c. anomaly.
d. by-product.
53. If costs are not responsive to changes in activity level, then these
costs can be best described as
a. mixed.
b. flexible.
c. variable.
d. fixed.
56. The master budget of Benedict Company shows that the planned activity level
for next year is expected to be 50,000 machine hours. At this level of
activity, the following manufacturing overhead costs are expected:
A flexible budget for a level of activity of 60,000 machine hours would show
total manufacturing overhead costs of
a. $494,000.
b. $420,000.
c. $504,000.
d. $454,000.
60. A flexible budget can be prepared for which of the following budgets
comprising the master budget?
a. Sales
b. Overhead
c. Direct materials
d. All of these
Practice Exam.--Page 11
62. If a company plans to sell 12,000 units of product but sells 16,000,
the most appropriate comparison of the cost data associated with the
sales will be by a budget based on
a. the original planned level of activity.
b. 14,000 units of activity.
c. 16,000 units of activity.
d. 12,000 units of activity.
63. Sales results that are evaluated by a static budget might show
1. favorable differences that are not justified.
2. unfavorable differences that are not justified.
a. 1
b. 2
c. both 1 and 2.
d. neither 1 nor 2.
84. Which one of the following will not increase return on investment?
a. Variable costs are increased
b. An increase in sales
c. Average operating assets are decreased
d. Variable costs are decreased
90. Which of the following valuations of operating assets are not readily
available from the accounting records?
a. Cost
b. Book value
c. Market value
d. Both cost and market value
100. The labor time requirements for standards may be determined by the
a. sales manager.
b. product manager.
c. industrial engineers.
d. payroll department manager.
107. The direct labor quantity standard is sometimes called the direct
labor
a. volume standard.
b. effectiveness standard.
c. efficiency standard.
d. quality standard.
110. The total standard cost to produce one unit of product is shown
a. at the bottom of the income statement.
b. at the bottom of the balance sheet.
c. on the standard cost card.
d. in the Work in Process Inventory account.
112. If actual costs are greater than standard costs, there is a(n)
a. normal variance.
b. unfavorable variance.
c. favorable variance.
d. error in the accounting system.
114. A company developed the following per-unit standards for its product: 2
pounds of direct materials at $4 per pound. Last month, 1,000 pounds of
direct materials were purchased for $3,800. The direct materials price
variance for last month was
a. $3,800 favorable.
b. $200 favorable.
c. $100 favorable.
d. $200 unfavorable.
115. The per-unit standards for direct materials are 2 gallons at $4 per gallon.
Last month, 2,800 gallons of direct material which actually cost $10,600 was
used to produce 1,500 units of product. The direct materials quantity
variance for last month was
a. $800 favorable.
b. $600 favorable.
c. $800 unfavorable.
d. $1,400 unfavorable.
Practice Exam.--Page 19
116. The per-unit standards for direct labor are 2 direct labor hours at $12 per
hour. If in producing 600 units, the actual direct labor cost was $12,800
for 1,000 direct labor hours worked, the total direct labor variance is
a. $480 unfavorable.
b. $1,600 favorable.
c. $1,000 unfavorable.
d. $1,600 unfavorable.
117. The standard rate of pay is $10 per direct labor hour. If the actual direct
labor payroll was $24,500 for 2,500 direct labor hours worked, the direct
labor price (rate) variance is
a. $500 unfavorable.
b. $500 favorable.
c. $700 unfavorable.
d. $700 favorable.
118. The standard number of hours that should have been worked for the output
attained is 4,000 direct labor hours and the actual number of direct labor
hours worked was 4,200. If the direct labor price variance was $2,100
unfavorable, and the standard rate of pay was $9 per direct labor hour, what
was the actual rate of pay for direct labor?
a. $8.50 per direct labor hour
b. $7.50 per direct labor hour
c. $9.50 per direct labor hour
d. $9.00 per direct labor hour
121. The total variance is $3,000. The total materials variance is $1,200. The
total labor variance is twice the total overhead
variance. What is the total overhead variance?
a. $300.
b. $600.
c. $900.
d. $1,200.
Practice Exam.--Page 20
122. A company uses 4,200 pounds of material and exceeds the standard by 200
pounds. The quantity variance is $600 unfavorable. What is the
standard price?
a. $1.00.
b. $2.00.
c. $3.00.
d. Cannot be determined from the data provided.
123. A company purchases 7,500 pounds of material. The materials price variance
is $1,500 favorable. What is the difference between the standard and actual
price paid for the materials?
a. $1.00.
b. $.20.
c. $5.00.
d. Cannot be determined.
124. A company uses 10,000 pounds of material for which they paid $6.40 a pound.
What is the materials price variance?
a. $.40.
b. $1.00.
c. $2.40.
d. Cannot be determined from the data provided.
125. If the materials price variance is $800 F and the materials quantity and
labor variances are each $600 U, what is. the total materials variance?
a. $800 F
b. $600 U
c. $200 F
d. $900 U
Tanner Company has a materials price standard of $3.00 per pound. One
thousand pounds of materials were purchased at $3.30 a pound. The actual
quantity of material used was 1,000 pounds, although the standard quantity
allowed for the output was 900 pounds.
133. If the labor quantity variance is unfavorable and the cause is inefficient
use of direct labor, the responsibility rests with the
a. sales department.
b. production department.
c. budget office.
d. controller's department.
134. Manufacturing overhead costs are applied to work in process on the basis of
a. actual hours worked.
b. standard hours allowed.
c. ratio of actual variable to fixed costs.
d. actual overhead costs incurred.
135. If the standard hours allowed are less than the standard hours at normal
capacity,
a. the overhead volume variance will be unfavorable.
b. variable overhead costs will be underapplied.
c. the overhead controllable variance will be favorable.
d. variable overhead costs will be overapplied.
Practice Exam.--Page 22
139. If the standard hours allowed are less than the standard hours at
normal capacity, the volume variance
a. cannot be calculated.
b. will be favorable.
c. will be unfavorable.
d. will be greater than the controllable variance.
140. The budgeted overhead costs for standard hours allowed and the
overhead costs applied to product are the same amount
a. for both variable and fixed overhead costs.
b. only when standard hours allowed is less than normal capacity.
c. for variable overhead costs.
d. for fixed overhead costs.
143. If 10,000 pounds of direct materials are purchased for $7,200 on account and
the standard cost is $.70 per pound, the
journal entry to record the purchase is
a. Raw Materials Inventory ................7,200
Accounts Payable……………………………………………………………………………….7,200
b. Work In Process Inventory ..............7,200
Accounts Payable ....-…………………..................7,000
Material Quantity Variance ......................200
c. Raw Materials Inventory ................7,200
Accounts Payable…………………………………………………………………7,000
Material Price Variance………………………………………………….200
d. Raw Materials Inventory ................7,000
Material Price Variance……………………………………….200
Accounts Payable…………………………………………………………..7,200