Budgeting and Financial Planning
Textbook Exam Questions
Course Introduction
This course provides students with a comprehensive understanding of budgeting and financial planning principles, focusing on strategies for effective financial management in both personal and organizational contexts. Topics include the budgeting process, types of budgets, forecasting techniques, cost analysis, resource allocation, and the role of budgeting in strategic decision-making. Through practical exercises and real-world case studies, students will learn how to develop, implement, and monitor financial plans, assess financial health, and make informed decisions to achieve financial goals. The course emphasizes the importance of ethical considerations and effective communication in financial planning, preparing students for careers in finance, management, and related fields.
Recommended Textbook
Management Accounting 6th Edition by Anthony A. Atkinson
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Chapter 1: How Management Accounting Information
Supports Decision Making
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Sample Questions
Q1) The most important factor in successful organizations is:
A)weaknesses.
B)competition.
C)strategy.
D)definition of quality.
Answer: C
Q2) A national company manufactures a line of modern furniture.Information MOST useful to the top executive includes:
A)individual job summaries of materials used.
B)monthly financial reports on the company's profitability by product line.
C)time reports submitted by each employee.
D)scheduled downtime for routine maintenance on machines.
Answer: B
Q3) The check step in the PDCA cycle includes two components - measuring and monitoring ongoing performance and taking short-term actions based on the measured performance.
A)True
B)False
Answer: True
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Chapter 2: The Balanced Scorecard and Strategy Map
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Sample Questions
Q1) ________ are generally written as action phrases and may also include the means and desired results.
A)Mission statements
B)Objectives
C)Targets
D)Strategies
Answer: B
Q2) Nonprofit and government organizations success must be measured by their effectiveness in providing benefits to constituents.
A)True
B)False
Answer: True
Q3) Strategy creates a competitive advantage by positioning the company in its external environment where its internal resources and capabilities deliver something to its customers better than or different from its competitors.
A)True
B)False
Answer: True
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Chapter 3: Using Costs in Decision Making
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Sample Questions
Q1) If the sales mix shifts to one unit of Product X and two units of Product Y,then the break-even point in units for a year will:
A)increase.
B)stay the same.
C)decrease.
D)be undeterminable.
Answer: C
Q2) The break-even point in units for a year is:
A)2,000 units.
B)3,000 units.
C)5,000 units.
D)10,000 units.
Answer: C
Q3) As a result of the layout reorganization,incremental manufacturing costs are projected to:
A)increase by $84,000 annually
B)increase by $20,000 annually
C)decrease by $20,000 annually
D)decrease by $16,500 annually
Answer: B
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Chapter 4: Accumulating and Assigning Costs to Products
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Sample Questions
Q1) Why is an accurate product cost important?
Q2) On a job bid sheet,four items are added together to arrive at a bid price.List each of these items and explain why each is necessary to arrive at the bid price.
Q3) What are the total manufacturing costs of Job #316?
A)$715
B)$880
C)$1,595
D)$1,000
Q4) Job order costing would be appropriate for the construction of a cruise liner. A)True
B)False
Q5) Manufacturing overhead costs applied to Job #432 total:
A)$12,000.
B)$24,000.
C)$36,000.
D)None of the above is correct.
Q6) List at least three factors taken into consideration when determining the markup rate.
Q7) Explain how an activity cost driver rate is determined.
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Chapter 5: Activity-Based Cost Systems
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Sample Questions
Q1) The first step in designing an activity-based cost system is to develop an activity dictionary.
A)True
B)False
Q2) It ONLY makes sense to implement an ABC system when:
A)ABC provides information to make better decisions.
B)its benefits exceed implementation costs.
C)ABC traces more costs as direct costs.
D)there is a strong cause-and-effect relationship between costs in the cost pools and their cost-allocation bases.
Q3) Advantages of the time-driven ABC model include all of the following except:
A)cost-driver rates change when there has been a shift in the efficiency of the activity.
B)cost-driver rates can be easily updated.
C)complex assumptions reflect the manufacturing environment.
D)data used are easily observed.
Q4) Capacity cost rates also change when the denominator,practical capacity,changes.
A)True
B)False
Q5) How are cost drivers selected in activity-based costing systems?
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Chapter 6: Measuring and Managing Customer Relationships
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Sample Questions
Q1) The whale curve shows that the middle 60% of customers generate the majority of total profits.
A)True
B)False
Q2) Describe five reasons that loyal customers are valuable.
Q3) In a service company,marketing and selling costs are customer independent.
A)True
B)False
Q4) High cost to serve customers:
A)have high order quantities.
B)have large amounts of post sales support.
C)order standard products.
D)have little to no pre-sales support.
Q5) The pricing waterfall charts revenue leaks from list price caused by discounts and allowances used to gain customer loyalty.
A)True
B)False
Q6) Describe the pricing waterfall.
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Q7) Compare the 80-20 rule and the whale curve as it relates to customer profitability.
Chapter 7: Measuring and Managing Process Performance
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Sample Questions
Q1) ________ include the cost of raw-materials inspections and assembly-line inspections.
A)Prevention costs
B)Appraisal costs
C)Internal failure costs
D)External failure costs
Q2) One goal of ________ is to design costs out of products in the research,development,and engineering stage.
A)cost-plus pricing
B)target costing
C)Kaizen costing
D)traditional costing
Q3) The implementation of just-in-time production results in all of the following EXCEPT: A)decreased cycle times.
B)reduced amount of waste.
C)a slower pace for employees.
D)structural changes.
Q4) Explain the differences between a process layout,a product layout,and cellular manufacturing.
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Chapter 8: Measuring and Managing Life-Cycle Costs
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Sample Questions
Q1) ________ starts with the estimated product costs and next adds the expected profit margin.
A)Cost-plus pricing
B)Target costing
C)Kaizen costing
D)Standard costing
Q2) What is benchmarking and why is it used?
Q3) The best chance of incorporating engineering flexibility into products and services is during the:
A)research, development, and engineering cycle.
B)manufacturing cycle.
C)post-sale service and disposal cycle.
D)operating cycle.
Q4) What is the target profit margin?
A)$480,000
B)$600,000
C)$384,000
D)$360,000
Q5) How do traditional costing and target costing differ in determining the selling price of a product?
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Chapter 9: Behavioral and Organizational Issues in Management Accounting and Control Systems
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Sample Questions
Q1) In compensation plans,gain sharing:
A)treats employees as owners and all receive corporate dividends.
B)applies to a group of employees within an organization.
C)is generally based on individual performance.
D)provides feedback on an annual basis.
Q2) Which BEST describes the control function in a management accounting and control system?
A)MACS seeks out areas that are out-of-control but not for corrective action.
B)MACS achieves cost reduction targets that are continually adjusted downward.
C)MACS guides and motivates employees to achieve organizational objectives.
D)MACS ensures performance standard goals are being met.
Q3) When implementing a new management accounting and control system,it is BEST:
A)to allow management to implement their ideas.
B)for management to involve employees in the implementation.
C)to involve consultants and implement their experienced ideas.
D)to engage in benchmarking.
Q4) If the organization's code of ethics is more stringent than an individual's code of ethics,conflicts may arise.
A)True
B)False
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Chapter 10: Using Budgets for Planning and Coordination
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Sample Questions
Q1) The production for July is projected to be:
A)300 units.
B)900 units.
C)1,050 units.
D)1,500 units.
Q2) For October,budgeted cost of goods sold is:
A)$20,000.
B)$30,000.
C)$40,000.
D)None of the above is correct.
Q3) For October,budgeted cash collections are:
A)$20,000.
B)$60,000.
C)$80,000.
D)None of the above is correct.
Q4) The MOST LIKELY explanation of the above variances for Material A is that:
A)a lower price than expected was paid for Material A.
B)higher quality raw materials were used than were planned.
C)the company used a new supplier.
D)Material A used during October was $2,000 less than expected.
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Chapter 11: Financial Control
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Sample Questions
Q1) If a company subscribes to the controllability principle,then it would be best to evaluate product line management on:
A)contribution margin.
B)corporate profit.
C)segment income.
D)segment margin.
Q2) Assume that the Sundries department has been discontinued and long-term capacity of the company has had time to adjust.The projected long-term effect of this action on annual corporate profits would be a decrease of:
A)$40,000.
B)$32,000.
C)$29,000.
D)$22,000.
Q3) A support department,such as human resources,should be evaluated as a cost center.
A)True
B)False
Q4) Why are transfer prices used? What is a market-based transfer price?
Q5) What types of revenues and costs are used to calculate segment margin?
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