Budgeting and Forecasting Exam Review
Course Introduction
Budgeting and Forecasting explores the principles, strategies, and tools used to plan, allocate, and control financial resources within organizations. The course covers essential topics such as developing operating budgets, capital expenditure planning, variance analysis, and incorporating forecasting techniques to anticipate future financial performance. Students will learn how to utilize both quantitative and qualitative data for effective decision-making, apply best practices in financial modeling, and assess the impact of economic and business trends on budgeting processes. Through practical exercises and case studies, the course prepares students to support organizational objectives by mastering the cycle of budget preparation, monitoring, and revision.
Recommended Textbook
Managerial Accounting 4th Edition by Karen W. Braun
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Page 2
Chapter 1: Introduction to Managerial Accounting
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Sample Questions
Q1) To ensure a profit in the current year,the manager ships out pre-ordered merchandise the last week of December,instead of in mid-January as the customer instructed.This early shipment could be a violation of which ethical standard?
A)Confidentiality
B)Integrity
C)Competence
D)All of the above
Answer: B
Q2) Which of the following roles require publicly-traded companies to have an internal audit function?
A)The New York Stock Exchange (NYSE)
B)The Internal Revenue Service (IRS)
C)The stockholders
D)The Board of Directors
Answer: A
Q3) IFRS stands for "Important Financial Reporting Standards."
A)True
B)False
Answer: False
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Chapter 2: Building Blocks of Managerial Accounting
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Sample Questions
Q1) Differential cost is the difference in cost between two alternatives.
A)True
B)False
Answer: True
Q2) How do variable costs per unit behave?
A)They decrease as production increases.
B)They increase as production decreases.
C)They decrease as production decreases.
D)They remain the same throughout production levels within the relevant range.
Answer: D
Q3) An example of a fixed cost for a manufacturer would be which of the following?
A)Sales commissions
B)Salary of plant manager
C)Direct materials
D)Delivery costs
Answer: B
Q4) Retailers sell their products to consumers.
A)True
B)False
Answer: True
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Chapter 3: Job Costing
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Sample Questions
Q1) When is the adjusting of cost of goods sold for the underallocation or overallocation of manufacturing overhead generally done?
A)At the end of the period
B)During the period
C)Before the period starts
D)Never
Answer: A
Q2) If manufacturing overhead has been overallocated during the period,and most of the jobs produced have been sold,then
A)Cost of Goods Sold on the income statement should be increased.
B)Cost of Goods Sold on the income statement should be decreased.
C)finished goods inventory should be increased.
D)work in process inventory should be decreased.
Answer: B
Q3) A labor time record is an essential component of accounting in a service firm.
A)True
B)False
Answer: True
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5
Chapter 4: Activity-Based Costing, lean Operations, and the Costs of Quality
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Sample Questions
Q1) One condition that favors using a departmental overhead rate,rather than plantwide overhead rates,is that different departments incur different amounts and types of manufacturing overhead.
A)True
B)False
Q2) Which of the following can be used in conjunction with activity-based costing?
A)Job costing
B)Process costing
C)Both A and B
D)Neither A nor B
Q3) The cost of installing improved production equipment and production processes is a(n)________ cost.
A)external failure
B)internal failure
C)appraisal
D)prevention
Q4) The goal of total quality management (TQM)is to provide customers with inferior products and services.
A)True B)False
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Chapter 5: Process Costing
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Sample Questions
Q1) Which of the following product costing systems is normally used to assign costs to goods that are mass-produced goods?
A)Fixed costing
B)Job costing
C)Process costing
D)LIFO costing
Q2) Fun Stuff Manufacturing produces frisbees using a three-step process that includes molding,coloring and finishing.Which of the following accounts is credited for direct labor used during the molding process?
A)Wages Payable
B)Manufacturing Overhead
C)Raw Materials Inventory
D)WIP Inventory-Molding
Q3) Conversion costs are usually incurred evenly throughout productions.
A)True
B)False
Q4) When units are sold,Cost of Goods Sold is debited.
A)True
B)False
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Chapter 6: Cost Behavior
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Sample Questions
Q1) The R-squared statistic determined by regression analysis is sometimes referred to as the "goodness-of-fit" statistic.
A)True
B)False
Q2) Relevant range is the range of activity (volume)over which total fixed costs and variable costs per unit can be assumed to remain the same.
A)True
B)False
Q3) Total mixed cost graphs intersect the y-axis at the level of fixed costs.
A)True
B)False
Q4) Sea Side Enterprises is trying to predict the cost associated with producing its anchors.At a production level of 5,000 anchors,Sea Side Enterprises' average cost per anchor is $52.00.If $15,000 of the total costs are fixed,what is the variable cost of producing each anchor?
A)$3.00
B)$49.00
C)$245.00
D)$52.00
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Chapter 7: Cost-Volume-Profit Analysis
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Sample Questions
Q1) Sandy Incorporated sells two products,larges and smalls.Larges sell for $90 per unit with variable costs of $60 per unit.Smalls sell for $30 per unit with variable costs of $10 per unit.Total fixed costs for the company are $41,600.Sandy Incorporated typically sells three larges for every two smalls.What is the breakeven point in total units?
A)392 units
B)4,160 units
C)1,600 units
D)320 units
Q2) If fixed expenses are $45,000,the breakeven in sales dollars is $60,000 and the selling price per unit is $100,then the variable expense per unit is
A)approximately $75.
B)approximately $175.
C)approximately $33.33.
D)approximately $25.
Q3) The margin of safety is the "cushion," or drop in sales,a company can absorb without incurring a loss.
A)True
B)False
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9
Chapter 8: Relevant Costs for Short-Term Decisions
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Sample Questions
Q1) Mountaintop golf course is planning for the coming season.Investors would like to earn a 12% return on the company's $50 million of assets.The company primarily incurs fixed costs to groom the greens and fairways.Fixed costs are projected to be $25,000,000 for the golfing season.About 400,000 golfers are expected each year.Variable costs are about $8 per golfer.The Mountaintop golf course is a price-taker and won't be able to charge more than its competitors who charge $75 per round of golf.What profit will it earn? State your answer in dollars and as a percent of assets.Will investors be happy with the profit level?
Q2) Managers should consider which of the following when deciding whether to outsource a product or service?
A)Quality of the product or service
B)Delivery schedule of the product or service
C)Cost charged for the product or service
D)All of the above
Q3) One cost that is irrelevant in decision making is a sunk cost.
A)True
B)False
Q4) Buy the part and use facilities to make another product
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Page 10
Chapter 9: The Master Budget
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Sample Questions
Q1) The master budget of a service company has fewer individual budget components compared to the master budget of a manufacturing company.
A)True
B)False
Q2) Jasmine and Rosemary sell healthy spices to consumers at the county fair.Sally and Rosemary only accept credit card purchases and cash from consumers.On Saturday,they sold $350 in merchandise and all consumers used credit cards to purchase merchandise at the fair.The bank charges 1.75% on total credit charges each day to settle the credit charges on their business banking account.Compute the total charges the bank will charge Jasmine and Rosemary on their account.How much will the bank deposit into their account after all charges? How should Jasmine and Rosemary show the sale and fees in the sales budget,the operating expense budget,and the cash collections budget?
Q3) The four components of the operating budget are the sales budget;inventory,purchases and cost of goods sold budget;and the cash budget.
A)True
B)False
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Page 11
Chapter 10: Performance Evaluation
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Sample Questions
Q1) A flexible budget is a budget prepared for multiple volume levels.
A)True
B)False
Q2) The number of on-time deliveries may be an example of measuring which perspective of the balanced scorecard?
A)Customer
B)Financial
C)Internal business
D)Learning and growth
Q3) Cost center performance reports typically focus on the static budget variance. A)True
B)False
Q4) Operations is one factor of the financial perspective of the Balanced Scorecard. A)True
B)False
Q5) Customer satisfaction,operational efficiency,employee excellence,and financial profitability are often measured as critical factors in the balanced scorecard approach. A)True
B)False
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Chapter 11: Standard Costs and Variances
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Sample Questions
Q1) A sales volume variance will occur when the number of units actually sold differs from the volume originally planned for in the master budget.
A)True
B)False
Q2) A company uses sugar in producing its product.If the price of sugar doubles,which variance is directly impacted?
A)Direct materials quantity variance
B)Direct materials price variance
C)Direct labor rate variance
D)Direct labor efficiency variance
Q3) The direct materials price variance is the difference between the Actual Price (AP)and the Standard Price (SP),multiplied by the Actual Quantity Purchased (AQP).
A)True
B)False
Q4) If production remains within the relevant range for the period,fixed costs are expected to remain fixed.
A)True
B)False
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Chapter 12: Capital Investment Decisions and the Time
Value of Money
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Sample Questions
Q1) How does depreciation affect the calculation of a project's accounting rate of return (ARR)?
A)Depreciation is added to the annual cash inflows.
B)Depreciation is deducted from the annual cash inflows.
C)Depreciation does not affect ARR.
D)Depreciation is only deducted if the ARR is less than the minimum required rate of return.
Q2) Post-audits of capital investments compare actual net cash inflows to projected net cash inflows.
A)True
B)False
Q3) The ARR is the only method that uses accrual accounting figures and thus making it important to financial statement users.
A)True
B)False
Q4) Buller Manufacturing is considering acquiring another facility for a cost of $610,000.The required payback period is 4.5 years.Assume annual net cash inflows are $150,000 for the first two years and $125,000 for years 3 and 4.What must the inflow be in the fifth year to meet the 4.5 year payback period?
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Chapter 13: Statement of Cash Flows
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Sample Questions
Q1) Which of the following would not appear on a statement of cash flows prepared using the direct method?
A)Cash receipts from customers
B)Cash payments for insurance
C)Depreciation expense
D)Cash payments for salaries and wages
Q2) Which of the following sections from the statement of cash flows includes purchases and sales of long-term assets?
A)Financing section
B)Investing section
C)Operating section
D)None of the above
Q3) A payment of interest on a loan would be considered a
A)cash outflow from investing activities.
B)cash outflow from operating activities.
C)cash outflow from financing activities.
D)cash outflow from depreciation.
Q4) Cash equivalents include investments that cannot be readily converted into cash. A)True
B)False
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Chapter 14: Financial Statement Analysis
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Sample Questions
Q1) Which of the following terms is defined as an analysis of a financial statement that reveals the relationship of each statement item to a specific base?
A)Benchmarking
B)Horizontal analysis
C)Vertical analysis
D)Capital analysis
Q2) A trend percentage is computed by dividing the dollar amount of change by the base-year amount.
A)True
B)False
Q3) Trend percentages are not a form of vertical analysis.
A)True
B)False
Q4) The formula to compute accounts receivable turnover is
A)net credit sales/average net accounts receivable.
B)net credit sales/average inventory.
C)cost of goods sold/average inventory.
D)average net accounts receivable/one day's sales.
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Chapter 15: Sustainability
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Sample Questions
Q1) Government grants and tax credits increase the costs of implementing sustainability measures.
A)True
B)False
Q2) Which of the following is a challenge an organization would face in implementing an environmental management accounting system?
A)Environmental costs are traditionally hidden in overhead costs.
B)Information systems are not equipped to deal with environmental information.
C)Environmental accounting is a relatively new field and is still developing.
D)All of the above.
Q3) In order to provide managers with environmental information,accountants will need to rethink their traditional views on what constitutes a "cost" and do which of the following?
A)Focus on the traditional accounting system
B)Expand their costing system to provide more detailed information
C)Reject any change
D)None of the above
Q4) The "triple bottom line" reports on three factors: profits,people,and planet.
A)True
B)False
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