Question 1 The following table presents selected information for Superior Flooring's monthly production budgets for the coming year. Superior's inventory policy is to have ending inventory equal to 10% of the next month's sales. What is the beginning inventory in June? A. 350 B. 310 C. 250 D. 340

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Question 1

The following table presents selected information for Superior Flooring's monthly production budgets for the coming year. Superior's inventory policy is to have ending inventory equal to 10% of the next month's sales.

What is the beginning inventory in June?

A. 350

B. 310

C. 250

D. 340

Question 2

Which of the following statements is true?

A. A budget reconciliation report shows the difference between actual profit and budgeted profit and does not show the other variances.

B. Activity-based costing is not used to evaluate customer profitability.

C. Sales quantity (budgeted sales volume vs. actual sales volume) is the only item which differs between the master budget and the flexible budget.

D. Comparing the flexible budget to the as-if budget isolates a change in input price (e.g. budgeted input price vs. actual input price).

Question 3

Which of the following is not a benefit of budgeting?

A. It reduces the need for analysis with regard to company expenses.

B. It compels managers to develop objectives and to plan allocating resources to achieve the objective.

C. It allows for coordination between different departments within a firm.

D. It provides performance evaluation and feedback.

Question 4

Fairy Company reported the following flexible budget, as-if budget, and actual results. The company's materials quantity variance is:

A. $3,000 Favorable

B. $3,000 Unfavorable

C. $1,000 Unfavorable

D. $1,000 Favorable

Question 5

The following table presents selected information for Superior Flooring's monthly production budgets for the coming year. Superior's inventory policy is to have ending inventory equal to 10% of the next month's sales.

What is the budgeted production in April?

A. 2,810

B. 2,500

C. 2,790

D. 3,410

Question 6

Which of the following statements about variances is false?

A. If actual sales price is less than budgeted, the result is an unfavorable revenue variance.

B. If actual profit is less than budgeted, the result is an unfavorable total profit variance.

C. If actual direct material price is less than budgeted, the result is an unfavorable materials price variance.

D. If actual sales volume is less than budgeted, the result is an unfavorable activity variance.

None of the above is true.

Question 7

Beta Company collects 80% of a month's sales in the month of sale and 20% of sales in the following month. What are the cash collections for October?

August sales: $850

September sales: $900

October sales: $1,000

A.$860

B. $980

C. $920

D. $890

Question 8

Which of the following statements is false?

A. Standard costs (e.g., how much should be paid for each unit of input) are benchmarks for measuring performance.

B. Managers should investigate only unfavorable variances.

C. A variance is the difference between the budgeted amount and actual amount.

D. Variance analysis enhances responsibility accounting.

Question 9

Which of the following statements is not correct?

A. The production budget is not based on the revenue budget.

B. The revenue budget is the starting point in preparing the master budget.

C. The cash budget is used to determine whether the firm will have enough cash on hand.

D. The revenue budget is constructed by multiplying the expected sales in units by the sales price.

Question 10

A labor rate variance is due solely to the difference

A. Between budgeted labor price and actual labor price

B. Between budgeted direct labor hours and actual direct labor hours

C. Between budgeted materials price and actual materials price

D. Between budgeted sales volume and actual sales volume

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