28 Dec ACC650 Managerial Accounting

ACC650 Managerial Accounting

Week 5 Quiz

• Flexible budgets reflect a company’s anticipated costs based on variations in:

•activity levels.

•inflation rates.

•managers.

•anticipated capital acquisitions.

•standards.

• Auditory Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended:

Actual units produced: 13,000

Actual fixed overhead incurred: $742,000

Standard fixed overhead rate: $15 per hour

Budgeted fixed overhead: $720,000

Planned level of machine-hour activity: 48,000

If Auditory estimates four hours to manufacture a completed unit, the company’s fixed-overhead budget variance would be:

•$22,000 favorable.

•$22,000 unfavorable.

•$60,000 favorable.

•$60,000 unfavorable.

•None of the answers is correct

• Which of the following would have no effect, either direct or indirect, on an organization’s cash budget?

•Sales revenues.

•Outlays for professional labor.

•Advertising expenditures.

•Raw material purchases.

•None of the answers is correct, since all of these items would have some influence.

• Miracle Enterprises sells electronics in retail outlets and on the Internet. It uses activity-based budgeting in the preparation of its selling, general, and administrative expense budget. Which of the following costs would the company likely classify as a unit-level expense on its budget?

•Media advertising.

•Retail outlet sales commissions.

•Salaries of web-site maintenance personnel.

•Administrative salaries.

•Salary of the sales manager employed at store no. 23.