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| 1 | |
To be most effective, performance reports should be: |
| | A) | Issued to all managers within the organization at the level of summarization or detail most appropriate to their needs. |
| | B) | Controlled by the management by exception concept, which highlights only those variances that are significant. |
| | C) | Designed to avoid dysfunctional behavior by reporting positive as well as negative variances. |
| | D) | Issued soon after the period in which the activity took place so that results can be meaningfully linked to the actions that caused the results. |
| | E) | All of the above. |
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| 2 | |
The principle objective of a performance report is to: |
| | A) | Highlight activities that need management attention. |
| | B) | Direct blame to those managers who did not meet goals. |
| | C) | Provide a basis for rewarding effective managers. |
| | D) | Highlight budgets that have been incorrectly established. |
| | E) | To determine how much compensation is owed. |
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| 3 | |
The best reason for flexing a budget is to: |
| | A) | Permit a more accurate determination of variances. |
| | B) | Revise a budget at the beginning of a period. |
| | C) | Adjust actual results so they are closer to budgeted amounts. |
| | D) | Recognize the cost behavior pattern of budgeted amounts. |
| | E) | None of the above. |
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| 4 | |
If they are to be useful to managers, variances should be reported: |
| | A) | Simultaneously to all managers within a week after the end of the month. |
| | B) | In dollar amount as soon as all costs are known. |
| | C) | In physical terms or dollar amounts as promptly as feasible. |
| | D) | In physical terms and dollar amounts if the variance exceeds 10% of the budget. |
| | E) | At the end of the month with other financial reports. |
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| 5 | |
A favorable materials quantity variance would occur if: |
| | A) | More material is purchased than used. |
| | B) | Actual pounds of materials used were less than the standard pounds allowed. |
| | C) | Actual labor hours used were greater than the standard labor hours allowed. |
| | D) | Actual pounds of materials used were greater than the standard pounds allowed. |
| | E) | Actual quantity of material purchased is less than the quantity budgeted to be purchased. |
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| 6 | |
How is performance evaluated for an investment center? |
| | A) | Actual costs compared to budgeted costs. |
| | B) | Actual segment margin compared to budgeted segment margin. |
| | C) | Actual operating income compared to budgeted operating income. |
| | D) | Comparison of actual and budgeted ROI based on segment margin and assets controlled by the segment. |
| | E) | None of the above. |
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| 7 | |
In a standard cost system, which of the following statements is true? |
| | A) | All variances will be investigated. |
| | B) | The material price variance is always the responsibility of the purchasing manager. |
| | C) | Favorable variances are not always good variances. |
| | D) | Standard costs, once they are set, can never be changed. |
| | E) | None of the above. |
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| 8 | |
For control purposes, the material price variance should be isolated when: |
| | A) | Material is purchased. |
| | B) | Material is issued to work-in-process. |
| | C) | Material is used in production. |
| | D) | Completed production is transferred to finished goods. |
| | E) | Finished goods are sold to the customer. |
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| 9 | |
If the actual number of labor hours used exceeds standard labor hours allowed for the actual number of units produced but actual labor cost is less than standard labor cost, the labor rate and efficiency variances are: |
| | A) | Unfavorable, favorable. |
| | B) | Favorable, favorable. |
| | C) | Favorable, unfavorable. |
| | D) | Unfavorable, unfavorable. |
| | E) | None of the above. |
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| 10 | |
The difference between the fixed manufacturing overhead budgeted for the period and the fixed manufacturing overhead applied to the production for the period is called: |
| | A) | A spending variance. |
| | B) | An efficiency variance |
| | C) | A volume variance. |
| | D) | A price variance. |
| | E) | A budget variance. |
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