ACC 241 - Exam 3 CH 9, 10, 11
questions well answered
Budgeting assists management in which of the following areas? - ANS ✔✔-Motivation
-Planning and setting objectives
-Performance measurement
Which of the following is an advantage of the budgeting process? - ANS ✔✔-Budgeting provides
a standard for performance evaluation
-Budgeting provides resource information for decision making
-Budgeting improves communication and coordination within the organization
When an organization involves its many employees in the budgeting process in a meaningful
way, the organization is said to be using: - ANS ✔✔Participative budgeting
"Responsibility accounting" is the concept that says: - ANS ✔✔Managers should be held
responsible for only those things under their control
The manager of a profit center should not be responsible for which of the following types of
decisions? - ANS ✔✔Deciding whether or not their segment should purchase additional
machinery
Which type of manager would most likely be held responsible for the return on investment
(ROI) of his segment? - ANS ✔✔Investment center
A company has computed that their "margin" is .18. Which of the following statements is the
best interpretation of these results? - ANS ✔✔$.18 of every $1 made in sales is profit
, A positive result that stems from the use of return on investment (ROI) is that it encourages
managers to focus on - ANS ✔✔-The relationship among sales, expenses, and investment
-Operating asset efficiency
-The efficient use of resources in generating income
-Cost efficiency
Division A had ROI of 15% last year. The manager of Division A is considering an additional
investment for the coming year. What step will the manager likely choose to take? - ANS
✔✔Reject the investment if it returns less than 15% ROI
Which of the following is a disadvantage of a focus on return on investment? - ANS ✔✔It can
produce a narrow focus on divisional profitability at the expense of profitability for the overall
firm
If the ROI of a project is greater than the target rate of return, the residual income will be - ANS
✔✔Greater than zero
A favorable labor efficiency variance is created when: - ANS ✔✔Actual hours worked are less
than the standard hours allowed.
Hayden Corp. has a $6,000 favorable flexible budget variance for January. If January's flexible
budget net income was $100,000, which of the following statements is true? - ANS
✔✔Hayden's actual net income must have been $106,000
Court Company has an unfavorable materials price variance. Which of the following would be
the LEAST likely reason for this variance? - ANS ✔✔The company used more material than was
budgeted for in each unit
questions well answered
Budgeting assists management in which of the following areas? - ANS ✔✔-Motivation
-Planning and setting objectives
-Performance measurement
Which of the following is an advantage of the budgeting process? - ANS ✔✔-Budgeting provides
a standard for performance evaluation
-Budgeting provides resource information for decision making
-Budgeting improves communication and coordination within the organization
When an organization involves its many employees in the budgeting process in a meaningful
way, the organization is said to be using: - ANS ✔✔Participative budgeting
"Responsibility accounting" is the concept that says: - ANS ✔✔Managers should be held
responsible for only those things under their control
The manager of a profit center should not be responsible for which of the following types of
decisions? - ANS ✔✔Deciding whether or not their segment should purchase additional
machinery
Which type of manager would most likely be held responsible for the return on investment
(ROI) of his segment? - ANS ✔✔Investment center
A company has computed that their "margin" is .18. Which of the following statements is the
best interpretation of these results? - ANS ✔✔$.18 of every $1 made in sales is profit
, A positive result that stems from the use of return on investment (ROI) is that it encourages
managers to focus on - ANS ✔✔-The relationship among sales, expenses, and investment
-Operating asset efficiency
-The efficient use of resources in generating income
-Cost efficiency
Division A had ROI of 15% last year. The manager of Division A is considering an additional
investment for the coming year. What step will the manager likely choose to take? - ANS
✔✔Reject the investment if it returns less than 15% ROI
Which of the following is a disadvantage of a focus on return on investment? - ANS ✔✔It can
produce a narrow focus on divisional profitability at the expense of profitability for the overall
firm
If the ROI of a project is greater than the target rate of return, the residual income will be - ANS
✔✔Greater than zero
A favorable labor efficiency variance is created when: - ANS ✔✔Actual hours worked are less
than the standard hours allowed.
Hayden Corp. has a $6,000 favorable flexible budget variance for January. If January's flexible
budget net income was $100,000, which of the following statements is true? - ANS
✔✔Hayden's actual net income must have been $106,000
Court Company has an unfavorable materials price variance. Which of the following would be
the LEAST likely reason for this variance? - ANS ✔✔The company used more material than was
budgeted for in each unit
