ACCT 526 - CH. 9 EXAM QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 2026
Budgets can be improved as performance measures by:
a. using fixed budgeting.
b. using participative budgeting.
c. setting standards that are either too high or too low.
d. holding managers accountable for noncontrollable costs. - Answers b. using participative
budgeting.
_____ is an example of a monetary incentive used to control a manager's tendency to shirk and waste
resources.
a. A promotion
b. A recognition program
c. Increased responsibility
d. Job enrichment - Answers a. A promotion
Which of the following is true of flexible budgets?
a. Flexible budget formulas are often based on number of units instead of direct labor hours.
b. Flexible budgets are created in advance and are based on a particular level of activity.
c. Flexible budgets enable firms to compute expected costs for a range of activity levels.
d. Flexible budgets are usually not a good choice for benchmarks in preparing a performance report. -
Answers c. Flexible budgets enable firms to compute expected costs for a range of activity levels.
A flexible budget variance is the difference between:
a. the actual amount and the flexible budget amount.
b. the static budget amount and the flexible budget amount.
c. the variable budget amount and the flexible budget amount.
d. the master budget amount and the flexible budget amount. - Answers a. the actual amount and
the flexible budget amount.
The actual and budgeted costs for Learner Corp.'s actual level of activity are as follows:
Actual Costs Budgeted Costs
Units produced 1,500 1,500
Direct materials cost $5,600 $5,090
Direct labor cost 1,700 1,500
VOH:
Maintenance 720 635
Power 280 150
FOH:
Grounds keeping 1,470 1,240
Depreciation 580 580
Which of the following conclusions can be made based on the provided data?
a. There is a favorable variance for direct materials cost.
b. There is an unfavorable variance for maintenance.
c. There is an unfavorable variance for grounds keeping.
d. There is a favorable variance for direct labor cost. - Answers c. There is an unfavorable variance for
grounds keeping.
After examining the records of Theta Company for the month of October, the following information is
obtained: Beginning cash balance $2,600
Cash receipts 59,000
Cash payments 36,000
Minimum cash balance 1,000
Loan repayments 12,000
Based on the given information, calculate Theta's cash surplus (deficiency) for the month of October.
a. $(15,600)
b. $(23,600)
c. $24,600
, d. $25,600 - Answers b. $(23,600)
Which of the following budgets is a financial budget?
a. A production budget
b. A sales budget
c. A cash budget
d. A cost of goods sold budget - Answers c. A cash budget
_____ are excluded from the cash disbursements section of a cash budget.
a. Distribution expenses
b. Advertisement expenses
c. Manufacturing expenses
d. Depreciation expenses - Answers d. Depreciation expenses
An overhead budget shows the expected cost of all production costs:
a. including direct materials and direct labor.
b. other than direct materials and direct labor.
c. including selling and administrative expenses.
d. other than fixed overhead items. - Answers b. other than direct materials and direct labor.
Silver Inc. has budgeted production costs of $2,600,000, budgeted beginning finished goods inventory
of $360,000, and budgeted ending finished goods inventory of $240,000 for the month. Silver's
budgeted cost of goods sold for this month is:
a. $2,720,000.
b. $2,960,000.
c. $2,480,000.
d. $3,200,000. - Answers a. $2,720,000.
Which of the following is true of a direct materials purchases budget?
a. It is a financial budget prepared by an organization.
b. It is prepared before preparing a production budget.
c. It must be separately prepared for every type of raw material used.
d. It does not depend on the raw materials inventory needs of a firm. - Answers c. It must be
separately prepared for every type of raw material used.
_____ budgets detail the inflows and outflows of cash.
a. Financial
b. Sales
c. Capital
d. Operating - Answers a. Financial
A budgeted income statement is the ultimate outcome of the:
a. financial budgets.
b. cash budgets.
c. capital budgets.
d. operating budgets. - Answers d. operating budgets.
_____ budgets describe the income-generating activities of a firm: sales, production, and finished
goods inventories.
a. Capital
b. Cash
c. Financial
d. Operating - Answers d. Operating
Which of the following is true of a continuous budget?
a. A continuous budget is a plan that is updated annually.
b. A continuous budget is synonymous with a master budget.
c. A continuous budget is a plan where one month or quarter is dropped as it expires and another
future period is added.
d. A continuous budget is a comprehensive financial plan for an organization as a whole. - Answers c.
A continuous budget is a plan where one month or quarter is dropped as it expires and another future
period is added.
A company is planning to sell 2,600 tables in the first quarter. Desired ending inventory is 200 tables,
and beginning inventory is 500 tables. How many tables need to be produced during the first quarter?
a. 2,900 tables
b. 2,300 tables
Budgets can be improved as performance measures by:
a. using fixed budgeting.
b. using participative budgeting.
c. setting standards that are either too high or too low.
d. holding managers accountable for noncontrollable costs. - Answers b. using participative
budgeting.
_____ is an example of a monetary incentive used to control a manager's tendency to shirk and waste
resources.
a. A promotion
b. A recognition program
c. Increased responsibility
d. Job enrichment - Answers a. A promotion
Which of the following is true of flexible budgets?
a. Flexible budget formulas are often based on number of units instead of direct labor hours.
b. Flexible budgets are created in advance and are based on a particular level of activity.
c. Flexible budgets enable firms to compute expected costs for a range of activity levels.
d. Flexible budgets are usually not a good choice for benchmarks in preparing a performance report. -
Answers c. Flexible budgets enable firms to compute expected costs for a range of activity levels.
A flexible budget variance is the difference between:
a. the actual amount and the flexible budget amount.
b. the static budget amount and the flexible budget amount.
c. the variable budget amount and the flexible budget amount.
d. the master budget amount and the flexible budget amount. - Answers a. the actual amount and
the flexible budget amount.
The actual and budgeted costs for Learner Corp.'s actual level of activity are as follows:
Actual Costs Budgeted Costs
Units produced 1,500 1,500
Direct materials cost $5,600 $5,090
Direct labor cost 1,700 1,500
VOH:
Maintenance 720 635
Power 280 150
FOH:
Grounds keeping 1,470 1,240
Depreciation 580 580
Which of the following conclusions can be made based on the provided data?
a. There is a favorable variance for direct materials cost.
b. There is an unfavorable variance for maintenance.
c. There is an unfavorable variance for grounds keeping.
d. There is a favorable variance for direct labor cost. - Answers c. There is an unfavorable variance for
grounds keeping.
After examining the records of Theta Company for the month of October, the following information is
obtained: Beginning cash balance $2,600
Cash receipts 59,000
Cash payments 36,000
Minimum cash balance 1,000
Loan repayments 12,000
Based on the given information, calculate Theta's cash surplus (deficiency) for the month of October.
a. $(15,600)
b. $(23,600)
c. $24,600
, d. $25,600 - Answers b. $(23,600)
Which of the following budgets is a financial budget?
a. A production budget
b. A sales budget
c. A cash budget
d. A cost of goods sold budget - Answers c. A cash budget
_____ are excluded from the cash disbursements section of a cash budget.
a. Distribution expenses
b. Advertisement expenses
c. Manufacturing expenses
d. Depreciation expenses - Answers d. Depreciation expenses
An overhead budget shows the expected cost of all production costs:
a. including direct materials and direct labor.
b. other than direct materials and direct labor.
c. including selling and administrative expenses.
d. other than fixed overhead items. - Answers b. other than direct materials and direct labor.
Silver Inc. has budgeted production costs of $2,600,000, budgeted beginning finished goods inventory
of $360,000, and budgeted ending finished goods inventory of $240,000 for the month. Silver's
budgeted cost of goods sold for this month is:
a. $2,720,000.
b. $2,960,000.
c. $2,480,000.
d. $3,200,000. - Answers a. $2,720,000.
Which of the following is true of a direct materials purchases budget?
a. It is a financial budget prepared by an organization.
b. It is prepared before preparing a production budget.
c. It must be separately prepared for every type of raw material used.
d. It does not depend on the raw materials inventory needs of a firm. - Answers c. It must be
separately prepared for every type of raw material used.
_____ budgets detail the inflows and outflows of cash.
a. Financial
b. Sales
c. Capital
d. Operating - Answers a. Financial
A budgeted income statement is the ultimate outcome of the:
a. financial budgets.
b. cash budgets.
c. capital budgets.
d. operating budgets. - Answers d. operating budgets.
_____ budgets describe the income-generating activities of a firm: sales, production, and finished
goods inventories.
a. Capital
b. Cash
c. Financial
d. Operating - Answers d. Operating
Which of the following is true of a continuous budget?
a. A continuous budget is a plan that is updated annually.
b. A continuous budget is synonymous with a master budget.
c. A continuous budget is a plan where one month or quarter is dropped as it expires and another
future period is added.
d. A continuous budget is a comprehensive financial plan for an organization as a whole. - Answers c.
A continuous budget is a plan where one month or quarter is dropped as it expires and another future
period is added.
A company is planning to sell 2,600 tables in the first quarter. Desired ending inventory is 200 tables,
and beginning inventory is 500 tables. How many tables need to be produced during the first quarter?
a. 2,900 tables
b. 2,300 tables
