WGU D559 Advanced Managerial Accounting: Practice Test 2
(Units 8-13)
50 questions
1. The cash budget typically includes sections for:
A. Assets, liabilities and equity
B. Revenue and gross margin only
C. Product costs only
D. Cash receipts, cash disbursements and financing
Correct Answer: D. Cash receipts, cash disbursements and financing
Rationale: It shows whether borrowing is needed.
2. A continuous (rolling) budget:
A. Always covers the next 12 months by adding a new month as one ends
B. Is prepared only once every five years
C. Covers only one month
D. Never changes
Correct Answer: A. Always covers the next 12 months by adding a new month as one ends
Rationale: It keeps planning forward-looking.
3. Which item is NOT a cash disbursement in the cash budget?
A. Payments for materials
B. Wages paid
C. Depreciation expense
D. Purchase of equipment
Correct Answer: C. Depreciation expense
Rationale: Depreciation is a noncash expense.
4. The production budget is based on:
A. Budgeted sales and desired changes in finished goods inventory
B. The cash budget
C. The capital budget
D. Prior-year net income
Correct Answer: A. Budgeted sales and desired changes in finished goods inventory
Rationale: Production = sales + ending FG - beginning FG.
5. Budgeted sales are 4,500 units. Desired ending finished goods are 1,700 units and beginning
finished goods are 2,000 units. How many units must be produced?
A. 4,500 units
B. 8,200 units
C. 4,200 units
D. 4,800 units
Correct Answer: C. 4,200 units
Rationale: 4,500 + 1,700 - 2,000 = 4,200 units.
, 6. Production is budgeted at 4,000 units, each requiring 4 pounds of material. Desired ending
materials are 4,000 pounds and beginning materials are 1,500 pounds. How many pounds must
be purchased?
A. 16,000 pounds
B. 6,500 pounds
C. 21,500 pounds
D. 18,500 pounds
Correct Answer: D. 18,500 pounds
Rationale: (4,000 x 4) + 4,000 - 1,500 = 18,500 pounds.
7. Sales are collected 60% in the month of sale and 40% in the following month. May sales are
$100,000 and June sales are $105,000. What are June cash collections?
A. $103,000
B. $105,000
C. $63,000
D. $102,000
Correct Answer: A. $103,000
Rationale: ($105,000 x 60%) + ($100,000 x 40%) = $103,000.
8. The difference between the flexible budget and the planning budget is the:
A. Spending variance
B. Price variance
C. Activity variance
D. Volume variance only
Correct Answer: C. Activity variance
Rationale: It results only from activity differences.
9. A flexible budget is:
A. A budget for a single activity level
B. A budget adjusted to the actual level of activity
C. A long-term capital budget
D. A budget that ignores variable costs
Correct Answer: B. A budget adjusted to the actual level of activity
Rationale: It allows meaningful comparison with actual results.
10. An unfavorable labor rate variance could result from:
A. Workers taking less time than standard
B. Lower wage rates
C. Using higher-paid workers or unplanned overtime
D. Buying cheaper materials
Correct Answer: C. Using higher-paid workers or unplanned overtime
Rationale: Actual rate exceeded standard.
11. Responsibility for the labor efficiency variance usually rests with the:
A. Purchasing manager
B. Controller
C. Sales manager
D. Production supervisor
Correct Answer: D. Production supervisor
Rationale: They control how efficiently labor is used.
(Units 8-13)
50 questions
1. The cash budget typically includes sections for:
A. Assets, liabilities and equity
B. Revenue and gross margin only
C. Product costs only
D. Cash receipts, cash disbursements and financing
Correct Answer: D. Cash receipts, cash disbursements and financing
Rationale: It shows whether borrowing is needed.
2. A continuous (rolling) budget:
A. Always covers the next 12 months by adding a new month as one ends
B. Is prepared only once every five years
C. Covers only one month
D. Never changes
Correct Answer: A. Always covers the next 12 months by adding a new month as one ends
Rationale: It keeps planning forward-looking.
3. Which item is NOT a cash disbursement in the cash budget?
A. Payments for materials
B. Wages paid
C. Depreciation expense
D. Purchase of equipment
Correct Answer: C. Depreciation expense
Rationale: Depreciation is a noncash expense.
4. The production budget is based on:
A. Budgeted sales and desired changes in finished goods inventory
B. The cash budget
C. The capital budget
D. Prior-year net income
Correct Answer: A. Budgeted sales and desired changes in finished goods inventory
Rationale: Production = sales + ending FG - beginning FG.
5. Budgeted sales are 4,500 units. Desired ending finished goods are 1,700 units and beginning
finished goods are 2,000 units. How many units must be produced?
A. 4,500 units
B. 8,200 units
C. 4,200 units
D. 4,800 units
Correct Answer: C. 4,200 units
Rationale: 4,500 + 1,700 - 2,000 = 4,200 units.
, 6. Production is budgeted at 4,000 units, each requiring 4 pounds of material. Desired ending
materials are 4,000 pounds and beginning materials are 1,500 pounds. How many pounds must
be purchased?
A. 16,000 pounds
B. 6,500 pounds
C. 21,500 pounds
D. 18,500 pounds
Correct Answer: D. 18,500 pounds
Rationale: (4,000 x 4) + 4,000 - 1,500 = 18,500 pounds.
7. Sales are collected 60% in the month of sale and 40% in the following month. May sales are
$100,000 and June sales are $105,000. What are June cash collections?
A. $103,000
B. $105,000
C. $63,000
D. $102,000
Correct Answer: A. $103,000
Rationale: ($105,000 x 60%) + ($100,000 x 40%) = $103,000.
8. The difference between the flexible budget and the planning budget is the:
A. Spending variance
B. Price variance
C. Activity variance
D. Volume variance only
Correct Answer: C. Activity variance
Rationale: It results only from activity differences.
9. A flexible budget is:
A. A budget for a single activity level
B. A budget adjusted to the actual level of activity
C. A long-term capital budget
D. A budget that ignores variable costs
Correct Answer: B. A budget adjusted to the actual level of activity
Rationale: It allows meaningful comparison with actual results.
10. An unfavorable labor rate variance could result from:
A. Workers taking less time than standard
B. Lower wage rates
C. Using higher-paid workers or unplanned overtime
D. Buying cheaper materials
Correct Answer: C. Using higher-paid workers or unplanned overtime
Rationale: Actual rate exceeded standard.
11. Responsibility for the labor efficiency variance usually rests with the:
A. Purchasing manager
B. Controller
C. Sales manager
D. Production supervisor
Correct Answer: D. Production supervisor
Rationale: They control how efficiently labor is used.
