ACC 241 – Budgeting and Variance Exam Practice with Verified Solutions

ACC 241 – Budgeting and Variance Exam Practice with

Verified Solutions


Description:

This ACC 241 exam pack provides updated and verified questions with 100% correct

answers. Topics include sales budgets, production budgets, direct labor and direct

materials budgets, as well as performance reports and responsibility accounting. It

also explains cost of goods sold, purchases, ending inventory, and gross profit

calculations with worked-out solutions. This material is ideal for practice and

revision before exams.



A favorable direct labor efficiency variance and an unfavorable direct labor rate

variance might indicate which of the following? A) Unskilled workers using more

actual hours than standard, paid at a higher rate per hour than the standard rate B)

Unskilled workers using less actual hours than standard, paid a lesser rate per hour

than the standard rate C) Skilled workers using less actual hours than standard, paid

at a higher rate per hour than the standard rate D) Skilled workers using more actual

hours than standard, paid at a higher rate per hour than the standard rate -

answer✔✔C Strategic planning involves setting short-term goals that extend three
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,to four months into the future - answer✔✔F Budgets are helpful because

managers can plan the cash inflows and outflows in an organization. - answer✔✔T

A budget is a quantitative expression of a plan that helps managers coordinate and

implement the plan. - answer✔✔T ) Which of the following alternatives reflects

the proper order of preparing components of the master budget? 1. Production

budget 2. Sales budget 3. Direct materials budget A) 2, 3, 1 B) 1, 3, 2 C) 3, 1, 2 D) 2, 1,

3 - answer✔✔D Which of the following budgets is a major part of the master

budget and it focuses on the income statement and its supporting schedules? A) cash

B) operating C) capital expenditures D) financial - answer✔✔B Which of the

following budgets is the cornerstone of the master budget? A) sales B) cash C)

budgeted balance sheet D) operating expense - answer✔✔A Which of the

following terms is useful because it compares "actual" revenues and expenses

against "budgeted" revenues and expenses? A) Responsibility center B) Capital

budget C) Performance report D) Sensitivity analysis - answer✔✔C When creating

the sales budget, management simply takes the sales from the year before and

divides that total by 12 months. Thus, each month will always predict the same

amount of budgeted sales. - answer✔✔F On the production budget, the number

of units to be produced is computed as A) unit sales + desired end inventory +

beginning inventory. B) unit sales + desired end inventory - beginning inventory. C)

unit sales - desired end inventory - beginning inventory. D) unit sales - desired end
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inventory + beginning inventory. - answer✔✔B On the direct labor budget, the
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,total quantity of direct labor hours needed is computed as A) units to be produced ×

direct labor hour per unit. B) quantity needed for production + indirect labor hours -

direct labor hours. C) units to be produced - indirect labor hours × cost per labor

hour. D) estimated direct labor hours needed × cost per hour - answer✔✔A On

the direct materials budget, the total quantity of direct materials needed is

computed as A) quantity needed for production + desired end inventory of DM -

beginning inventory of DM. B) units to be produced + desired end inventory of DM -

beginning inventory of DM. C) units to be produced - desired end inventory of DM +

beginning inventory of DM. D) quantity needed for production - desired end

inventory of DM + beginning inventory DM. - answer✔✔A The ________ budget is

the only budget stated only in units, not dollars. A) production B) sales C) direct

materials D) manufacturing overhead - answer✔✔A The ________ budget starts

with the number of units to be produced. A) production B) operating expense C)

direct labor D) All of these choices start with the number of units to be produced -

answer✔✔A Which of the following budgets usually shows separate sections for

fixed and variable costs? A) Direct materials and manufacturing overhead budget B)

Manufacturing overhead budget and production budget C) Production budget and

manufacturing overhead budget D) Operating expenses budget and manufacturing

overhead budget - answer✔✔D Which of the following budgets or financial

statements is part of the operating budget? A) Sales budget B) Budgeted balance

sheet C) Capital expenditures budget D) Cash budget - answer✔✔A The ________
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, is a plan that shows the units to be sold and the projected selling price and is also the

starting point in the budgeting process. A) cash budget B) budgeted statement of

cash flows C) budgeted income statement D) sales budget - answer✔✔D Which of

the following is not part of the operating budget? A) Inventory, purchases and cost of

goods sold budget B) Cash budget C) Sales budget D) Budgeted income statement -

answer✔✔B Which of the following is not included in the operating budget? A)

Budgeted income statement B) Sales budget C) Inventory budget D) Budgeted

balance sheet - answer✔✔D In preparing the operating budget, the first step is

preparing the A) cash budget. B) sales budget. C) budgeted income statement. D)

purchases budget. - answer✔✔D Desired ending inventory is 20% of next month's

sales. If cost of goods sold is $300,000 and next month's sales are $900,000, which of

the following statements is true regarding purchases? A) Purchases will be more than

cost of goods sold. B) Purchases cannot be predicted from the information given. C)

Purchases will be less than cost of goods sold. D) Purchases will equal cost of goods

sold. - answer✔✔B ) Desired ending inventory is 25% more than beginning

inventory. If purchases total $160,000, which of the following statements is true

regarding cost of goods sold (COGS)? A) COGS will exceed cost of goods available for

sale. B) COGS will be less than purchases. C) COGS will exceed purchases. D) COGS

will equal $55,000. - answer✔✔B Loyal Pet Company expects to sell 5,000 beefy

dog treats in January and 9,000 in February for $3 each. What will be the total sales

revenue reflected in the sales budget for those months? A) January $15,000;
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