Multiple Choice Answers

Select the correct equation format for the purchases budget.
A. Beginning inventory + expected sales = required purchases.
B. Expected sales + Desired ending inventory = required purchases.
C. Beginning inventory + expected sales – desired ending inventory = required purchases.
D. Expected sales + desired ending inventory – beginning inventory = required purchases.

Which of the following items would be least useful in preparing a schedule of cash receipts?
A. Expected revenue from cash sales.
B. Number of units expected to be purchased.
C. Service charges for credit card sales.
D. Past accounts receivable collection experience.

Select the incorrect statement about the master budget.
A. The master budget is a group of detailed budgets and schedules representing the company’s operating and financial plans for the past accounting period.
B. Preparing the master budget begins with the sales forecast.
C. The budgeting process usually begins with preparing the operating budgets.
D. The master budget usually includes operating budgets, capital budgets and pro forma financial statements.

When would a variance be labeled as favorable?
A. When standard costs are equal to actual costs
B. When standard costs are less than actual costs
C. When actual costs are less than standard costs
D. When expected sales are greater than actual sales

Select the correct statement from the following assuming Camacho Company had a favorable direct materials price variance of $2,500 and an unfavorable direct materials usage variance of $1,000.
A. The total direct materials variance is $3,500 favorable.
B. The total direct materials variance is $3,500 unfavorable.
C. The total direct materials variance is $1,500 unfavorable.
D. The total direct materials variance is $1,500 favorable.

 

 

Gonzalez Company makes a product that is expected to use 1.2 pounds of material per unit of product. The material has a standard cost of $2 per pound. Gonzalez actually used 1.25 pounds of material per unit of product made in January. The actual cost of material was $1.95 per pound. Based on this information alone, the condition of the variances for the January production would be
A. unfavorable for price and unfavorable for usage.
B. unfavorable for price and favorable for usage.
C. favorable for price and favorable for usage.
D. favorable for price and unfavorable for usage.

You are considering an investment in Coca Cola Company stock and wish to assess the firm’s long-term debt-paying ability and its use of debt financing. All of the following ratios can be used to assess solvency expect:
A. Number of times interest is earned
B. Net margin
C. Debt to assets ratio
D. Debt to equity ratio

The Zintrozak Company reported net income of $50,000 on sales of $300,000. The company has total assets of $500,000 and total liabilities of $100,000. What is the company’s return on equity ratio?
A. 10.0%
B. 12.5%
C. 50.0%
D. 16.7%

You are considering an investment in Delta Airlines stock and wish to assess the firm’s ability to generate earnings. All of the following ratios can be used to assess profitability except:
A. Net margin
B. Asset turnover
C. Average days to collect receivables
D. Return on investment

In monitoring process quality we might use which of the following statistics?

A. Absolute values
B. Percentage deviation from tolerance centers
C. Difference between the highest and lowest value in a sample
D. Logarithmic control intervals
E. “k” values for the sample mean

Which of the following is an approach to dealing with a bottleneck?
A. Keep a buffer inventory in front of it to insure that it always has something to work on
B. Use Johnson’s sequencing rules on bottleneck operations
C. Pay an incentive bonus to workers on the bottleneck operation
D. Move things to a faster bottleneck
E. Don’t worry about the bottleneck; it will take care of itself

Which manager is usually held responsible for materials usage variances?
A. plant manager
B. purchasing agent
C. production supervisor
D. marketing manager