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202 Prelim Quiz
202 Prelim Quiz
3. The setting of objectives and the identification of methods to achieve those objectives is
called
A. planning
B. controlling
C. decision making
D. performance evaluation
4. In the planning and control process, what is the proper sequence of events?
A. Set goals, set objectives, develop plans, implement plans, evaluate performance.
B. Establish a master budget, set standard costs, develop variance analysis.
C. Develop engineered costs, develop pricing targets, calculate contribution margins
D. Identify variable costs, identify fixed costs, project the sales mix, determine
breakeven.
7. Which of the following is included in the day-to-day work of the management team?
A. decision making
B. planning
C. controlling
D. all of the given choices
9. Which of the following is true of managerial accounting rather than financial accounting?
A. The outputs of this accounting system are the basic financial statements.
B. The methods of this accounting system are established by an overseeing board.
C. The accounting methods are standardized to allow comparisons among companies.
D. The accounting system would be unique to each company.
11. Which of the following statements is (are) true regarding financial and managerial
accounting?
I. Both are mandatory.
II. Both rely on the same underlying financial data.
III. Both emphasize the segments of an organization, rather than just looking at the
organization as a whole.
IV. Both are geared to the future, rather than to the past.
13. For internal users, managers are more concerned with receiving information that is:
A. completely objective and verifiable.
B. completely accurate and precise.
C. relevant, flexible, and immediately available.
D. relevant, completely accurate, and precise.
18. The major reporting standard for presenting managerial accounting information is
A. relevance
B. generally accepted accounting principles
C. the cost principle
D. the current tax law
19. With respect to the time dimension, how does managerial decision compare with external
performance evaluation?
Managerial Decision External
Making Performance
A. Past Past
B. Past Future
C. Future Past
D. Future Future
20. Which of the following activities is not usually performed by a management accountant?
A. Assisting managers to interpret data in managerial accounting reports.
B. Designing systems to provide information for internal and external reports.
C. Gathering data from sources other than the accounting system.
D. Deciding the best level of inventory to be maintained.
21. How does the managerial decision making compare with external performance
evaluation?
Managerial Decision Making External Performance Evaluation
A. Detailed Detailed
B. Detailed More aggregated
C. More aggregated Detailed
D. More aggregated More aggregated
22. Management accountants would not
A. assist in budget planning.
B. prepare reports primarily for external users.
C. determine cost behavior.
D. be concerned with the impact of cost and volume on profits.
25. Managerial accounting provides data to achieve all of the following major objectives
except:
A. planning and control of costs.
B. supporting management planning
C. compliance with SEC reporting requirements
D. determining the costs of products
28. Which of the following statements about internal reports is not true?
A. The content of internal reports may extend beyond the double-entry accounting
system.
B. Internal reports may show all amounts at market values.
C. Internal reports may discuss prospective events.
D. Most internal reports are summarized rather than detailed.
31. Which statement about the extent of detail in a management accounting report is true?
A. It may depend on the frequency of the report.
B. It depends on the type of manager receiving the report.
C. It depends on the level of the manager receiving the report.
D. All of the given choices.
33. In order to be useful to managers, management accounting reports should possess all of
the following characteristics except:
A. Provide objective measures of past operations and subjective estimates about future
decisions
B. Be prepared in accordance with generally accepted accounting principles.
C. Be provided at any time management needs information.
D. Be prepared to report information for any unit of the business to support decision
making.
34. Which ethical standard of conduct requires that a managerial accountant be responsible to
prepare complete and clear reports and recommendations are based on appropriate
analyses of relevant and reliable information?
A. competence
B. confidentiality
C. integrity
D. objectivity
35. Which ethical standard of conduct requires the managerial accountant have to
communicate information fairly and objectively?
A. competence
B. confidentiality
C. integrity
D. objectivity
36. Under which ethical standard of conduct does the managerial accountant have the
responsibility to refuse any gift, favor, or hospitality that would influence or appear to
influence his or her decision?
A. competence
B. confidentiality
C. integrity
D. objectivity
37. Under which ethical standard of conduct does the managerial accountant have the
responsibility to refrain from either actively or passively subverting the attainment of an
organization’s legitimate and ethical objectives?
A. integrity
B. competence
C. objectivity
D. confidentiality
38. Under which ethical standard of conduct does the managerial accountant have the
responsibility to disclose fully all relevant information that could reasonably expected to
influence an intended user’s understanding of the reports, comments, and
recommendations presented?
A. objectivity
B. competence
C. confidentiality
D. integrity
39. For managerial decision purposes, the volume of information should be evaluated on the
basis of
A. cost-benefit relationship
B. A cost, but not benefit.
C. A benefit, but not cost.
D. Neither cost nor benefits, but some other criteria.
41. In a broad sense, cost accounting can be defined within the accounting system as
A. internal and external reporting that may be used in making nonroutine decisions and
in developing plans and policies.
B. external reporting to government, various outside parties, and stockholders.
C. internal reporting for use in management planning and control, and external
reporting to the extent its product-costing function satisfies external reporting
requirements.
D. internal reporting for use in planning and controlling routing operations.
43. If a distinction is made between cost accounting and managerial accounting, managerial
accounting is more oriented toward
A. valuation inventory.
B. analysis of variances including spoilage.
C. financial reporting to third parties.
D. the planning and controlling aspects of the management process.
47. In determining whether planned goals are being met, a manager is performing the
function of
A. planning
B. controlling
C. motivating
D. follow-up
49. Which of the following best describes what performance evaluation should be designed
to do?
A. Modify goal and objectives each month.
B. Establish sales goals and targets.
C. Compare actual results to plan.
D. Establish blame
52. Each of the following would be considered a staff function EXCEPT the:
A. vice-president of finance
B. vice-president of corporate planning
C. vice-president of research and development
D. vice-president of marketing
56. Developing a company strategy for responding to anticipated new markets is an example
of:
A. decision making
B. controlling
C. planning
D. motivating
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University of San Jose – Recoletos
School of Business and Management
Accountancy and Finance Department
Strategic Business Analysis
Mr. Jun Brian Alenton
CPA, CMA, CAT, RCA, MICB, MBA
Module 2
Operational Budgeting
Theories:
1. Budgeting is
a. the process of creating a formal plan and translating goals into a quantitative format.
b. a technique for comparing actual costs with standard costs.
c. a technique for determining the cost of manufactured products.
d. a means of product costing that emphasizes activities as basic cost objects.
4. It involves the forecasting of realizable results over a definite period or periods, the planning and
coordination of the various operations and functions of the business to attain realizable results,
and control of variations from the approved plan.
a. Cost control
b. Budgeting
c. Internal control
d. Vouching
11. A budget manual describes how a budget is to be prepared. It usually includes a budget planning
calendar and
a. the company policies regarding the authorization of transactions.
b. documentation of the accounting system software.
c. distribution instructions for budget schedules.
d. a chart of accounts.
12. The budget element (s) included in the financial budget process are the following, except the
a. budgeted balance sheet.
b. capital budget.
c. cash budget and budgeted statement of cash flows.
d. budget variance.
18. When developing a budget, an external factor to consider in the planning process is
a. the activities of competitors.
b. development of new product.
c. the implementation of employees’ retirement plan.
d. a change in management.
19. A budget can be many tools in one. It can be used for planning, communications, motivation, and
control. For the budgetary process to serve effectively as a control tool,
a. the organization must have a budget director.
b. a budget committee must be organized.
c. forecasting procedures must be developed.
d. the budgeting and accounting system must be integrated or synchronized with the
organizational structure.
20. In developing an annual master budget, individual budget schedules are prepared. The budget
schedule that would provide the necessary input data for the direct labor budget would be the
a. schedule of cash receipts and disbursements.
b. sales forecast.
c. production budget.
d. raw materials purchases budget.
21. Among the components of the operating budget is the selling and administrative expenses budget,
which
a. is usually optional.
b. is composed only of fixed costs.
c. is difficult to allocate by month and therefore presented as a lump sum figure for the whole
year.
d. should be detailed so that the key assumptions can be better understood.
22. One component of the financial budget is the cash budget. It is prepared periodically to facilitate
cash planning and control. Its purpose is to anticipate cash needs while minimizing the amount
of idle cash. The cash receipts section of the budget includes all sources of cash, among which is
a. depreciation. c. extinguishment of debt.
b. factory supplies. d. loan proceeds.
23. The budget preparation process typically begins with the sales budget and continues through the
preparation of the budgeted financial statements. The last budget schedule prepared before the
financial statements
a. taxes and licenses budget.
b. cash budget.
c. selling and administrative expenses budget.
d. cost of goods sold budget.
24. When a company prepares its first draft of its budgeted income statement, management must
evaluate whether projected earnings would meet company objectives. This evaluation is based
on factors such as the following except
a. desired earnings per share.
b. average earnings for other firms in the industry.
c. desired price earnings ratio.
d. desired internal rate of return.
30. In this budgeting process, the budget is based not on the existing system, but on changes or
improvements that are to be made. It assumes the continuous improvement of products and
processes.
a. Zenkai Budgeting
b. Kaizen Budgeting
c. Keizan Budgeting
d. Zankei Budgeting
Problem 1: Comprehensive
Kayud Engineering produces two products, Diligence and Perseverance. The budget for the forthcoming
year to 31 March 2022 is to be prepared. Expectations for the forthcoming year include the following.
Depreciation is taken at 5% straight line on plant and equipment. A machine costing the company
P20,000 is due to be installed on 1 October 2021 in the machining department, which already has
machinery installed to the value of P100,000 (at cost). Land worth P180,000 is to be acquired in
December 2021.
(g) There is no opening or closing work in progress and inflation should be ignored.
Required: Prepare the following for the year ended 31 March 2022 for Kayud Engineering
Ltd.
(a) Sales budget
(b) Production budget (in quantities)
(c) Direct materials usage budget
(d) Direct labor budget
(e) Factory overhead budget
(f) Computation of the factory cost per unit for each product
(g) Direct materials purchases budget
(h) Cost of goods sold budget
(i) Cash budget
(j) A budgeted statement of financial performance and budgeted statement of financial position
Short Problems:
1. Ernie Trading Co. budgeted merchandise purchases of 40,000 units next month. The expected
beginning inventory is 12,000 units and the desired inventory at the end of next month is
15,000 units. Budgeted sales in units for next month is
a. 37,000. c. 55,000.
b. 43,000. d. 52,000
2. Edil Producers, Inc. will start its commercial operations on January 1, 200A. The sales forecast
per the sales management’s estimates for its first year of operations is 50,000 units. However,
the production manager estimated that only 80% of the sales forecast can be produced with
the available workforce and equipment. The product will be sold for P20 per unit. The budgeted
peso sales for Edil Producers, Inc.’s initial year of operations is
a. P800,000. c. P50,000.
b. P1,000,000. d. P40,000.
4. Tasyo Company has budgeted sales of 90,000 units in January; 120,000 units in February; and
180,000 units in March. The company has 20,000 units of finished goods and 35,000 pieces of
materials on hand on January 1. Each unit of product requires 5 pieces of materials. The desired
inventory of finished goods and materials at the end of each month is as follows:
Finished goods – 20% of next month’s sales
Materials - 25% of next month’s production needs
How many pieces of materials should the company plan to purchase in January?
a. 600,000 c. 468,000
b. 567,000 d. 552,500
Each unit of product requires 2 pieces of raw materials. The desired ending raw materials inventory for
each month 130% of the following month’s production needs, plus 2,000 pieces. (The April 1
inventory meets this requirement.)
The product is processed in two departments (Dept. A and Dept. B) and the direct labor standards are
as follows:
Hours per Unit Rate per Hour Labor Cost per Unit
Department A 6 P30 P180
Department B 2 40 80
6. What is the budgeted direct labor cost for the month of May?
a. P13,000,000 c. P10,400,000
b. P11,700,000 d. P7,200,000
7. Fame Company has the following budget formula for factory overhead costs:
FOH = P5,000,000 per month + P300 per unit of product
If the company plans to produce 50,000 units in January, how much is the budgeted factory
overhead cost?
a. P20,000,000 c. P5,000,000
b. P15,000,000 d. P5,050,300
How many equivalent units should Bugnot Corporation plan to produce during the budget period?
a. 7,300 c. 7,000
b. 7,400 d. 7,200
Budgeted sales of dolls for the last 3 months of the year are as follows:
October 30,000
November 40,000
December 70,000
As much as possible, the company does not want to stock finished goods inventory, so it produces
exactly the same quantity as the budgeted sales each month. However, in order to avoid
stock-out problems in December, it plans to have a December 1 inventory balance of 30%
of December’s budgeted sales. What is the budgeted production cost in November?
a. P54,900,000 c. P46,000,000
b. P56,800,000 d. P64,900,000
10. What is the budgeted production of leather bags for the first quarter?
a. 3,760 c. 4,400
b. 3,040 d. 3,400
13. Assume that on the average, a full-time factory worker works 188 hours per month and no
overtime is allowed, how many full-time equivalent factory workers are needed to produce the
budgeted output of leather bags in January?
a. 5 c. 100
b. 25 d. 23.94
16. Gargalicana Company is preparing its cash budget for next year. Budgeted sales for four months
are as follows:
April P80,000 June 240,000
May 160,000 July 80,000
Fifty percent of total sales is cash sales. The balance, or the credit sales, is collected in the
following manner:
70% in the month following the sale
20% in the second month following the sale
10% in the third month following the sale
How much is the budgeted cash receipts in July?
a. P144,000
b. P104,000
c. P288,000
d. P208,000
17. All sales of Paige Company are on count. Budgeted sales for the first quarter of 200B are:
January P96,000
February 168,800
March 158,400
Based on the company’s collection experience, 60% of the sales is collected in the month after
the sale, 36% is collected in the second month following the sale, and the balance is
uncollectible. The budgeted cash receipts for March is
a. P118,368. c. P155,808.
b. P158,304. d. P135,840.
Because of this change in collection policy, the total cash inflow from April sales will be
a. P62,720. c. P62,848.
b. P56,448. d. P64,000.