Question 1

Which one of the following is not an advantage of a participatory budgeting process?

Options :

A : Control of uncertainties.

B : Goal congruence.

C : Communication between departments.

D : Coordination between departments.

Answer: A

Question 2

Which one of the following is the best reason for using variable costing?

Options :

A : Variable costing is acceptable for income tax reporting purposes.

B : All costs are variable in the long term.

C : Fixed factory overhead is more closely related to the capacity to produce than to the production of specific units.

D : Variable costing usually results in higher operating income than if a company uses absorption costing.

Answer: C

Question 3

Wilson Company uses a comprehensive planning and budgeting system. The proper order for Wilson to prepare certain budget scheduleswould be:

Options :

A : Cost of goods sold, income statement, balance sheet, and statement of cash flows.

B : Cost of goods sold, balance sheet, income statement, and statement of cash flows.

C : Income statement, balance sheet, statement of cash flows, and cost of goods sold.

D : Statement of cash flows, cost of goods sold, income statement, and balance sheet.

Answer: A

Question 4

A company had sales in its first year of operation of $3,450,800 and $4,576,000 in the second year. Salary expense for the business was $568,920 in year one and $622,310 in year two.What is the annual growth rate in salaries?

Options :

A : 9.38%.

B : 18.03%.

C : 8.58%.

D : 13.60%.

Answer: A

Question 5

A corporation utilizes an activity-based costing system for applying costs to its two products, P and Q. In the assembly department, material handling costs vary directly with the number of parts inserted into the product. Machinery is recalibrated and oiled each weekend regardless of the number of parts inserted during the previous week. Both material handling and machinery maintenance costs are charged to the product on the basis of the number of parts inserted. Due to reengineering of the production process for Product P, the number of insertion parts per finished unit has been reduced. How will the redesign of the production process for Product P affect the activity-based cost of Product Q?

Options :

A : Material handling cost per Q will remain unchanged, and machinery maintenance cost per Q unit will remain unchanged.

B : Material handling cost per Q unit will increase, and machinery maintenance cost per Q unit will remain unchanged.

C : Material handling cost per Q will remain unchanged, and machinery maintenance cost per Q unit will increase.

D : Material handling cost per Q unit will increase, and machinery maintenance cost per Q unit will increase.

Answer: C