Passmaster - B2

Front 1

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Back 1

Contribution margin per unit does not change with volume.

Front 2

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Back 2

The best transfer pricing model is based on market price

Front 3

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Back 3

OC per Unit = CM ($)/Special Order Size in Units

Front 4

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Back 4

Under Variable costing the product costs are as follows:
1-Direct materials
2-Direct labor
3-Variable manufacturing OH

Front 5

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Back 5

Regression analysis can be used to separate costs into fixed and variable components by means of least squares. This method mathematically fits a trend line to minimize the distance between the trend line and the actual observations

Front 6

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Back 6

Rule: The basic premise of the learning curve is that operating efficiency and/or production increases in repetitive tasks as experience is gained. The rate of improvement, measured by the learning curve, has a regular pattern that can be stated as follows:
As cumulative quantities double, average cost per unit decreases by a specified percent of the previous cost.

Front 7

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Back 7

The standard error (also standard error of the mean) is a measurement used in conjunction with standard deviation
computations

Front 8

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Back 8

On the CPA exam, direct material and direct labor are presumed to be variable unless otherwise stated.

Front 9

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Back 9

Regression analysis method is the most accurate way to classify costs of an object as either fixed or variable.

Front 10

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Back 10

Absorption costing encourages larger inventories

Front 11

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Back 11

One of the assumptions underlying Cost-Volume profit Analysis include "Selling prices are to be unchanged"

Front 12

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Back 12

In making decisions about which products to emphasize, managers should select products with the highest contribution margin per unit of the constraining resource.

Front 13

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Back 13

The Delphi method of forecasting involves the use of multiple teams in geographically remote locations. Information is shared and gathered in a central point and compiled and then redistributed for
comment. The method is highly interpersonal and requires significant judgment.

Front 14

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Back 14

The opportunity cost the next best use of the productive capacity ($10,000), not the difference between the best and next best alternatives ($25,000 - $10,000).

Front 15

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Back 15

Return on sales is the NI

Front 16

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Back 16

Manufacturing industries such as mass production are typical
areas where standard cost systems are used.

Front 17

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Back 17

Interest expense on fixed rate notes & Depreciation expense are not subject to inflation adjustment

Front 18

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Back 18

An investment center is most like an independent business.

Front 19

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Back 19

Customer satisfaction perspective of balanced scorecard examines a company's success in targeted market segments

Front 20

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Back 20

Strategic Business Units are established in a decentralized
environment not a centralized environment.

Front 21

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Back 21

Responsibility accounting is a system of accounting that recognizes various responsibility or decision centers throughout an organization and reflects the plans and actions of each of these centers by assigning particular revenues and costs to the one having the responsibility for making decisions about these revenues and costs.

Front 22

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Back 22

The purpose of identifying and assigning responsibility for a
variance to a person/department should be to use the knowledge to promote learning and continuous improvement.

Front 23

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Back 23

A flexible budget is a budget prepared at different levels of
operating activity. It is appropriate for any activity that has variable costs. It is not necessary for the control of fixed costs since fixed costs do not vary with changes in the level of activity.

Front 24

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Back 24

Forecast of sales volume is the first step in the budget development process. Sales volumes will drive product supply requirements and, by extension, purchasing and inventory requirements.

Front 25

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Back 25

Accounts payable would be the most impacted by the use of the percentage of sales forecasting method for budgeting purposes. If sales increased or decreased, purchases would presumably increase or decrease, by whatever percentage was being used in the budgeting process. If purchases increased or decreased, accounts payable would presumably increase or decrease by approximately
the same percentage.

Front 26

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Back 26

The fixed overhead spending variance is purely the difference
between the amount spent and the amount budgeted for fixed overhead.

Front 27

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Back 27

The case budget is done after all budgets have been prepared

Front 28

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Back 28

The cash budget provides information concerning the need for
external financing, not internal financing.

Front 29

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Back 29

The cash budget must be prepared before you can complete the
forecasted balance sheet.

Front 30

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Back 30

The statement of cash flows is usually the last pro forma statement
prepared. This is because everything affects cash. Only when everything else has been estimated can cash flow be projected.

Front 31

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Back 31

The financial budget process includes:
1 . Cash and capital purchases budgets.
2. Balance sheet and statement of cash flows.
The operating budget process includes:
1 . All budgets except cash and capital purchases.
2. The pro forma income statement.

Front 32

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Back 32

The purchase of lower than standard quality material will often result in an unfavorable material usage variance (the inferior material causes more waste)

Front 33

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Back 33

An unfavorable direct labor efficiency variance could be caused by
an unfavorable material usage variance. Poor quality materials could mean unfavorable material usage and cause inefficient labor usage.

Front 34

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Back 34

Favorable sales commission variance in a static budget is not good news; it means actual sales are less than budgeted.

Front 35

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Back 35

Probability ( risk) analysis is used to examine the possible outcomes given different alternatives. Sensitivity analysis uses a trial and error method in which the sensitivity of the solution to changes in variables is calculated. Therefore, probability analysis is an extension of sensitivity analysis.

Front 36

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Back 36

Cost-based pricing is associated with:
1-Price Stability
2-Price Justification
3-Fixed-Cost recovery

Front 37

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Standard sales price/unit is the standard total dollar sales amount divided by the standard amount of units allowed to be sold

Front 38

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Back 38

The best basis for setting standards is engineering standards based
on attainable performance. Tight standards are good, but if unattainable, employees will not be motivated.

Front 39

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Back 39

When the question says "Sales" it means units sold, but when it says "Sales value" it means dollar sales

Front 40

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The production budget process usually begins with Sales Budget

Front 41

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Standard costs usually means that a flexible budget is being used.

Front 42

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Back 42

The overhead volume variance is the least controllable standard costing variance by a production supervisor

Front 43

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Back 43

Budgeting is the process of creating a formal plan and translating
goals into a quantitative format.

Front 44

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Back 44

The production budget (which includes projected units to be produced) would provide the necessary input data for the direct labor budget.

Front 45

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Back 45

The first step in the sales planning process is to develop management guidelines specific to sales planning, including the sales planning process and planning responsibilities.

Front 46

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Back 46

The benefits a company could realize from improved cash budgeting include:
I . Displaying the cash effects of the master budget on the actual cash inflows and outflows from operations.
II . Determining when additional sources of financing (either short-term or long-term) are necessary and planning cash expenditures with cash availability.
III . The optimal use of trade credit.

Front 47

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Back 47

Labor price variances would not be attributable to union contracts
approved before the budgeting cycle. If the contracts are approved before, they would be used as the basis for the budget.

Front 48

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Back 48

Flexible budget variance is the difference between the actual
amounts and the flexible budget amounts for the actual output achieved.

Front 49

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Back 49

Production volume variance is the variance in an absorption costing
system that measures the departure from the denominator level of activity that was used to set the fixed overhead rate.

Front 50

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Back 50

Variable overhead spending variance is most controllable by the
plant manager and somewhat by production control.

Front 51

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Back 51

Flexible Budget variance = Actual amount spent for OH - Standard amount spent for OH based on actual level of output

Front 52

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Back 52

In a standard cost system, the investigation of an unfavorable
material use variance should begin with the production manager and/or the purchasing manager.

Front 53

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Back 53

Budgetary control is the process of developing plans for a company's expected operations and controlling the operations to help carry out those plans.

Front 54

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Back 54

The variable spending OH variance formula is the same as the Material price variance

Front 55

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"A flexible budget allows comparison of actual results with a budget based on achieved volume."

Front 56

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Margin of safety = Total Sales ($) - Break even sales ($)

Front 57

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Back 57

The Delphi method of forecasting involves the use of multiple teams in geographically remote locations. Information is shared and gathered in a central point and compiled and then redistributed for comment. The method is highly interpersonal and requires significant judgment.

Front 58

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Back 58

The cash budget provides information concerning the need for external financing, not internal financing.

Front 59

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Back 59

An unfavorable direct labor efficiency variance could be caused by an unfavorable material usage variance. Poor quality materials could mean unfavorable material usage and cause inefficient labor usage.