Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
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Chapter 9, Problem 16MCQ
To determine
Identify the option which is an example of myopic behavior.
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Which of the following explains why managers compare the budgeted costs to actual costs?
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a.
Managers only focus on the budgeted costs and infrequently compare these with actual costs.
b.
Managers only want to know how well they did to control costs.
c.
Managers never compare budgeted costs to actual costs.
d.
Managers evaluate how well they did to control costs and learn how to do better in the future.
e.
Managers only want to learn how to make better decisions in the future.
KKK Co is trying to analyze its costs if it is exceeding to its budgeted figures especially the materials being used in the production. One thing he noticed is that the actual expenditures does not conform to its standards. The following can the possible reasons, except:
A. Failure to take cash discounts available
B. Using a different grade or a substitute material.
C. Higher or lower delivery costs than were expected
D. Fluctuations in market prices of materials
Suppose that Adriana’s decision was prompted mostly by the desire to receivethe computer quickly. Informed that it was losing sales because of the longertime to produce and deliver its products, the management of the company producing Drantex decided to improve delivery performance by improving its internal processes. These improvements decreased the number of defective units andthe time required to produce its product. Consequently, delivery time and costsboth decreased, and the company was able to lower its prices on Drantex.Explain how these actions translate into strengthening the competitive positionof the Drantex PC relative to the Confiar PC. Also discuss the implications forthe management accounting information system.
Chapter 9 Solutions
Managerial Accounting: The Cornerstone of Business Decision-Making
Ch. 9 - Define the term budget. How are budgets used in...Ch. 9 - Prob. 2DQCh. 9 - Explain how both small and large organizations can...Ch. 9 - Prob. 4DQCh. 9 - What is a master budget? An operating budget? A...Ch. 9 - Explain the role of a sales forecast in budgeting....Ch. 9 - All budgets depend on the sales budget. Is this...Ch. 9 - Why is goal congruence important?Ch. 9 - Why is it important for a manager to receive...Ch. 9 - What is participative budgeting? Discuss some of...
Ch. 9 - A budget too easily achieved will lead to...Ch. 9 - Explain why a manager has an incentive to build...Ch. 9 - Discuss the differences between static and...Ch. 9 - Explain why mixed costs must be broken down into...Ch. 9 - What is the purpose of a before-the-fact flexible...Ch. 9 - Prob. 1MCQCh. 9 - Which of the following is part of the control...Ch. 9 - Which of the following is not an advantage of...Ch. 9 - The budget committee a. reviews the budget. b....Ch. 9 - A moving, 12-month budget that is updated monthly...Ch. 9 - Which of the following is not part of the...Ch. 9 - Before a direct materials purchases budget can be...Ch. 9 - The first step in preparing the sales budget is to...Ch. 9 - Which of the following is needed to prepare the...Ch. 9 - A company requires 100 pounds of plastic to meet...Ch. 9 - A company plans to sell 220 units. The selling...Ch. 9 - Select the one budget below that is not an...Ch. 9 - A company has the following collection pattern:...Ch. 9 - The percentage of accounts receivable that is...Ch. 9 - Which of the following is not an advantage of...Ch. 9 - Prob. 16MCQCh. 9 - For performance reporting, it is best to compare...Ch. 9 - To create a meaningful performance report, actual...Ch. 9 - To help assess performance, managers should use a...Ch. 9 - A firm comparing the actual variable costs of...Ch. 9 - Preparing a Sales Budget Patrick Inc. sells...Ch. 9 - Preparing a Production Budget Patrick Inc. makes...Ch. 9 - Preparing a Direct Materials Purchases Budget...Ch. 9 - Preparing a Direct Labor Budget Patrick Inc. makes...Ch. 9 - Preparing an Overhead Budget Patrick Inc. makes...Ch. 9 - Preparing an Ending Finished Goods Inventory...Ch. 9 - Preparing a Cost of Goods Sold Budget Andrews...Ch. 9 - Preparing a Selling and Administrative Expenses...Ch. 9 - Preparing a Budgeted Income Statement Oliver...Ch. 9 - Preparing a Schedule of Cash Collections on...Ch. 9 - Preparing an Accounts Payable Schedule Wight Inc....Ch. 9 - Preparing a Cash Budget La Famiglia Pizzeria...Ch. 9 - Flexible Budget with Different Levels of...Ch. 9 - Performance Report Based on Budgeted and Actual...Ch. 9 - Preparing a Sales Budget Tulum Inc. sells powdered...Ch. 9 - Preparing a Production Budget Tulum Inc. makes a...Ch. 9 - Preparing a Direct Materials Purchases Budget...Ch. 9 - Preparing a Direct Labor Budget Tulum Inc. makes a...Ch. 9 - Preparing an Overhead Budget Tulum Inc. makes a...Ch. 9 - Prob. 40BEBCh. 9 - Preparing a Cost of Goods Sold Budget Lazlo...Ch. 9 - Preparing a Selling and Administrative Expenses...Ch. 9 - Preparing a Budgeted Income Statement Jameson...Ch. 9 - Preparing a Schedule of Cash Collections on...Ch. 9 - Pilsner Inc. purchases raw materials on account...Ch. 9 - Preparing a Cash Budget Olivers Bistro provided...Ch. 9 - Flexible Budget with Different Levels of...Ch. 9 - Performance Report Based on Budgeted and Actual...Ch. 9 - Planning and Control a. Dr. Jones, a dentist,...Ch. 9 - Use the following information for Exercises 9-50...Ch. 9 - Prob. 51ECh. 9 - Production Budget and Direct Materials Purchases...Ch. 9 - Production Budget Aqua-Pro Inc. produces...Ch. 9 - Direct Materials Purchases Budget Langer Company...Ch. 9 - Direct Labor Budget Evans Company produces asphalt...Ch. 9 - Sales Budget Alger Inc. manufactures six models of...Ch. 9 - Production Budget and Direct Materials Purchases...Ch. 9 - Schedule of Cash Collections on Accounts...Ch. 9 - Schedule of Cash Collections on Accounts...Ch. 9 - Cash Payments Schedule Fein Company provided the...Ch. 9 - Cash Budget The owner of a building supply company...Ch. 9 - Flexible Budget for Various Levels of Production...Ch. 9 - Use the following information for Exercises 9-63...Ch. 9 - Use the following information for Exercises 9-63...Ch. 9 - Prob. 65PCh. 9 - Operating Budget, Comprehensive Analysis Allison...Ch. 9 - Use the following information for Problems 9-67...Ch. 9 - Use the following information for Problems 9-67...Ch. 9 - Use the following information for Problems 9-67...Ch. 9 - Ryan Richards, controller for Grange Retailers,...Ch. 9 - Participative Budgeting, Not-for-Profit Setting...Ch. 9 - Cash Budget The controller of Feinberg Company is...Ch. 9 - Optima Company is a high-technology organization...Ch. 9 - Direct Materials and Direct Labor Budgets Willison...Ch. 9 - Prob. 75PCh. 9 - Prob. 76CCh. 9 - Prob. 77CCh. 9 - Budgetary Performance, Rewards, Ethical Behavior...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Which of the following is the most likely explanation for an unfavorable materials usage variance and a favorable labor wage variance? a. The new labor contract increased wages. b. Higher quality materials were purchased, resulting in less waste. c. The company experience labor turnover and newer, less experienced workers were hired. d. A new supplier offered a lower price for materials.arrow_forwardWhich of the following is a possible cause of an unfavorable labor efficiency variance? A. hiring substandard workers B. making too many Units C. buying higher-quality material D. paying too much for workersarrow_forwardWhich problem might be a result of an unrealistic budget? reduced employee morale profitable operations minimal differences between actual and budgeted amounts favourable operating activityarrow_forward
- These are measures not found in the chart of accounts, such as customer satisfaction scores or product quality measures. A. Quality measures B. Non-financial measures C. Financial Measures D. Balanced Scorecard A manager would like to see reduction of the following operational measures, except: A. Spoilage B. Number of customer complaints C. Queue time D. Manufacturing Efficiencyarrow_forwardThe costs referred to as “controllable costs” are    a. Costs which management decides to incur in the current period to enable the company to achieve objectives other than the filling of orders placed by customers.    b. Costs which are likely to respond to the amount of attention devoted to them by a specified manager.    c. Costs which are governed mainly by past decisions that established the present levels of operating and organizational capacity and which only change slowly in response to small changes in capacity.    d. Costs which fluctuate in total in response to small changes in the rate of utilization of capacity.arrow_forwardWhat of the following is NOT a Benefit of Activity Based Management? a.It assists in the budgeting process. b.It aids management in cost cutting and/or cost control and inferentially in product profitability. c.It causes managers to identify non-value added activities and therefore encourages thinking of means of reducing such activities. d.Is more complex than traditional accounting system because it uses multiple cost application rates, one for each activity or cost pool.arrow_forward
- Which of the following would be expected to result in a reduction in actual net profit compared to budgeted net profit in an accounting period? Please select all that apply.     A decrease in the actual selling price of products compared to the budgeted selling price of products without a corresponding decrease in the actual costs of producing those goods.     An increase in actual expenditure on non-current assets compared to budgeted expenditure on non-current assets.     A more productive workforce than budgeted.     An increase in the actual cost of raw materials compared to the budgeted cost of raw materials without a corresponding increase in the actual selling price of goods produced.arrow_forward1. There is a significant decrease in unit sales. Which of the following would be the LEAST likely action among the different departments?  a. Consult with marketing and sales to determine whether there are changes in customer preferences. b. Review changes in technology and determine whether there is obsolescense in the products and the production process c. Inquire with the after-sales service whether there are indications of high level of unresolved customer complaints. d. Communicate with inbound logistics and determine whether raw materials contributed to increase in product failure.  2. The internal cost analysis process involves the following in what order? (A) Identify the links between the process and check for opportunities to lower costs, (B) Identify the value creating processes and the cost of each, (C) Identify the cost driver for each process and the cost per activity level.  a. A, B, Cb. C, A, Bc. B, A, Cd. B, C, A  3. This stage of…arrow_forwardWhich of the following is a limitation of using past performance as a basis for judging actual results? Choose below: 1. It does not account for productivity increases over the periods  2. It assumes inefficiencies of previous periods without considering possible efficiencies of the budget period  3. It increases the tendency of senior managers exaggerating changes in future conditions as opposed to changes in current conditions  4. It increases the incentive for managers to introduce budgetary slackarrow_forward
- In your opinion, where should companies spend most of their quality funds: on prevention, inspection, internal failure or external failure costs? Explain your logic in making this selection.arrow_forwardWhich of the following is not a consideration when a manager is deciding to discontinue a product or product line? Â Â Whether the product has a positive or negative contribution margin. Â Â Determining if direct fixed costs could be avoided if the product or product line is discontinued. Â Â If discontinuing the product or product line will affect sales of remaining products. Â Â Not having any free capacity.arrow_forwardAssume that a company has decided not to allocate any support department costs to producing departments. Describe the likely behavior of the managers of the producing departments. Would this be good or bad? Explain why allocation would correct this type of behavior.arrow_forward
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