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Acctg 6

1. The document contains 10 multiple choice questions about business concepts like net income, contribution margin, break-even point, operating leverage, budgeting, and direct materials usage budget. 2. The questions cover topics such as how a firm's net income can remain unchanged as volume changes, how different factors are impacted by increases in projected net income, managerial preferences for operating leverage, identifying components in a contribution margin equation, and the effect of changing a sales commission plan. 3. The final few questions address what operating decisions primarily deal with, what budgeting does not provide, the purpose of comparing actual to budgeted performance, and determining the correct order of budget preparation and what the direct materials usage budget is based

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Shayne Esmero
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1K views2 pages

Acctg 6

1. The document contains 10 multiple choice questions about business concepts like net income, contribution margin, break-even point, operating leverage, budgeting, and direct materials usage budget. 2. The questions cover topics such as how a firm's net income can remain unchanged as volume changes, how different factors are impacted by increases in projected net income, managerial preferences for operating leverage, identifying components in a contribution margin equation, and the effect of changing a sales commission plan. 3. The final few questions address what operating decisions primarily deal with, what budgeting does not provide, the purpose of comparing actual to budgeted performance, and determining the correct order of budget preparation and what the direct materials usage budget is based

Uploaded by

Shayne Esmero
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

If a firm's net income does not change as its volume changes, the firm('s)
a. must be in the service industry
b. must have no fixed costs
c. sales price must equal P0
d. sales price must equal its variable costs

2. As projected net income increases the


a. contribution margin ratio goes up
b. break-even point goes down
c. margin of safety stays constant
d. degree of operating leverage declines

3. A managerial preference for a very low degree of operating leverage might indicate that
a. a decrease in sales volume is expected
b. the firm has very high fixed costs
c. the firm is very unprofitable
d. an increase in sales volume is expected

4. Consider the equation X = Sales - [(CM/Sales) * (Sales)]. What is X?


a. contribution margin
b. fixed costs
c. net income
d. variable costs

5. Management is considering replacing an existing sales commission compensation plan with a


fixed salary plan. If the change is adopted, the company's
a. operating leverage must increase
b. margin of safety must decrease
c. profit must increase
d. break-even point must increase
6. Operating decisions PRIMARILY deal with:
a. acquiring equipment and buildings
b. the use of scarce resources
c. how to obtain funds to acquire resources
d. satisfying stockholders

7. Budgeting provides all of the following EXCEPT:


a. support for the management functions of planning and coordination
b. a means to anticipate problems
c. an ethical framework for decision making
d. a means to communicate the organization's short-term goals to its members

8. A company’s actual performance should be compared against budgeted amounts for the same
accounting period so that:
a. no feedback is possible
b. a rolling budget can be implemented
c. inefficiencies of the past year can be included
d. adjustments for future conditions can be included

9. The order to follow when preparing the operating budget is:


a. revenues budget, manufacturing overhead costs budget, and production budget
b. costs of goods sold budget, production budget, and cash budget
c. revenues budget, production budget, and direct manufacturing labor costs budget
d. cash expenditures budget, revenues budget, and production budget.

10. The direct materials usage budget is based on:


a. the amount of labor-hours worked
b. the predetermined factory overhead rate
c. budgeted sales in pesos
d. the units to be produced during a period

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