This quiz works best with JavaScript enabled. Home > Accounting > Budgeting > Flexible Budgets > Flexible Budgets – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Flexible Budgets Quiz 2 (18 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. IN 2017, ABC Company's net income was P 200, 000, and in 2018, it was P 50, 000. What percentage increase in net income must ABC achieve in 2019 to offset the 2018 decline in net income? A) 60%. B) 300%. C) 400%. D) 600%. Show Answer Correct Answer: B) 300%. 2. Static budgets are: A) Prepared for a range of activity levels. B) Updated for the actual level of activity. C) Provide valid basis for comparing actual and expected costs. D) Prepared for a single, planned level of activity. Show Answer Correct Answer: D) Prepared for a single, planned level of activity. 3. A zero budget is: A) Is a method of budgeting for a single level of activity. B) Is a method of budgeting that ignores inflation. C) Is a method of budgeting that used only for fixed costs. D) Is a method of budgeting in which all expenses must be justified for each new period. Show Answer Correct Answer: D) Is a method of budgeting in which all expenses must be justified for each new period. 4. In evaluating the performance of a profit manager, which of the following would be used? A) Segment Margin. B) Residual Income. C) Return on Investment. D) Economic value-added. Show Answer Correct Answer: C) Return on Investment. 5. Flexible budget variance occurs because A) Of inflation. B) Sales price/cost per unit and the fixed cost was different than planned. C) Actual number of units sold differs from the amount in the static budget. D) None of above. Show Answer Correct Answer: B) Sales price/cost per unit and the fixed cost was different than planned. 6. ABC Company recently declared and issued a 50% stock dividend. This transaction will reduce the company's A) Current ratio. B) Debt to equity ratio. C) Return on operating assets. D) Book value per common share. Show Answer Correct Answer: D) Book value per common share. 7. In a standard cost system, overhead is applied to production on the basis of: A) The denominator hours chosen for the period. B) The actual hours required to complete the output of the period. C) The standard hours allowed to complete the output of the period. D) None of these. Show Answer Correct Answer: C) The standard hours allowed to complete the output of the period. 8. Which will be captured as product costs in the WIP account? A) Actual variable overhead. B) Flexible budget for variable overhead, based on standard DLH allowed for actual output. C) Budget for variable overhead based on actual DLH. D) None of above. Show Answer Correct Answer: B) Flexible budget for variable overhead, based on standard DLH allowed for actual output. 9. A static budget variance is the difference between A) Actual results and the expected results in the flex budget. B) Master budget results and the expected results in the static budget. C) Actual results and the expected results in the master budget. D) None of above. Show Answer Correct Answer: C) Actual results and the expected results in the master budget. 10. Which of the following is a common measure of liquidity? A) Return on sales. B) Debt to equity. C) Return to total assets. D) Accounts receivable turnover. Show Answer Correct Answer: D) Accounts receivable turnover. 11. Variance is Unfavorable (U) if A) An actual amount decreases operating income. B) The budget amount is equal to the operating income. C) An actual amount increases operating income. D) None of above. Show Answer Correct Answer: A) An actual amount decreases operating income. 12. If actual costs are greater than standard costs, there is a(n) A) Normal variance. B) Favorable variance. C) Unfavorable variance. D) Error in the accounting system. Show Answer Correct Answer: C) Unfavorable variance. 13. Comparing actual results to a budget based on actual activity for the period is possible with the use of a: A) Planning budget. B) Master budget. C) Flexible budget. D) Static budget. Show Answer Correct Answer: C) Flexible budget. 14. Managers use budgets for ..... business activities. A) Planning. B) Controlling. C) Planning and controlling. D) None of above. Show Answer Correct Answer: C) Planning and controlling. 15. The master budget focuses on A) The controlling step. B) The planning step. C) Budget risk. D) None of above. Show Answer Correct Answer: B) The planning step. 16. One way of analyzing the variable factory overhead variance is breaking it down into A) Variable overhead spending and rate variance. B) Variable overhead efficiency and volume variance. C) Variable overhead spending and capacity variance. D) Variable overhead spending and efficiency. Show Answer Correct Answer: D) Variable overhead spending and efficiency. 17. TAZ Company had the following information pertaining to 2016:Sales P 2, 000, 000Profit 240, 000Asset Turnover 2.5 timesThe desired minimum rate is 20%What is the residual income? A) P 80, 000. B) (P 80, 000). C) P 100, 000. D) (P 100, 000). Show Answer Correct Answer: A) P 80, 000. 18. Which of the following is true about flexible budgeting? A) Flexible budgets are prepared for one specific activity level. B) Total variable costs change in direct proportion to changes in activity. C) Total fixed costs change within the relevant range. D) None of above. Show Answer Correct Answer: B) Total variable costs change in direct proportion to changes in activity. ← PreviousRelated QuizzesBudgeting QuizzesAccounting QuizzesFlexible Budgets Quiz 1 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books