Deck 7: Flexible Budgeting

Question 1

The focus of a flexible budget is on

A) Control of inputs
B) Control over processes
C) Efficiency
D) Effectiveness

Answer 1

C

Question 2

The part of a system that flexible budgeting focuses on is

A) Inputs
B) Throughputs
C) Outputs
D) Outcomes
E) Feedback

Answer 2

C

Question 3

Differences between actual and budgeted expenditures can arise due to changes in input prices, efficiency, intensity, and output volume. A flexible budget accounts for which of these four variables?

A) Input prices
B) Efficiency
C) Intensity
D) Output volume

Answer 3

D

Question 4

When a flexible budget is used and actual output exceeds forecasted output, the percentage change in total expenses in the restated or flexed budget will be

A) Greater than the percentage increase in output
B) Equal to the percentage increase in output
C) Less than the percentage increase in output
D) Zero

Question 5

The primary metric used in flexible budgeting is

A) Total cost
B) Cost per input
C) Cost per output
D) Cost per outcome
E) Total profit

Question 6

If 500 units of supplies are consumed when output is at its high of 200, and 300 supply units are consumed during the low month when 150 units of output were produced, the variable component using the high/low method is

A) 2.00
B) 2.50
C) 3.33
D) 4.00
E) None of the above

Question 7

If 500 units of supplies are consumed when output is at its high of 200, and 300 supply units are consumed during the low month when 150 units of output were produced, what will be the predicted consumption of supplies when output is 175 units using the high/low method?

A) 350
B) 375
C) 400
D) 450
E) None of the above

Question 8

If 500 units of supplies are consumed when output is at its high of 200, and 300 supply units are consumed during the low month when 150 units of output were produced, what will be the predicted supply expense if output is 175 and the average supply cost is $12 per unit using the high/low method?

A) $4200
B) $4500
C) $4800
D) $5400
E) None of the above

Question 9

Which two methods for determining productivity standards produce fixed and variable estimates for input use?

A) Simple average and benchmarks
B) Benchmarks and time and motion studies
C) Time and motion studies and the high/low method
D) The high/low method and regression
E) Regression and simple average

Question 10

A productivity standard specifies the

A) Number of inputs needed per output
B) Cost of inputs consumed during the expenditure base
C) Cost of inputs expected during the budget year
D) Per output profit expected during the budget year

Question 11

When regression is used to calculate a productivity standard, input = f(output),

A) α estimates the change in input use expected from an increase in output
B) α estimates the change in output expected from increasing inputs
C) β estimates the change in input use expected from an increase in output
D) β estimates the change in output expected from increase inputs

Question 12

Frank Gilbreth categorized work into four groups: essential, preparation, incidental, and unnecessary. Essential work includes

A) Assembly, disassembly, or use
B) Loading, transporting, unloading, and set-up
C) Searching, finding, selecting, and inspecting
D) Planning, thinking, and rest

Question 13

Frank Gilbreth categorized work into four groups: essential, preparation, incidental, and unnecessary. Incidental work includes

A) Assembly, disassembly, or use
B) Loading, transporting, unloading, and set-up
C) Searching, finding, selecting, and inspecting
D) Planning, thinking, and rest

Question 14

Frank Gilbreth categorized work into four groups: essential, preparation, incidental, and unnecessary. Work that transforms material and meets a need was called

A) Essential
B) Preparation
C) Incidental
D) Unnecessary

Question 15

The category of work Frank Gilbreth thought should be minimized is

A) Essential
B) Preparation
C) Incidental
D) Unnecessary

Question 16

According to the Five S's system, to organize work and optimize output, sort requires

A) Decluttering and arranging
B) Establishing a place for everything and putting everything in its place
C) Cleaning the work area
D) Establishing best practices
E) Ensuring improvements are continued

Question 17

According to the Five S's system, to organize work and optimize output, standardize requires

A) Decluttering and arranging
B) Establishing a place for everything and putting everything in its place
C) Cleaning the work area
D) Establishing best practices
E) Ensuring improvements are continued

Question 18

According to the Five S's system, to organize work and optimize output, establishing a place for everything and putting everything in its place is called

A) Sort
B) Store
C) Shine
D) Standardize
E) Sustain

Question 19

Which of the following is NOT a strength of flexible budgeting?

A) Ties input use to actual output produced
B) Encourages efficiency
C) Provides clear and stable monetary target for managers
D) Produces more realistic budgets
E) Establishes appropriate incentives and empowers managers

Question 20

Which of the following is NOT a weakness of flexible budgeting?

A) Requires more time and cost to prepare and revise than an incremental budget
B) Budgets shrink with decreases in output
C) Does not produce a fixed budget since the actual budget can only be determined retrospectively after actual output is known
D) May not be feasible for organizations whose output is not tied to revenue
E) Does not encourage efficiency

Question 21

The use of a flexible budgeting system is appropriate when revenue is tied directly to output produced.

Question 22

Flexible budgets are restated (or flexed) at the close of each budget period to account for changes in input prices and output volume.

Question 23

When actual output is 10% greater than forecasted output a flexible budget will increase by 10%.

Question 24

Flexible budgets are easier to prepare than incremental budgets.

Question 25

Flexible budgets require greater manager diligence and response to changes in output to ensure actual expenditures are less than or equal to the end-of-period, restated budget.