CMA Test 2

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Question 1 of 10

1. Question

Which budgeting technique focuses on the costs of activities needed to produce a product or service, rather than focusing on departmental line items?

Kaizen budgeting.
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Zero-based budgeting.
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Activity-based budgeting.
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Incremental budgeting.
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Question 2 of 10

2. Question

Under Zero-Based Budgeting, every ‘decision package’ must:

Be approved based on the previous year's funding level.
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Be justified in terms of its costs and benefits, regardless of previous spending.
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Include a 10% cost-of-living increase.
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Focus only on manufacturing activities.
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Question 3 of 10

3. Question

A ‘rolling budget’ is most effective for:

Reducing the time spent on budget preparation.
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Companies operating in a highly stable and predictable environment.
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Maintaining a constant 12-month planning horizon.
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Eliminating the need for variance analysis.
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Question 4 of 10

4. Question

When using the high-low method to separate fixed and variable costs, which of the following data points should be selected?

The highest and lowest cost amounts.
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The highest and lowest activity levels.
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The two data points closest to the regression line.
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The median cost and the median activity level.
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Question 5 of 10

5. Question

In a regression analysis, the ‘Standard Error of the Estimate’ indicates:

The percentage of variance explained by the model.
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The degree of scatter of the actual data points around the regression line.
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The slope of the regression line.
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The y-intercept.
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Question 6 of 10

6. Question

A manufacturing firm discovers that the first unit of a new product took 100 hours to produce. If the firm experiences an 80% cumulative learning curve, how many total hours will be required to produce the first four units?

400 hours.
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320 hours.
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256 hours.
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244 hours.
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Question 7 of 10

7. Question

In a standard master budget sequence for a manufacturing company, which of the following budgets must be prepared before the production budget?

Direct materials budget.
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Sales budget.
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Cash budget.
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Ending finished goods inventory budget.
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Question 8 of 10

8. Question

A company’s production budget shows 5,000 units to be produced. Each unit requires 2 pounds of material. Beginning inventory is 400 pounds, and the company wants ending inventory to be 600 pounds. How many pounds of material must be purchased?

10,000 lbs.
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10,200 lbs.
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9,800 lbs.
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11,000 lbs.
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Question 9 of 10

9. Question

A company anticipates selling 20,000 units. It has 2,000 units in beginning inventory and wants 3,000 units in ending inventory. How many units should be produced?

20,000.
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21,000.
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19,000.
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25,000.
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Question 10 of 10

10. Question

Which of the following would be found on a budgeted balance sheet but NOT on a budgeted income statement?

Depreciation expense.
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Dividends payable.
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Interest expense.
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Sales commissions.
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Quiz Summary

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1. Question

Which budgeting technique focuses on the costs of activities needed to produce a product or service, rather than focusing on departmental line items?

2. Question

Under Zero-Based Budgeting, every ‘decision package’ must:

3. Question

A ‘rolling budget’ is most effective for:

4. Question

When using the high-low method to separate fixed and variable costs, which of the following data points should be selected?

5. Question

In a regression analysis, the ‘Standard Error of the Estimate’ indicates:

6. Question

A manufacturing firm discovers that the first unit of a new product took 100 hours to produce. If the firm experiences an 80% cumulative learning curve, how many total hours will be required to produce the first four units?

7. Question

In a standard master budget sequence for a manufacturing company, which of the following budgets must be prepared before the production budget?

8. Question

A company’s production budget shows 5,000 units to be produced. Each unit requires 2 pounds of material. Beginning inventory is 400 pounds, and the company wants ending inventory to be 600 pounds. How many pounds of material must be purchased?

9. Question

A company anticipates selling 20,000 units. It has 2,000 units in beginning inventory and wants 3,000 units in ending inventory. How many units should be produced?

10. Question

Which of the following would be found on a budgeted balance sheet but NOT on a budgeted income statement?