Budgetary Control and Performance Evaluation: Master Managerial Accounting

Question 1

A common metric used to gauge the performance of a sales manager would be:

Accepted Answer

Sales revenue generated

Answer

Gross margin achieved

Answer

Customer satisfaction levels

Answer

Employee turnover rate

Question 2

Controllable costs are best defined as:

Accepted Answer

Costs that can be influenced by the responsible manager

Answer

Costs incurred solely by a particular manager

Answer

Costs that remain constant regardless of activity levels

Answer

Costs that are not related to production

Question 3

Which technique is commonly employed to allocate overhead costs?

Accepted Answer

Activity-based costing

Answer

Marginal costing

Answer

Standard costing

Answer

Direct costing

Question 4

The primary purpose of budgetary control is to:

Accepted Answer

Allocate resources effectively and efficiently.

Answer

Prevent fraud and embezzlement.

Answer

Ensure compliance with industry regulations.

Answer

Evaluate the performance of individuals and organizations.

Question 5

A benefit of implementing a responsibility accounting system is:

Accepted Answer

Improved cost control and accountability.

Answer

Reduced organizational complexity.

Answer

Increased employee resistance.

Answer

Diminished decision-making capabilities.

Question 6

The balanced scorecard is a performance evaluation tool that incorporates which four perspectives?

Accepted Answer

Financial, customer, internal process, and learning and growth.

Answer

Short-term, medium-term, long-term, and overall.

Answer

Operational, marketing, human resources, and financial.

Answer

Strategic, tactical, operational, and financial.

Question 7

The primary purpose of a variance investigation is to:

Accepted Answer

Identify the underlying causes of variances.

Answer

Determine the materiality of variances.

Answer

Assign blame for variances.

Answer

Improve future budgeting accuracy.

Question 8

A characteristic of a well-designed budget is:

Accepted Answer

Accuracy and reliability.

Answer

Inflexibility and rigidity.

Answer

Vagueness and ambiguity.

Answer

Untimeliness and irrelevance.

Question 9

The concept of continuously improving an organization's performance is known as:

Accepted Answer

Kaizen.

Answer

Benchmarking.

Answer

Six Sigma.

Answer

Business process reengineering.

Question 10

The process of comparing an organization's performance to that of peer organizations is referred to as:

Accepted Answer

Benchmarking.

Answer

Variance analysis.

Answer

Performance evaluation.

Answer

Kaizen.

Question 11

Which type of variance compares actual input quantities to budgeted input quantities?

Accepted Answer

Quantity variance

Answer

Price variance

Answer

Efficiency variance

Answer

Volume variance

Question 12

What is the main purpose of a flexible budget?

Accepted Answer

To adjust budgeted amounts for changes in activity levels

Answer

To compare actual results to a fixed budget

Answer

To allocate resources across different departments

Answer

To establish standard costs for products or services

Question 13

In budgetary control, 'responsibility centers' refer to:

Accepted Answer

Departments or units with defined responsibilities

Answer

Individuals assigned specific tasks

Answer

Cost centers only

Answer

Profit centers only

Question 14

Which variance measures the difference between actual cost per unit and budgeted cost per unit?

Accepted Answer

Price variance

Answer

Quantity variance

Answer

Spending variance

Answer

Volume variance

Question 15

A key distinction between traditional budgeting and activity-based budgeting is:

Accepted Answer

Activity-based budgeting considers cost drivers

Answer

Activity-based budgeting is simpler to implement

Answer

Traditional budgeting provides more accurate cost allocations

Answer

Activity-based budgeting is only used by manufacturing companies

Question 16

What is the primary purpose of establishing standard costs?

Accepted Answer

To set performance targets and assess efficiency

Answer

To determine actual production costs

Answer

To predict future expenses

Answer

To allocate overhead costs

Question 17

Which of the following is NOT a type of performance measure?

Accepted Answer

Employee satisfaction

Answer

Financial ratios

Answer

Operational metrics

Answer

Customer loyalty

Question 18

What is the primary distinction between controllable and uncontrollable variances?

Accepted Answer

Controllable variances arise from factors within the manager's control, while uncontrollable variances do not.

Answer

Controllable variances are reported on the income statement, while uncontrollable variances are not.

Answer

Controllable variances are only relevant in manufacturing companies.

Answer

Uncontrollable variances are caused by external factors, while controllable variances are not.

Question 19

What is a key benefit of performing variance analysis?

Accepted Answer

Enhanced cost control

Answer

Simplified budgeting

Answer

Eliminated performance evaluation

Answer

Increased employee morale

Question 20

Which of the following is NOT a purpose of budgetary control?

Accepted Answer

To attract new customers

Answer

To control costs

Answer

To evaluate performance

Answer

To provide a plan for operations

Question 21

What is the primary difference between a static and a flexible budget?

Accepted Answer

Static budgets remain constant regardless of activity levels, while flexible budgets adapt to changes in activity.

Answer

Static budgets focus on past data, while flexible budgets consider future projections.

Answer

Static budgets are used for short-term planning, while flexible budgets are used for long-term planning.

Question 22

What is a key characteristic of the balanced scorecard approach to performance evaluation?

Accepted Answer

It incorporates both financial and non-financial measures from multiple perspectives.

Answer

It emphasizes financial measures exclusively.

Answer

It relies solely on historical data.

Question 23

What is the role of feedback in performance evaluation?

Accepted Answer

To provide employees with constructive criticism and guidance for improvement.

Answer

To reward employees for exceptional performance.

Answer

To punish employees for underperformance.

Question 24

Which of the following is an advantage of using budgets in performance evaluation?

Accepted Answer

They establish clear expectations and provide a basis for comparison.

Answer

They guarantee that employees will always meet or exceed targets.

Answer

They are immune to biases.

Answer

They eliminate the need for other performance evaluation methods.

Question 25

What is the distinction between efficiency and effectiveness?

Accepted Answer

Efficiency focuses on optimizing resource utilization, while effectiveness concerns achieving desired outcomes.

Answer

Efficiency is inherently more important than effectiveness.

Answer

Effectiveness is inherently more important than efficiency.