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NEW QUESTION 45
Comparing actual results with a budget based on achieved volume is possible with the use of a:

• A. Flexible budget.
• B. Rolling budget.
• C. Master budget.
• D. Monthly budget.

Answer: A

Explanation:
A flexible budget is essentially a series of several budgets prepared for many levels of sales or production. At the end of the period, management can compare actual costs or performance with the appropriate budgeted level in the flexible budget. New columns can quickly be made by interpolation or extrapolation, if necessary. A flexible budget is designed to allow adjustment of the budget to the actual level of activity} before comparing the budgeted activity with actual results.

NEW QUESTION 46
Which of the following statements is true regarding cost-volume-profit analysis?

• A. Following breakeven, net operating income will increase by the excess of fixed costs less the variable costs per units sold
• B. Breakeven point is the amount of units sold to cover variable costs.
• C. Contribution margin is the amount remaining from sales revenue after fixed expenses have been deducted.
• D. Breakeven occurs when the contribution margin covers fixed costs

Answer: D

NEW QUESTION 47
An entity allows customers to redeem 20 coupons for a toy cost US $3.00). Estimates are that 40% of coupons distributed will result in redemption. Since beginning the promotion this year, 4 million coupons were distributed and 1 million coupons redeemed. The adjusting entry to accrue for unredeemed coupons at year-end is

• A. Option C
• B. Option D
• C. Option A
• D. Option B

Answer: C

Explanation:
An expense and a provision should be accurate for the coupons still outstanding that are expected to be redeemed. Of the 4 million coupons distributed, 411%, or 1.6 million, are estimated to be redeemable. Of those, 1 million have already been redeemed, and 600,000 more are expected to be redeemed. The promotion requires 20 coupons to receive one toy, so, 30,000600,000 / 20) more toys will be required. Each toy costs US $3.00, creating a provision of US $90,00030,000 x $3.00).

NEW QUESTION 48
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