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Identify if the following statements are TRUE or FALSE.
1. Operating budgets and financial budgets are prepared after the
2. In setting profit objectives, management must consider sales volume required to meet all costs, dividends, and
3. Zero-based budgeting includes variable costs only.
Step by step
Solved in 3 steps
- Which of the following is not a part of budgeting? A. planning B. finding bottlenecks C. providing performance evaluations D. preventing net operating lossesSelect the one budget below that is not an operating budget. a. Cost of goods sold budget b. Cash budget c. Production budget d. Overhead budget e. All of these.The Zero Base Budget (ZBB) is the budget system that most influences resource allocation management by involving the devolution of decision making power to the lower levels. Identify whether this statement is true or false. Select one:TrueFalse
- 1. Match each of the following terms with the appropriate definition. The difference between actual and budgeted revenue or cost caused by the difference between the actual number of units sold or used and the budgeted number of units. A budget prepared after an operating period is complete in order to help managers evaluate past performance; uses fixed and variable costs in determining total costs. The costs that should be incurred under normal conditions to produce a specific product or to perform a specific service. The difference between 1. Cost Variance total overhead cost that would have been expected if the actual operating 2. Volume Variance volume had been accurately predicted and 3. Price Variance the amount of overhead cost that was allocated to products using the predetermined standard overhead rate. 4. Quantity Variance 5. Standard Costs A planning budget based on a single predicted amount 6. Fixed Budget of sales or production volume; unsuitable for 7. Flexible Budget…Match the definition the term. Terms: Cost variance Overhead cost variance Price variance Quantity variance Standard costs Sales budget Production Budget Balanced scorecard Profit center Cost center Definitions: 1. A plan showing the units of goods to be sold and sales to be derived; usually starting pointing the budgeting process. 2. A system of performance measures, including the nonfinancial measures, used to asses manager performance. 3. A department that incurs cost and genrate revenues, such as a selling department 4. The difference between actual and budgeted sales or cost caused by the difference between the actual per unit and the budgeted price per unit. 5. The difference between actual cost and standard cost, made up of a price variance and a quantity variance. 6. The difference between the total overhead cost actually incurred and the total overhead cost applied to products 7. The difference between the actual budgeted cost caused by…For most organizations, a budget is the benchmark for evaluating actual performance. O True O False
- 1. Describe the difference between a static and a flexible budget 2. Outline how often businesses must report GST 3. Describe a method that can be used to evaluate a budget or financial plan.Management Accounting Question (Qualitative Short Answer) a. Why is the sales forecast the starting point in budgeting? b. What is a perpetual budget? c. Which is a better basis for evaluating actual results: budgeted performance or past performance? Why? d. The materials price variance can be computed at what two different points in time? Which point is better and why? e. What effect, if any, would you expect purchasing poor-quality materials to have on direct labor variances? f. Distinguish between ideal and practical standards. g. Costs associated with the quality of conformance can be broken down into four broad groups. What are these four groups and how do they differ? h. What is likely the most effective way to reduce a company's total quality costs? i. What are the three main uses of quality cost reports?Which of the following statements is NOT true? Multiple Choice A planning budget is based budgeted costs and revenues for the budgeted level of production and sales A flexible budget does not represent actual costs incurred. A static budget is based on the actual the level of production and sales A flexible budget is based on budgeted costs and revenues for the actual level of production and sales.
- Question: What is the purpose of a flexible budget? a) To control costs and evaluate performance b) To prepare financial statements for external reporting c) To forecast long-term strategic goals d) To allocate overhead costsWhich of the following is true in a bottom-up budgeting approach? a.Supervisors tell departments their budget amount and the departments are free to work within those amounts. b.Departments determine their needs and relate them to the overall goals. c.Every expense needs to be justified. d.Departments budget their needs however they see fit.Estimating the effects of changes in budget assumptions, such as determining the impact of an increase or decrease in sales, is called: Question 4 options: static budget analysis. sensitivity analysis. variance analysis, cost reduction analysis. (Ch 10) An advantage of a flexible budget is that it: Question 5 options: allows comparison of actual costs to master (static) budget costs. considers only variable costs. allows comparisons of actual costs to the costs that should have been incurred, given the level of sales. allows management freedom in meeting profitability goals.
