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Which of the following statement(s) is/are false?

Which of the following statement(s) is/are false?

Question 53. (A) Cost centers, profit centers, and investment centers can all be classified as responsibility centers. (B) The terms “direct fixed costs” and “indirect fixed costs” are synonymous with “traceable costs” and “common costs,” respectively. (C) Management by exception means that management will investigate areas where actual results differ from planned results if the items are material and controllable. (D) None of the above Answer: (D) All of the above

Question 56

Question 54. A major element in budgetary controlis: (A) The preparation of long-term plans (B) The comparison of actual results with planned objectives (C) The valuation of inventories (D) Approval of the budget by the stock-holders Answer: (B) The comparison of actual results with planned objectives

Question 55. Budget reports should be prepared (A) Daily (B) Monthly (C) Weekly (D) As frequently as needed Answer: (D) As frequently as needed

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On the basis of the budget reports (A) Management analyzes differences between actual and planned results (B) Management may take corrective action (C) Management may modify the future plans (D) All of these Answer: (D) All of these

Question 57. The purpose of the sales budget report is to (A) Control selling expenses (B) Determine whether income objectives are being met (C) Determine whether sales goals are being met (D) Control sales commissions Answer: (C) Determine whether sales goals are being met

Question 58. A static budget (A) Should not be prepared in a company (B) Is useful in evaluating a manager’s performance by comparing actual variable costs and planned variable costs (C) Shows planned results at the original budgeted activity level (D) Is changed only if the actual level of activity is different than originally budgeted Answer: (C) Shows planned results at the original budgeted activity level

Question 59. Top management’s reaction to a difference between budgeted and actual sales often depends on (A) Whether the difference is favorable or unfavorable (B) Whether management anticipated the difference (C) The materiality of the difference (D) The personality of the top managers Answer: (C) The materiality of the difference

Question 60. Assume that actual sales results exceed the planned results for the second quarter. This favourable difference is greater than the unfavourable difference reported for the first quarter sales. Which of the following statements about the sales budget report on June 30 is true? (A) The year-to-date results will show a favourable difference (B) The year-to-date results will show an unfavourable difference (C) The difference for the first quarter can be ignored (D) The sales report is not useful if it shows a favorable and unfavourable difference for the two quarters Answer: (A) The year-to-date results will show a favourable difference

Question 61

Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets? (A) Direct materials cost (B) Direct labour cost (C) Variable manufacturing overhead (D) Fixed manufacturing overhead Answer: (D) Fixed manufacturing overhead

Question 62. In developing a flexible budget within a relevant range of activity, (A) Only fixed costs are included (B) It is necessary to relate variable cost data to the activity index chosen (C) It is necessary to prepare a budget at 1,000 unit increments (D) Variable and fixed costs are combined and are reported as a total cost Answer: (B) It is necessary to relate variable cost data to the activity index chosen

Question 63. Another name for the static budget is: (A) Master budget (B) Overhead budget (C) Permanent budget (D) Flexible budget Answer: (A) Master budget

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