Budgeting and Management Processes Quiz
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Questions and Answers

What is a disadvantage of a static budget?

  • It does not adjust for changes in activity levels (correct)
  • It adjusts for changes in activity levels
  • It integrates operating and financial budgets
  • It shows expected results for several activity levels
  • Which budget estimates the quantities of direct materials to be purchased to support budgeted production and desired inventory levels?

  • Factory overhead cost budget
  • Direct materials purchases budget (correct)
  • Sales budget
  • Direct labour cost budget
  • What does the production budget estimate?

  • Quantities of direct materials to be purchased
  • Direct labor hours needed to support budgeted production
  • Number of units to be manufactured to meet budgeted sales and desired inventory levels (correct)
  • Cost for each item of factory overhead
  • Which budget integrates the following budgets: Direct material purchases, Direct labour cost, and Factory overhead cost?

    <p>Cost of goods sold budget</p> Signup and view all the answers

    What is the purpose of a cash budget?

    <p>Estimating expected receipts and payments of cash</p> Signup and view all the answers

    In multiperiod budgeting, what does the Budget Production formula represent?

    <p>The number of units to be manufactured</p> Signup and view all the answers

    What is the main difference between zero-based budgeting and incremental budgeting?

    <p>Zero-based budgeting requires starting from scratch each year, while incremental budgeting builds on the previous year's budget.</p> Signup and view all the answers

    What is the purpose of participating budgeting in organizations?

    <p>To involve employees in developing performance metrics and budgeted goals with supervisors.</p> Signup and view all the answers

    In what situation does goal conflict arise in the budgeting process?

    <p>When individual objectives contradict organizational objectives.</p> Signup and view all the answers

    What is the role of a responsibility center in an organization?

    <p>To allocate responsibility over costs, revenue, or assets to a manager.</p> Signup and view all the answers

    Why might setting too loose budget goals be detrimental to a company?

    <p>Because it leads to unnecessary expenditure of resources.</p> Signup and view all the answers

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