QUESTION 16 Which of the following can be a problem with participative budgeting? Budget-based incentives lead to
Question:
QUESTION 16
Which of the following can be a problem with participative budgeting?
Budget-based incentives lead to incorrect information about projected costs and sales (budgetary slack) being communicated to higher level management.
All the other answers.
Production budgets are established based on unrealistically low sales forecasts, leading to production being short of materials and labor.
Conflicts of interest when lower level managers are evaluated by comparing actual results to the budget.
2 points
QUESTION 17
Which component of the master budget is NOT needed to create the budgeted income statement?
The cash budget
The sales budget
The direct materials budget
The selling and administrative budget
2 points
QUESTION 18
A revised master budget that represents expected costs given actual sales is called the:
Budgeted income statement
Master budget
Flexible budget
Standard budget
2 points
QUESTION 19
What is the best way to establish standard costs?
Strive for perfection, with the lowest imaginable costs
Use ideal standards, assuming no waste or down time
Adjust ideal standards for common problems in production (machine downtime due to maintenance, expected materials waste, etc).
Use historical data from when the product was first being released
2 points
QUESTION 20
Which of the following best describes variance analysis?
Comparing flexible budget costs to actual costs
Comparing master budget costs to actual costs
Comparing flexible budget costs to master budget costs
Comparing ideal costs to master budget costs
Introduction to Probability
ISBN: 978-0716771098
1st edition
Authors: Mark Daniel Ward, Ellen Gundlach