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Multiple Choice 1. The starting point in preparing a comprehensive budget is a. the sales forecast. the cash budget. C. the budgeted income statement. d. the flexible expense budget. 2. Budgets are related to which of the following management functions? a. Planning. b. Control. C. Performance evaluation. d. All of the above. 3. Which of the following equations can be used to budget purchases? (BI beginning inventory, EI = ending inventory desired, CGS = budgeted cost of goods sold) a. Budgeted purchases = CGS + BI - EI b. Budgeted purchases = CGS + BI c. Budgeted purchases = CGS + EI + BI d. Budgeted purchases = CGS + EI - BI 4. A flexible budget is a. one that can be changed whenever a manager so desires. b. adjusted to reflect expected costs at the actual level of activity. c. one that uses the formula total cost = cost per unit x units produced. d. the same as a continuous budget. 5. The use of flexible (as opposed to static) budget allowances is LEAST important for which of the following? a. Costs of the production department. b. Costs of the general accounting department. c. Costs of the product shipping department. d. Costs of the material receiving department. . Budgets set at very high levels of performance (i. e. , very low costs) a, assist in planning the operations of the company. b. stimulate people to perform better than they ordinarily would. c. are helpful in evaluating the performance of managers. d. can lead to low levels of performance. Inventory policy is most critical in the budgeting of a. sales. b. cost of goods sold. c. purchases. d. expenses . Budgeting expenditures by purpose is called a. program budgeting. b. zero-based budgeting. c. line budgeting. d. flexible budgeting