Circle the correct answer True False 1. Budgeting is the process of establishing company-wide objectives that serve as a deter- rent to waste and inefficiency. True False 2. The effectiveness of the budget program is directly related to its acceptance by all levels of management. True False 3. Budgeting always has the effect on human behavior of inspiring managers to higher levels of performance. True False 4. One disadvantage of budgeting is that it does not facilitate the coordination of activities within a business True False 5. The sales budget is the first budget prepared and each of the other budgets depends on it. True False 6. The quantities of direct materials in the direct materials budget are derived from the formula: Desired Ending Direct Materials Units + Direct Materials Units Required for Production - Beginning Direct Materials Units = Required Direct Materials Units to be Purchased True False 7. The manufacturing overhead budget shows only the expected indirect labor costs for the year. True False 8. The budgeted income statement indicates the expected profitability of operations for the next year and provides the basis for evaluating company performance True False 9. Long-range planning differs from budgeting in the time period involved, emphasis, and the amount of detail presented. True False 10. Budgeting is not used in not-for-profit organizations because it is not necessary for these organizations to engage in profit planning. True False