erial Accounting : Tools for Business Decision Making

Exercises

E$10\mathrm{.}1($LO $1,2),$ K Connie Rice has prepared the following list of statements about budgetary control.

Budget reports compare actual results with planned objectives.

All budget reports are prepared on a weekly basis.

Management uses budget reports to analyze differences between actual and planned results and to determine their causes.

As a result of analyzing budget reports, management may either take corrective action or modify future plans.

Budgetary control works best when a company has an informal reporting system.

The primary recipients of the sales report are the sales manager and the production supervisor.

The primary recipient of the scrap report is the production manager.

A static budget is a projection of budget data at a single level of activity.

Top management's reaction to unfavorable differences is not influenced by the materiality of the difference.

A static budget is not appropriate in evaluating a manager's effectiveness in controlling costs unless the actual activity level approximates the static budget activity level or the behavior of the costs is fixed.

Understand the concept of buo control.