In variable costing, fixed costs do not become part of the cost of goods manufactured, but are considered an expense of the period. True False Electricity purchased to operate factory machinery would be included as part of the cost of products manufactured under the absorption costing concept. a. True b. False Changes in the quantity of finished goods inventory, caused by differences in the levels of sales and production, directly affect the amount of income from operations reported under absorption costing. True False The financial budgets of a business include the cash budget, the budgeted income statement, and the budgeted balance sheet. True False The master budget of a small manufacturer would normally include all necessary component budgets except the capital expenditures budget. True False Accounting systems that use standards for product costs are called budgeted cost systems. True False The principle of exceptions allows managers to focus on correcting variances between standard costs and actual costs. True False Standards are more widely used for nonmanufacturing activities than for manufacturing activities. True False A decentralized business organization is one in which all major planning and operating decisions are made by top management. True False