Problem 1: Multiple-Choice Questions (36 points) Instructions: Circle the letter of the one best answer to each question. 1. A static budget report A. shows costs at only two or three different levels of activity B. is appropriate in evaluating a manager's effectiveness in controlling variable costs C. should be used when the actual level of activity is materially different from the master budget activity level D. may be appropriate in evaluating a manager's effectiveness in controlling costs when the behavior of the costs in response to changes in activity is fixed none of the above E. 2. Which one of the following would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets? A. Direct materials cost B. Direct labor cost C. Variable manufacturing overhead D. Fixed manufacturing overhead E. More than one of the above 3. Management by exception A. causes managers to be buried under voluminous paperwork B. means that all differences will be investigated C. means that only unfavorable differences will be investigated D. means that material differences will be investigated E. none of the above The accumulation of accounting data on the basis of the individual manager who has the authority to make day-to-day decisions about activities in an area is called 4. A. static reporting B. flexible accounting C. responsibility accounting D. master budgeting E. none of the above