True or False

17. Operating and financial budgets are an integrated part of the master budget process for a period of time. 18 In preparing an operating budget, generally the sales budget begins the process because it estimates the expected level of sales. 19. A direct materials budget estimates the number of units that are required to be manufactured to meet budgeted sales and desired inventory levels. 20. A direct labor budget estimates the number of direct labor hours and related cost needed to support the production budget. 21. The cost of goods sold budget should include direct materials, direct labor, and factory overhead cost 22 23 Businesses like manufacturing, generally use standard cost for direct materials, direct labor and factory overhead. T The principle of exceptions allows a company to focus on correcting differences between actual and standard performance. Ideal and normal standards are one in the same; achieve under normal conditions. 24. 25. The standard setting process in an organization requires the effort of several departments. 26. One of the criticisms of using a standard cost system is that it discourages improvements. 27 A favorable variance is when the actual is greater than the standard. 28. A standard consist of two components; price and quantity. 29. The total manufacturing cost variance is the difference between the total standard costs and the total actual cost for the units produced. 30. All variance are controllable. 31. Variances should be reported to the manager responsible for the variance. 31. Variances should be reported to the manager responsible for the variance. 32 Direct labor variances are normally the responsibility of production supervisors for controlling direct labor cost. 33. Analyzing factory overhead variances are different than direct material and direct labor because of the cost being both variable and fixed