Question

Question 3 1 pts Advantages of a flexible budget include all of these, EXCEPT: it is appropriate for fixed costs, but not variable costs. it is adaptable to changes in operating conditions it can be prepared for individual budgets in the Master Budget all of the above are advantages of a flexible budget Question 4 1pts An investment center manager would most likely have his/her performance evaluation based on: return on investment controllable margin. how well he/she was able to control costs all of the above

Answer 1

3)correct option is "a"

Flexible budget is appropriate for variable cost since it varies with activity whereas fixed cost remains constant so it remains same at each activity under flexible budget.

4)correct option is "a"

The performance of investment center is most likely to evaluate based on return on investment ..

6)correct option is "c"

Budgeted cost =activity *cost per DLH

                 = 5000 *.80

                 = $ 4000

7)Correct option is"a"

Return on investment = controllable margin /Asset invested

   = 100000/400000

               = .25 or 25%

**contribution margin -controllable fixed cost = controllable margin

   200000 - 100000 = 100000

8)Correct option is "d"

Return on investment = controllable margin /Asset invested

   .25    = 200000/Asset invested

         Asset invested = 200000/.25

                              = $ 800000