Question

A) As price increases, demand increases. B) As price increases, demand decreases. C) As demand increases, profit decreases. D) As price decreases, demand decreases. 2. One way a company can perform "what if budget analysis is by preparing a flexible bu A) True B) False 3. Budgeting often involves both monetary and nonmonetary measures of performance. A) True B) False 4. Which of the following budgets is prepared first? A) Cash budget B) Production budget C) Budgeted balance sheet D) Sales budget 5. Unfavorable variances are red flags that a manager has performed poorly. A) True B) False 6. The labor rate variance is equal to the difference between the actual number of labor hours worked ar the standard labor hours allowed, times the standard labor wage rate. A) True B) False 7. A company that utilizes just-in-time inventory eliminates the need for budgeting. A) True B) False 8. Management by exception refers to the practice of only investigating variances A) in areas of the company that have been performing poorly. B) in which the actual cost exceeds the budget. C) in product costs. D) that are material in dollar amounts relative to budgeted amounts. 9. The labor rate variance measures whether the rate paid to employees is more or less than the standard rate. A) True B) False static budget is prepared for a single anticipated level of production. True False Version C Page 1

Answer 1

As per HOMEWORKLIB POLICY and guideline, the 1^st –four MCQs are answered below:

2.

Answer: True

This is the budget of evaluating the scenarios if capacity increases – such as what should be the profit if 85% capacity of machine is utilized.

3.

Answer: True

Such as sales budget is monetary; but, production budget is non-monetary (units based).

4.

Answer: D

Sales budget should be prepared first, since it gives idea how much production and cash are required for that selling.

5.

Answer: False

There may be so many reasons of unfavorable variances – such as actual market price is higher than standard market price, actual labor rate is higher, etc. In those cases managers have nothing to do, since these are guided by the prevailing market and with demand supply movements.