Question

14. Which of the following includes a normal sequence in which the indicated budgets are prepared? A. Direct Materials, Cash, Sales C. Sales, Balance Sheet, Direct Materials E. Production, Direct Materials, Direct Labor B. Production, Direct Materials, Sales D. Production, Mfg. OH, Sales 15. Which of the following is a benefit of budgeting? A. reduces the need for tracking actual cost activity B. sets benchmarks C. does not uncover potential bottlenecks D. discourages planning E. all of these 16. The purpose of the actual results comparison is to: A. evaluate performance reports by managers B. permit managers to reduce the number of unfavorable variances that are reported C. update the static planning budget to reflect the actual level of activity of the period D. reduce the amount of conflict between departments when the master budget is prepared E. none of these

Answer 1

Answer with explanation is given below

14 Answer is Option E) Production budget helps in preparing production units Form production units we can calculate Direct Material and Direct labor budget The other options are wrong because sequence of budgets is Sales Production Direct Material Direct Labor Manufacturing overhead Administrative and selling overheads Cash budget Profit and Loss Account Balance Sheet 15 Answer is Option B) Budgeting exercise helps in setting benchmarks to achieve better performance It is the yardstick against which actual performance of division/managers is monitored Hence budgets are considered as benchmarks for performance evaluation Other option are not the answer since they are not benefits of budgeting 16 Answer is Option A) The purpose of comparing actual results with budgets is to evaluate performance of managers Budget targets are given at the beginning of the year and then actual results during the period is compared with the budget to see performance of the managers The performance evaluation is done for incentive payments other options are not the answers