Question

True/False Questions worth 2 pts each. 1. Self-imposed budgets prepared by lower-level managers should be scrutinized by higher levels of management 2. Budgets are used to plan and to control operations. 3. Fixed costs should be ignored when evaluating how well a manager has controlled costs. 4. A flexible budget can be used to estimate what revenues and costs should have been given the actual level of activity for the period. 5. An unfavorable spending variance may reflect waste as well as paying too much for inputs. 6. The standard price per unit for direct materials should not include the cost of delivering the materials. tandard labor rate per hour defines the company's expected direct labor wage rate per hour including employment taxes and fringe benefits. Only future costs that differ between alternatives are relevant in decision making er the sum of its variable costs, its traceable fixed costs, A product whose revenues do not cover the sum of its variable coste corporate administrative expenses should usually be dropped. and its allocated share of general corporate administrative expenses should usua ucts are products that are sold to customers as a set or as a part of a group of 10. Joint products are products that are sold te products. payback method is that it ignores cash flows that occur after the payback 11. One criticism of the payback method is th point has been reached. return is the minimum rate of return that an investment project must vield to 12. The required rate of return is the minim the acceptable.

Answer 1

1. True :- If the same is not scrutinized ,there is possibility of budget slack

2. True - Planning and controlling are two functions of the Budgeting

3. False - Fixed cost is also to be required to analyse to control the cost.

4. True - Flexible budget is measured  based on the actual level of activity

5. True :- Using more quantity (Waste occurred) or paying more price results in unfavorable spending variance

6. False - If the standard material unit cost should include the carriage inwards also

7. True :- The standard labor rate per hour should include all the benefits in order to proper analysis of the variances

8. True :- All the incurred cost is known as sunk cost which is not relevant  for decision making

9. False :- If the revenue is not enough to cover the Variable cost is definitely to be dropped

10 False :- Joint product is a product that are resulted jointly with other products from  processing a common input     

11.True :- Payback method ignores the cash inflow after the payback period

12. True:- The project is acceptable only when it yields the  Required rate of return