Consider the following statements about zero-base budgeting: I. The budget for virtually every activity in an organization is initially set to the level that existed during the previous year. II. The budget forces management to rethink each phase of an organization's operations before resources are allocated. III. To receive funding for the upcoming period, individual activities must be justified in terms of continued usefulness to the organization.
Which of the above statements is (are) true?
A. II only.
B. III only.
C. I and II.
D. II and III.
E. I, II, and III.
If a manager builds slack into a budget, how would that manager handle estimates of revenues and expenses? Revenues Expenses
A.Underestimate Underestimate
B.Underestimate Overestimate
C.Overestimate Underestimate
D.Overestimate Overestimate
E.Estimate correctly Estimate correctly
Correct option is D
1. The budget for virtually every activity in an organization is initially set to the level that existed during the previous year: False as The process of zero-based budgeting starts from a 'zero base' irrespective of the level of previous year.
2. The budget forces management to rethink each phase of an organization's operations before resources are allocated: True
3. To receive funding for the upcoming period, individual activities must be justified in terms of continued usefulness to the organization: True
Correct option is B
For building slack the worst case scenario is undertaken. Hence if a manager builds slack into a budget, he would underestimate the revenues and overestimate expenses.
Consider the following statements about zero-base budgeting: I. The budget for virtually every activity in an...
Jackson manufactures products X and Y, applying overhead on the basis of labor hours. X, a low-volume product, requires a variety of complex manufacturing procedures. Y, on the other hand, is both a high-volume product and relatively simplistic in nature. What would an activity-based costing system likely disclose about products X and Y as a result of Jackson's current accounting procedures? X Y A.Undercosted Undercosted B.Undercosted Overcosted C.Overcosted Undercosted D.Overcosted Overcosted E.Costed correctly Costed correctly Consider the following statements about...
Consider the following statements about budget administration: The budgeting process is a very formal process in all organizations regardless of an organization's size. The budget manual is prepared to communicate budget procedures and deadlines to employees throughout an organization. Effective internal control procedures require that the budget director be an individual other than the controller. Which of the above statements is (are) true? Multiple Choice I and II. III only. II only. I only. I and III.
Listed next are several terms. Complete the following statements with one of these terms. You may use a term more than once, and some terms may not be used at all. Master budget Participative budgeting Operating budgets Production budget Zero-based budgeting Strategic planning Financial budgets Slack Budget committees Rolling budget Safety stock Variance a. ▼ Budget committee Financial budgets Master budget Operating budgets Participative budgeting Production budget Rolling budget Safety stock Slack Strategic planning Variance Zero-based budgeting is a budget...
All of the following statements are true about marginal cost except I. marginal cost increases as production expands. II. when marginal cost is below average cost, average cost is falling. III. when marginal cost is above average cost, average cost is constant. IV. when marginal cost meets the average total cost, the average total cost is at its minimum point. II and III I only II only III only III and IV IV only Which of the following is an...
Given the following statements regarding fiscal policy, which is/are TRUE? (i). A decrease in a government’s budget deficit should lead to a fall in interest rates in a country. (ii). Changes in tax rates do not directly affect monetary policy. (iii). Increased borrowing by a government generally leads to a drop in interest rates. (iv). When a country is in recession, then decreasing taxes may deepen the recession. (v). For a progressive tax system, when people earn more, a country’s...