Question

Write in your test booklet “TRUE” if the statement is correct and “FALSE” if is false. T or F answer is not accepted. (1 mark each) 1. Both planning and control are needed for an effective budgeting system.

2. One benefit of budgeting is that it coordinates the activities of the entire organization.

3. Sales forecasts are drawn up after the cash budget has been completed because only then are the funds available for marketing known.

4. A sales budget is a detailed schedule showing the expected sales for the budget period; typically, it is expressed in both dollars and units of product.

5. .Planning and control are essentially the same thing.

6. The materials price variance is computed by multiplying the difference between the actual price and the standard price by the actual quantity of materials used in production.

7. A materials price variance is favorable if the actual price exceeds the standard price.

8. When more hours of labor time are necessary to complete a job than the standard allows, the labor rate variance is unfavorable.

9. The standard quantity per unit for direct materials should not include an allowance for waste.

10. The standard cost per unit is computed by multiplying the standard quantity or hours by the standard price or rate.

Answer 1

Write in your test booklet “TRUE” if the statement is correct and “FALSE” if is false. T or F answer is not accepted. (1 mark each) 1. Both planning and control are needed for an effective budgeting system.
2. One benefit of budgeting is that it coordinates the activities of the entire organization.	TRUE	Budgets coordinate the activities of the entire organization by integrating the plans of its various parts.
3. Sales forecasts are drawn up after the cash budget has been completed because only then are the funds available for marketing known.	FALSE	Sales forecast  is the starting point in budgeting because all other parts of the master budget depend on the sales budget. If the sales budget is inaccurate, the rest of the budget will be inaccurate.
4. A sales budget is a detailed schedule showing the expected sales for the budget period; typically, it is expressed in both dollars and units of product.	TRUE	A sales budget is a schedule  expressed in both dollars and units of product for future period.
5. .Planning and control are essentially the same thing.	FALSE	Both planning and control are needed for an effective budgeting system
6. The materials price variance is computed by multiplying the difference between the actual price and the standard price by the actual quantity of materials used in production.	FALSE
7. A materials price variance is favorable if the actual price exceeds the standard price.	FALSE	A materials price variance is unfavorable if the actual price exceeds the standard price.
8. When more hours of labor time are necessary to complete a job than the standard allows, the labor rate variance is unfavorable.	TRUE
9. The standard quantity per unit for direct materials should not include an allowance for waste.	FALSE
10. The standard cost per unit is computed by multiplying the standard quantity or hours by the standard price or rate.	TRUE