1. Standard costs provide a basis for assessing the reasonableness of actual costs incurred for producing a product or service.

(Points : 5) True False

2.

Ideal standards are developed under conditions that assume no idle time, no machine breakdowns, and no materials spoilage.
(Points : 5) True False

3. Cost variances are ignored under management by exception. (Points : 5) True False

4. Standard

costs are used in companies for a variety of reasons. Which of the following is not one of the benefits for using standard costs? (Points : 5) Used to indicate where changes in technology and machinery need to be made.

Used to value inventory

Used to plan direct materials, direct labor, and factory manufacturing cost.

Used to control costs.

5.

Standard costs should always be revised when they differ from actual costs.
(Points : 5) True False

6.

The profit center income statement should include only revenues and expenses that are controlled by the manager.
(Points : 5) True False

7. The three common types of responsibility centers are referred to as cost centers, profit centers, and investment centers. (Points : 5) True False

8.

The costs of initially producing an intermediate product should be considered in deciding whether to further process a product, even though the costs will not change, regardless of the decision.
(Points : 5) True False

9. To

calculate income from operations, total service department charges are: (Points : 5)

added to income from operations before service department charges

subtracted from operating expenses

subtracted from income from operations before service department charges

subtracted from gross profit margin

10. Budgeting is an informal plan for future business activities. (Points : 5) True False

11. Budgets are normally more effective when all levels of management are involved in the budgeting process. (Points : 5) True False

12. The usual starting point for preparing a master budget is forecasting or estimating: (Points : 5) Expenditures Production Sales

13. The master budget consists of three major groups of budget components: the operating budgets, the capital expenditures budgets, and the financial budgets. (Points : 5) True False

14.

The budget procedure that requires all levels of management to start from zero in estimating sales, production, and other operating data is called continuous budgeting.
(Points : 5) True False

15. Airtex Company budgeted the following credit sales during the current year: September, $90,000; October, $123,000; November, $105,000; December, $111,000. Experience has shown that cash from credit sales is received as follows: 10% in the month of sale, 50% in the first month after sale, 35% in the second month after sale, and 5% is uncollectible. How much cash should Eastern Company expect to collect in November from all current and past credit sales? Be sure to show all work (Points : 10)

16.

Define standards as used in the budgeting process and give a detailed example as part of your explanation.

(Points : 10)

17. Crawford Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units. The company actually used 4,500 pounds that cost $5.10 per pound to produce 2,000 units. What is the direct materials price variance? Be sure to show all work and state if the variance is favorable or unfavorable. (Points : 10)

18. The sales budget is usually the first and most crucial of the component budgets in a master budget because all other budgets usually rely on it for planning purposes. Please used outside sources to cite your information or text book

Assume that your companys sales staff provides information on expected sales and selling prices for items making up the sales budget. Write to your supervisor outlining concerns with the sales staffs input in the sales budget when its compensation is at least partly tied to these budgets. More generally, explain the importance of assessing any potential bias in information provided to the budget process. Please used outside sources to cite your information or the book