ACC 561 Week 5 Quiz 37. Why are budgets useful in the planning process? They enable the budget committee to earn their paycheck. They provide management with information about the company’s past performance. They help communicate goals and provide a basis for evaluation. They guarantee the company will be profitable if it meets its objectives. 44. A common starting point in the budgeting process is a clean slate, with no expectations. expected future net income. past performance. to motivate the sales force. 48. Which of the following statements about budget acceptance in an organization is true? The most widely accepted budget by the organization is the one prepared by top management. Budgets are hardly ever accepted by anyone except top management. The most widely accepted budget by the organization is the one prepared by the department heads. Budgets have a greater chance of acceptance if all levels of management have provided input into the budgeting process. 38. What is budgetary control? The process of providing information on budget differences to lower level managers Another name for a flexible budget The degree to which the CFO controls the budget The use of budgets in controlling operations 44. The comparison of differences between actual and planned results is done by the external auditors. appears on the company’s external financial statements. is usually done orally in departmental meetings. appears on periodic budget reports. 45. A static budget should not be prepared in a company. is useful in evaluating a manager’s performance by comparing actual variable costs and planned variable costs. shows planned results at the original budgeted activity level. is changed only if the actual level of activity is different than originally budgeted. 93. A responsibility report should show only those costs that a manager can control. only show variable costs. only be prepared at the highest level of managerial responsibility. be prepared in accordance with generally accepted accounting principles. 99. Which responsibility centers generate both revenues and costs? Only profit centers Profit and cost centers Cost and investment centers Investment and profit centers 100. The linens department of a large department store is an investment center. not a responsibility center. a profit center. a cost center. 39. What is a standard cost? The total number of units times the budgeted amount expected Any amount that appears on a budget The amount management thinks should be incurred to produce a good or service The total amount that appears on the budget for product costs 48. Using standard costs increases clerical costs. makes employees less “cost-conscious.” provides a basis for evaluating cost control. makes management by exception more difficult. 80.Unfavorable materials price and quantity variances are generally the responsibility of the Price Quantity Production department Purchasing department Production department Production department Purchasing department Purchasing department Purchasing department Production department
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