Question

1. Another name for the static budget is...

select one:

a. master budget

b. overhead budget

c. permanent budget

d. flexible budget

2. Costs incurrd indirectly and allocated to a responsiblity level are consideted to be...

select one:

a. nonmaterial

b. mixed

c. controllable

d. noncontrollable

3. It is possible that a company's financial statements may report inventories at...

select one:

a. budgeted costs

b. standard costs

c. both budgeted and standard costs

d. none of these

4. Under management by exception, which differences between planned and actual results should be investigated?

select one:

a. material and noncontrollable

b. controllable and noncontrollable

c. material and controllable

d. all differences should be investigated

Answer 1

1. (A) Another name of static budget is master budget.

Explanation :- As the name suggests it is static or fixed whether there is increase or decrease in revenue and expenses over a specified period of time. Overhead budget includes expected expenses of production other than direct materials and labour. Permanent budget is made in the starting of the business year and can be modified according to need. Flexible budget is a series of static budget.

2. (D) It considered to be non controllable.

Explanation :- Controllable cost is a cost on which manager has a control. Non controllable cost incurred indirectly and allocated to a responsibility level. Mixed cost includes fixed and variable both. Non material cost is like the cost of service or intangible cost.

3. (B) Standard cost

Company's financial statements report inventories at Standard cost only. Budget cost includes the cost recorded under budget.

4. (C) material and controllable

According management by exception rule, material and controllable differences between planned and actual results should be investigated.