A continuous (or perpetual) budget:

A continuous (or perpetual) budget:

A. is prepared for a range of activity so that the budget can be adjusted for changes in activity.
B. is a plan that is updated monthly or quarterly, dropping one period and adding another.
C. is a strategic plan that does not change.
D. is used in companies that experience no change in sales.

Answer: B

National Telephone company has been forced by competition to put much more emphasis on planning and controlling its costs. Accordingly, the company's controller has suggested initiating a formal budgeting process. Which of the following steps will NOT help the company gain maximum acceptance by employees of the proposed budgeting system?

National Telephone company has been forced by competition to put much more emphasis on planning and controlling its costs. Accordingly, the company's controller has suggested initiating a formal budgeting process. Which of the following steps will NOT help the company gain maximum acceptance by employees of the proposed budgeting system?

A. Implementing the change quickly.
B. Including in departmental responsibility reports only those items that are under the department manager's control.
C. Demonstrating top management support for the budgeting program.
D. Ensuring that favorable deviations of actual results from the budget, as well as unfavorable deviations, are discussed with the responsible managers.

Answer: A

Which of the following represents the correct order in which the indicated budget documents for a manufacturing company would be prepared?

Which of the following represents the correct order in which the indicated budget documents for a manufacturing company would be prepared?

A. Sales budget, cash budget, direct materials budget, direct labor budget
B. Production budget, sales budget, direct materials budget, direct labor budget
C. Sales budget, cash budget, production budget, direct materials budget
D. Selling and administrative expense budget, cash budget, budgeted income statement, budgeted balance sheet

Answer: D

Self-imposed budgets typically are:

Self-imposed budgets typically are:

A. not subject to review by higher levels of management since to do so would contradict the participative aspect of the budgeting processing.
B. not subject to review by higher levels of management except in specific cases where the input of higher management is required.
C. subject to review by higher levels of management in order to prevent the budgets from becoming too loose.
D. not critical to the success of a budgeting program.

Answer: C

Which of the following is not a benefit of budgeting?

Which of the following is not a benefit of budgeting?

A. It reduces the need for tracking actual cost activity.
B. It sets benchmarks for evaluation performance.
C. It uncovers potential bottlenecks.
D. It formalizes a manager's planning efforts.

Answer: A

Which of the following represents the normal sequence in which the indicated budgets are prepared?

Which of the following represents the normal sequence in which the indicated budgets are prepared?

A. Direct Materials, Cash, Sales
B. Production, Cash, Income Statement
C. Sales, Balance Sheet, Direct Labor
D. Production, Manufacturing Overhead, Sales

Answer: B