A Level Budgets

Which of the following is NOT a main objective of creating budgets?

• To help plan ahead for the whole business
• To help control by comparing actual with budget
• To help increase participation and motivation of managers
• To meet legal requirements to publish all financial resuls

What two things does a budget compare?

• Income and Expenses
• Savings and Interest
• Income and Investments
• Expenses and Expenditures

The idea of a budget is to spend exactly as much as you spend.

• True

• False

When you set a budget, you should never revisit or adjust it.

• True
• False

A potential downside of budgeting is that budget holder:

• Might take short term decisions

• will feel less motivated

• Might spend their budget rather than make savings

• will always spend more than their allowance

Which of these actions might help correct an adverse overheads variance?

• Increase bonus payments.

• Reduce Head Office staff numbers.

• offer promotional discounts

• Cut supplier payments for raw materials.

Which of the following is a possible explanation for a favourable sales variance?

• Higher than expected selling prices

• Lower than expected gross profit margins

• Lower than expected overtime costs.

• Lower than expected sales volumes.

Which one of the following is an adverse variance?

• Marketing expenditure lower than the budget.

• Raw material cost lower than the budget.

• Gross profit margin higher than the budget.

• Sales revenue lower than the budget..