BME200

Budgets are financial plans for the future.

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The master budget is composed of operating budgets and financial budgets

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Planning is achieved by comparing actual results with budgeted results on a periodic basis.

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The first budget to be prepared is the sales budget.

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The direct materials purchases budget is based on the sales budget.

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The direct labor budget includes: units to be produced, direct labor time needed per unit, and total direct labor cost for the period.

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The first step in making a short-run decision is to identify alternatives as possible solutions to the problem

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In short-run decision making, the alternative with the lowest overall cost is always chosen.

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The benefit sacrificed when one alternative is chosen over another is called sunk cost.

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Future costs that differ across alternatives are relevant costs

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• false