Chap 10 to 12

Which of the following budgetary systems involves setting specific goals or targets that departments or units are expected to achieve within a given budget?

• Incremental Budgeting

• Zero-Based Budgeting

• Performance-Based Budgeting

• Line-Item Budgeting

In a participatory budgetary system, which of the following is a primary characteristic?

• Budgets are primarily created by top management with little input from other levels.

• Budgeting is done through a decentralized process involving input from various levels of the organization.

• The focus is on reducing costs, with no consideration of departmental performance

• Budgets are built on the assumption that the previous year’s budget is a valid starting point for the new cycle.

Which of the following statements correctly distinguishes between feedback control and feedforward control in the context of budgeting?

• Feedback control focuses on making adjustments to future budgets based on past performance, while feedforward control adjusts the budget to correct problems before they occur.

• Feedback control is applied after a budget period ends to review performance, while feedforward control is a reactive approach to address past mistakes.

• Feedback control involves analyzing outcomes and results of past activities to forecast future performance, while feedforward control does not rely on historical data.

• Feedback control is primarily concerned with ensuring budget adherence, while feedforward control focuses only on the allocation of resources at the start of a budget cycle.

• 1

• 2

• 2.5

• 3

• 70%

• 72.25%

• 82%

• 85%

A company is using simple linear regression to predict its total cost based on the number of units produced. The following results were obtained from the regression analysis:

• Intercept (β₀) = 1,200

• Slope (β₁) = 4.5

• Equation: Total Cost = β₀ + β₁ × Units Produced

If the company produces 1,000 units, what will be the predicted total cost?

• $5,700

• $4,700

• $6,200

• $5,200

A company has the following data for its production of 2,000 units:

• Standard labor time per unit: 1.5 hours

• Standard hourly rate: $12

• Actual labor hours used: 2,700 hours

• Actual labor cost: $32,400

What is the labor efficiency variance?

• $3,600 unfavorable

• $4,200 favorable

• $4,200 unfavorable

• $3,600 favorable

A company has the following data:

• Budgeted fixed costs: $50,000

• Budgeted production capacity: 10,000 units

• Actual production units: 9,000 units

• Actual fixed costs: $48,000

What is the Fixed Cost Capacity Variance?

• $2,000 favorable

• $2,000 unfavorable

• $5,000 unfavorable

• $5,000 favorable

company produces a product using two raw materials, A and B. The standard cost information for the materials is as follows:

• Material A: Standard cost = $5 per unit, Standard quantity = 3,000 units

• Material B: Standard cost = $8 per unit, Standard quantity = 2,000 units

In a given period, the company actually used:

• Material A: 2,800 units at $5.50 per unit

• Material B: 2,200 units at $8.20 per unit

What is the Material Mix Variance?

• $1,600 unfavorable

• $1,600 favorable

• $2,400 unfavorable

• $2,400 favorable