Strategic Cost Management Quiz 2

What is the primary purpose of budgeting?

• To hire new employees

• To plan and control operations

• To increase sales

• To reduce costs

Which component of the master budget focuses on income-generating activities?

• Financial Budget

• Operating Budget

• Cash Budget

• Capital Expenditures Budget

What does the Sales Budget forecast?

• Employee salaries

• Units to be sold and expected revenue

• Marketing expenses

• Production costs

What is the formula for the Production Budget?

• Sales Units + Desired Ending Inventory - Beginning Inventory

• Sales Units - Beginning Inventory + Desired Ending Inventory

• Sales Units - Desired Ending Inventory + Beginning Inventory

• Sales Units + Beginning Inventory - Desired Ending Inventory

What does the Direct Labor Budget estimate?

• Cost of materials

• Labor hours and costs based on production volume

• Sales revenue

• Marketing expenses

What is a key feature of a Flexible Budget?

• It is only used for fixed costs

• It adjusts based on actual output levels

• It is prepared annually

• It remains static regardless of activity levels

What is Zero-Based Budgeting (ZBB)?

• A method that uses historical data for planning

• A method that starts from zero and justifies every expense

• A budget that adjusts based on previous years

• A budget that only considers fixed costs

What does Kaizen Budgeting focus on?

• Cost reduction through continuous improvement

• Setting fixed budgets for departments

• Increasing production capacity

• Eliminating all costs

What is the primary goal of Responsibility Accounting?

• To reduce costs across the board

• To improve employee morale

• To increase sales revenue

• To assign responsibility for financial results

What is a Cost Center responsible for?

• Generating revenue

• Controlling costs only

• Managing investments

• Maximizing profits