Exam 3

Which of the following is an example of the coordination and communication function of the budgeting process?

A budget demands integrated input from different business units and functions

Which of the following describes the production budget?

It provides the quantity of finished goods to be produced during a budget period

Costs that have both variable and fixed components are called

Mixed costs

Which of the following statements is true of the behavior of total variable costs, within the relevant range?

They will decrease as production decreases

Which of the following statements is true of the behavior of total fixed costs, within the relevant range?

They will remain the same as production levels change.

Which of the following is an example of the benchmarking function of the budgeting process?

budget numbers are used to evaluate the performance of managers

The_____details how the business expects to go from the beginning cash balance to the desired ending cash balance

cash budget

The dollar amount that provides for covering fixed costs and then provides for operating income is called

contribution margin

Contribution margin ratio is equal to

contribution margin divided by net sales revenue

A_______ groups cost by behavior; costs are classified as either variable costs or fixed costs

contribution margin income statement

Which of the following is a variable cost?

direct materials cost

Which of the following costs do not change in total despite changes in volume within the relevant range?

fixed costs

When the sales price per unit decreases, the break even point

increases

The direct materials budget is prepared using information from the _____ budget

production

Variable cost per unit, within the relevant range, will

remain the same as production levels change

The starting point in developing the master budget is the preparation of the

sales budget

Operating leverage predicts the effects that fixed costs have on operating income when

sales volume changes