Management 122
Consistency demands that a cost is relevant in one decision be regarded as relevant in other decisions as well.
False
Fixed costs are irrelevant in decisions about whether a product should be dropped.
False
Variable costs are always relevant costs in decisions.
False
The production budget is typically prepared prior to the sales budget.
False; Sales Budget always first, then Production Budget.
Benefits of budgeting
It sets benchmarks for evaluation performance; It uncovers potential bottlenecks; It formalizes a manager's planning efforts.
A sales budget is a detailed schedule showing the expected sales for the budget period; typically, it is expressed in both dollars and units of product.
True
Both planning and control are needed for an effective budgeting system.
True
One way to increase the effective utilization of a bottleneck is to reduce the number of defective units.
True
Vertically integrated
When a company is involved in more than one activity in the entire value chain.
Continuous (perpetual) budget
A plan that is updated monthly or quarterly, dropping one period and adding another.
Fixed MOH is included in
Absorption costing (and not Variable costing)
Calculate Purchases made
End Inv <Beg Inv> + COGS = Inventory Purhcased