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