Ch. 10 - True/False

A cost is defined as controllable for a manager if he or she can influence it even if that manager cannot strictly control it.

True

Enterprise Resource Planning systems help managers develop and analyze budgets.

True

Kaizen budgeting explicitly incorporates continuous improvement anticipated during a budget period into the budget process.

True

One function of budgets is to allow feedback by comparing actual results with the budgets.

True

Sensitivity analysis allows managers to see how results will change if predicted data are not achieved or an underlying assumption changes.

True

Variances can alert managers early to problems or events they may otherwise not see immediately.

True

A cost center and a profit center are different terms for the same thing.

False

A strategic plan and an operating plan both lead to short-run budgeting.

False

In a profit center, managers are accountable for revenues only.

False

It is important to build in "slack" when developing a budget.

False

Multinational companies have found budgeting to be unnecessary due to the impact of currency fluctuations.

False

Preparation of the production budget is usually the first step in preparing the operating budget.

False

Statistical analysis should be the only input used to forecast sales.

False

The first step in preparing an operating budget is to prepare a budgeted income statement.

False

The master budget reflects the impact of only operating decisions.

False