Accounting II - Exam 3

- is a lost potential benefit that could have Benn obtained by following an alternative course of action.

An opportunity cost

An overly optimistic sales budget may result in --.

Excessive inventories

When the units required to fill a special order can be produced within existing plant capacity, which of the following will NOT increase?

Fixed costs

What would be the same total amount on a flexible budget and a static budget if the activity level is different for the two types of budgets.

Fixed manufacturing overhead

An unrealistic budget is more likely to result when it -.

Has been developed in a top down fashion.

A manager of a cost center is evaluated mainly on --.

His or her ability to control costs

Which types of responsibility centers generate both revenues and costs?

Investments and profit centers

The financing section of a cash budget is needed if there is a cash deficiency or of the ending cash balance is less than --.

Managements minimum required balance

Under management by exception, what differences between planned and actual results should be investigated.

Material and controllable

What is always a relevant cost?

Opportunity cost

Long-range planning usually encompasses a period of --.

at least five years

In preparing a direct labor budget, the number of direct labor hours required is calculated using the --.

production budget

Costs that will differ between alternative courses of action and influence the outcome of a decision are called --.

relevant costs

A responsibility report should --.

show only those costs that a manager can control

In an equipment replacement decision, the cost of the old equipment is a --.

sunk cost