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