1. An example of a mixed cost is a. utility costs. b. property taxes. c. direct
ID: 2434252 • Letter: 1
Question
1. An example of a mixed cost isa. utility costs.
b. property taxes.
c. direct materials.
d. supervisory salaries.
2. Which of the following items does not follow from the adoption of a budget?
a. Deterrent to waste
b. Basis for performance evaluation
c. Guarantee of accomplishing the profit objective
d. Promote efficiency
3. A budget is most likely to be effective if
a. employees and managers at the lower levels do not get involved in the budgeting process.
b. it has top management support.
c. it is used to assess blame when things do not occur according to plans.
d. it is not used to evaluate a manager's performance.
4. In a production budget, total required units are the budgeted sales units plus
a. desired ending finished goods units plus beginning finished goods units.
b. desired ending finished goods units minus beginning finished goods units.
c. beginning finished goods units.
d. desired ending finished goods units.
5. Of the following items, which one is not obtained from an individual operating budget?
a. Cost of goods sold
b. Selling and administrative expenses
c. Sales
d. Accounts receivable
6. The formula for determining budgeted merchandise purchases is budgeted
a. cost of goods sold + beginning inventory - desired ending inventory.
b. sales + beginning inventory - desired ending inventory.
c. cost of goods sold + desired ending inventory - beginning inventory.
d. production + desired ending inventory - beginning inventory.
Explanation / Answer
1. An example of a mixed cost is a. utility costs. Any cost which has a relationship like y=ax+b where 'a' varies with level of activity while 'b' is a fixed cost which is incurred even with sero level of activity is a mixed cost. So we can apply this rule to Utilities where we have to pay a fixed rental even if we don;t use the utility eg electricity. We also pay a variable charge which varies with the no of eletrcial units consumed. 2. Which of the following items does not follow from the adoption of a budget? b. Basis for performance evaluation.. THis is a HR matter related to empyee perf & is not a part of budget 3. A budget is most likely to be effective if c. it is used to assess blame when things do not occur according to plans. If we can;t fix the blame when things go wrong, budget will be ineffective t implement. 4. In a production budget, total required units are the budgeted sales units plus b. desired ending finished goods units minus beginning finished goods units. This is self explanatory 5. Of the following items, which one is not obtained from an individual operating budget? d. Accounts receivable THis is not part of budget but is a result of sales. 6. The formula for determining budgeted merchandise purchases is budgeted c. cost of goods sold + desired ending inventory - beginning inventory. Self explanatory
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