Peter Newton, a production supervisor at Be Think Inc., uses variable costing fo

Question

Peter Newton, a production supervisor at Be Think Inc., uses variable costing for any cost control decisions that he has to take. Which of the following is the reason for his choice? lower management usually does not have control over most fixed costs only variable costs are controllable in the long and short run fixed costs are not relevant in the long-run absorption costing is not relevant for long-run decisions Which of the following statements is true of the budgeting process? It shows the actual performance of the business. It is a continuous process that encourages communication. It includes the qualitative targets of a company. It leads to slack where managers understate expected expenses. An intentional understatement of expected revenues or overstatement of expected expenses by managers in order to have a favorable performance evaluation is known as Which of the following budgets focuses on the income statement and its supporting schedules? The starting point in die budgeting process is the preparation of the The direct material budget is prepared on the basis of the Nobell Inc. has a cash balance of $20,000 on April 1,2015. They are now preparing the cash budget for the second quarter. Budgeted cash collections and payments are as follows: There are no budgeted capital expenditures or financing transactions during the quarter. Based on the above data, calculate the projected cash balance at the end of June. Uncles Caps Inc. a merchandising company, wants to prepare the budgeted balance sheet for the next budget period. For this purpose, the amount of ending cash balance can be retrieved from the

Explanation / Answer

Solution 20:

The reason for selecting variable costing for cost control decision is "lower management usually does not have control over most fixed costs"

Hence option A is correct.

Solution 21:

The true statement is "it is a continuous process that encourages communication"

Hence option B is correct.

Solution 22:

An intentional understatement of expected revenues or overstatement of expected expenses by managers in order to have a favorable performance evaluation is known as "budgetary slack"

Hence option C is correct.

Solution 23:

Operating budget focuses on the income statement and its supporting schedules.

Hence option A is correct.

Solution 24:

The starting point of a budgeting process is the preparation of "Sale Budget"

Hence option D is correct.

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