(a) The economy looks optimistic. (b) Anticipation of greater sales ahead. (c) D
ID: 2457992 • Letter: #
Question
(a) The economy looks optimistic.
(b) Anticipation of greater sales ahead.
(c) Detailed study and justification of the project.
(d) The consultant approves the project.
18. The contribution margin inbreak-even analysis is derived by subtracting:
(a) Fixed costs from price.
(b) Fixed costs from variable costs.
(c) Price from variable costs.
(d) Variable cost per unit from fixed costs.
(e) Variable cost per unit from price.
19. The key initial element in developingforecasts is:
(a) A cash budget.
(b) An income statement.
(c) A sales forecast.
(d) A collection schedule.
20. The capacity and production of productsshould be carefully studied because budgeting managers:
(a) Need to know how much the machines will produce.
(b) Need to know how much labor to employ.
(c) Need to know the efficient utilization of manpower andmachinery.
(d) Need to know the long-term strategic objectives and planning.
Explanation / Answer
1. Discretionary costs are costs easily changed by managementdecision. Example advertising costs, repairs, maintenance etc. Non-discretionary costs are mandatory and not avoidable. Examplerent, wages etc. 9. C Detailed study andjustification of the project. 18. E Variable cost per unitfrom price. 19. C Sales forecast 20. C need to know theefficient utilization of manpower and machinery
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