Grand Valley State University Seidman College of Business ase select, by circlin

Question

Grand Valley State University Seidman College of Business ase select, by circling, the best answer for the following questions. The amounts in brackets in the left rgin indicate the maximum points possible on each question. Depreciation on sales office equipment would most likely appear in which of the following budgets? a. cash budget. b. merchandise purchases budget. c. selling and administrative expenses budget. d. sales budget. The process of developing budget estimates by requiring all levels of management to estimate sales, production, and other operating data as though operations were being initiated for the first time is referred to as a. incremental budgeting b. master budgeting. c. continuous budgeting. d. zero-base budgeting. Budgetary slack i. enhances employee motivation by creating really difficult-to-attain standards. i. makes performance evaluations more difficult. lii. makes planning for the future much easier. Which statement(s) is(are) true? a ionly. b. lionly. c. ili only. d· i,ii, and iii. e. None of the above. The correct answer or combination of answers is Consider the following statements regarding the difference between a flexible budget and a planning budget L. Flexible budgets provide cost allowances for different levels of activity, whereas a planning budget provides costs for one level of activity. i. A flexible budget has only variable costs, whereas a planning budget has only fixed costs. ili. Variances will always be larger with a flexible budget than with a planning budget. Which statement(s) is(are) true? a. i only b. il only c. ili only. d. I, li, and ill e. None of the above. The correct answer or combination of answers is 213 Midterm Exam 2 Winter Semester 2017 Page 1

Explanation / Answer

Depreciation option c)   Selling and administration expense budget option d) Zero -Base budgeting Slack option b) ii only makes performance evaluations more difficult Flexible budget option a) I only Flexible budget provide cost allowance for different levels of activity,whereas planning budget provides costs for one level of activity.

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