Answer all of the following questions Question 1: Select either () or (F) for ea

Question

Answer all of the following questions Question 1: Select either () or (F) for each of the following statements: (5 marks) C(F) Budgeting includes only the financial aspects of the plan and not any 2CD(F) To create greater commitment to the budget, top-management 3 (F) Simply because activity-based costing systems employ more activity-cost 4 1-1 (F) | A key factor in controlling costs is focusing on the revenues a nonfinancial aspects such as the number of physical units manufactured create the budget and then share it with lower-level managers. drivers they provide more accurate product costs than traditional systems service generates. (T) (F) 6F) Measurement of cost behavior means understanding and quantifying how 7(F) During an engineering cost analysis, knowledge about new costs may be Costing systems with multiple cost pools are considered ABC systems. activities of an organization affect its levels of costs. obtained from experiments with prototypes and the experience of competitors. F) When a company acquires all of the common stock of a subsidiary, the books of the subsidiary are no longer used break-even point is when enough units are margin equals total variable costs 0(FWhen an investing company owns less than 50 percent of another company, the companies must prepare consolidated financial statements Question 2: Choose the most suitable answer a, b. e, d for each of the statements: (10 marks) 1) The time coverage of a budget should be a. one year. b. guided by the purpose of the budget. c. cover design through manufacture and sale of the product. d. shorter rather than longer. 2) The manufacturing overhead costs budget includes budgeted amounts for a. direct materials. b. direct manufacturing labor. c. indirect manufacturing labor. d. all of the above. 3) Which of the following statements about activity-based costing is NOT true? a. Activity-based costing is useful for allocating marketing and distribution costs. b. Activity-based costing is more likely to result in major differences from traditional costing c. Activity-based costing seeks to distinguish batch-level, product-sustaining, and facility-sustaining d. Activity-based costing differs from traditional costing systems in that products are not cross- systems if the firm manufactures only one product rather than multiple products. costs, especially when they are not proportionate to one another. subsidized

Explanation / Answer

TRUE OR FALSE

1. FALSE - Budgeting includes both financial and nonfinancial aspects of the plan.

2. TRUE - Participation of employees in the budgeting process helps create greater commitment towards the budget

3. TRUE - Activity-based costing is more accurate because it takes important factors into account before assigning a cost to a product

4. FALSE - Key factor in controlling cost is focusing on cost minimization and optimum utilization of resoure

5. FALSE - ABC system based on activity along with cost

6. TRUE - Cost behavior refers to the way different types of production costs change when there is a change in level of production activity.

7. TRUE

8. TRUE - Each company keeps separate books. At the end of the year, a consolidation financials is prepared to combine the books

9. FALSE - As Break Even point contribution margin equal to fixed cost

10. FALSE - Cosolidation of financial statement are compasary require when a compayn ows a majority (more than 50%) of another company

CHOOSE THE MOST SUITALBE OPTION

1. The time coverage of a budget should be - B. guided by the purpose of the budget

2. The manufacturing overhead costs budget includes budgeted amounts for - C. Indirect Manufacture Labour

3. Which of the following statment about activity - basd costing is NOT true - B. Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products

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