14. _______ budgets shows expected revenues costs at variety of volume levels; a
ID: 2601272 • Letter: 1
Question
14. _______ budgets shows expected revenues costs at variety of volume levels;
a. flexible.
b. static.
c. master.
d. sales
15. When actual costs exceed standard costs, are variances;
a. Variances.
b. Operating income.
c. Favorable.
d. Unfavorable.
19. The Return on Investment (ROI) is;
a. The operating income divided by the operating assets.
b. The target of the sales department.
c. Encourages managers to make profitability that would rejected using ROI.
d. The operating income less operating assets.
20. Static budget is:
a. called master budget too.
b. show expected revenue at a variety of volume levels.
c. called variances too.
d. always unfavorable.
Explanation / Answer
Answer:
14) a. Flexible
Flexible budget shows expected revenue costs at various volume levels. It can be used by the management for planning and performance. As the volume increases the cost shall increas and vice versa. The cost per unit shall generally remain the same.
15) d. Unfavourable
When the actual costs exceed the standards initially set, such variance is known as unfavourable variance. It has negative impact on the organization. It includes over paid labour, material, overhead etc, or underutilized or less economically used resources.
19) a. Operating income divided by operating assets.
Return on Investment is the return or profits that an investment/asset would fetch if invested. Thus it shall be calculated by dividing the return on such investment by total investment. (Operating income/Operating assets).
20) a. Called master budget too.
A static budget does not change with the change in volume. It is also known as an annual master budget of the organization.
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