Answered: Answer: Flexible budgets have the…

Answer: Flexible budgets have the characteristic of 1) Being prepared only annually 2) Never being changed 3) Adjusting for volume changes 4) Ignoring fixed costs

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter7: The Master Budget And Flexible Budgeting

Section: Chapter Questions

Problem 5Q: Explain zero-based budgeting and how it differs from the traditional approach to preparing next...

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Answer:
Flexible budgets have the characteristic of
1) Being prepared only annually
2) Never being changed
3) Adjusting for volume changes
4) Ignoring fixed costs

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Flexible budgets have the characteristics of what?
Why is it relevant to calculate the fixed cost budget? Management must account for these fixed costs as part of their monthly expenses. Management usually forecast the fixed costs based on past financial records and take into account potential rate increase of these fixed costs on a monthly basis. Without budgeting fixed cost into the income statement, you won’t be able to calculate the net profit. All the above.
1.Using a flexible budget, actual results can be compared to what costs should have been at the actual level of activity. True or False 2.Fixed costs should not be included in a flexible budget because they do not change when the level of activity changes. True or False 3.Actual costs are determined by plugging the actual level of activity for the period into the cost formulas used in flexible budgets. True or False 4.If activity is higher than expected, total fixed costs should be higher than expected. If activity is lower than expected, total fixed costs should be lower than expected. True or False
In a flexible budget, what will happen to fixed costs as the activity level increases? Multiple Choice The fixed cost per unit will decrease. The fixed cost per unit will increase. Fixed costs are not included in a flexible budget.
Please correct me if I am wrong and give the reason thoroughly. When using a flexible budget, a decrease in activity within the relevant range: A) decreases variable cost per unit. B) increases the variable cost per unit. C) decreases total costs. D) increases total costs. The correct answer is (C). My understanding that (within the relevant range) the variable cost is constant and Fixed cost is variable, which means it decreases if the level of activity decreased and vice versa when the level of activity increased. Therefore, the total cost decreases when the total activity within the range decreased.
In your own words, Define the following terms they relate to spending budgeted dollars obligated amount pipeline obligation burn rate
19. What is the main advantage of a flexible budget? a. It is easier to prepare than a static budget b. It can adapt to changes in activity levels and provide more accurate financial control c. It does not require regular revisions d. It is based on historical data
Estimating the effects of changes in budget assumptions, such as determining the impact of an increase or decrease in sales, is called: Question 4 options: static budget analysis. sensitivity analysis. variance analysis, cost reduction analysis. (Ch 10) An advantage of a flexible budget is that it: Question 5 options: allows comparison of actual costs to master (static) budget costs. considers only variable costs. allows comparisons of actual costs to the costs that should have been incurred, given the level of sales. allows management freedom in meeting profitability goals.
How do rolling forecasts enhance traditional budgeting methods? a) Quarterly reviews are eliminated b) Annual budgets remain unchanged c) Regular updates replace rigid annual predictions d) Long-term plans become fixed
Which of the following is NOT a problem associated with traditional line-item budgets? Absence of program value measurement Single-year cost orientation The fallacy of appellation Inability to control input usage
Ma1. Which of the following statements is true? A. Budget reports comparing actual results with planned objectives should be prepared only once a year B. OA static budget is most useful for evaluating a manager's performance in controlling variable costs C. The master budget is not used in the budgetary control process D. OA static budget ignores data for different levels of activity
4. Explain the differences between fixed and flexible budgets and their relevance in evaluating operational performance.