Question 19 Which of the following statements is true? Only statement I is true. Both statements II and III are true. All of the statements are true. None of the statements are true. 1. 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. 2. Comparing a static planning budget to actual costs is not a good way to assess whether variable costs are under control. 3. In a flexible budget, when the activity declines, the total variable cost also declines.

Question 19 Which of the following statements is true? Only statement I is true. Both statements II and III are true. All of the statements are true. None of the statements are true. 1. 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. 2. Comparing a static planning budget to actual costs is not a good way to assess whether variable costs are under control. 3. In a flexible budget, when the activity declines, the total variable cost also declines.

Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter21: Budgeting

Section: Chapter Questions

Problem 5DQ: Under what circumstances would a static budget be appropriate?

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S1: A budgeted cost for one unit of product may not always be the standard cost of said product. S2: Standard cost maybe described as benchmarks used to evaluate performance. a)both are true b)both are false c)S1 is true d)S2 is true
Under what circumstances would a static budget be appropriate?
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1. How does incremental budgeting differ from program planningbudgeting? How does it differ from zero- based budgeting?2. What are the strengths and weaknesses of incremental budgeting?3. How does program planning budgeting differ from zero-basedbudgeting?4. What are the strengths and weaknesses of program planningbudgeting?5. What are the strengths and weaknesses of zero- based budgeting?
1. Statement 1: A budgeted cost for one unit of product may not always be the standard cost of said product. Statement 2: Standard cost maybe described as benchmarks used to evaluate performance. a. both are true b. both are false c. Statement 1 is true d. Statement 2 is true 2. Standard costs differ from budgeted costs in that standard costs are: a. always expressed in total amounts while budgeted costs are in per unit amounts b. costs incurred for actual production while budgeted costs are that should have been incurred for production c. costs that have been incurred for actual production while budgeted costs are costs that should be incurred for planned production d. based on engineering studies while budgeted costs are based on historical data
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A static budget is most useful for evaluating a manager's performance in controlling variable costs. O a. True O b. False
Comparing a static planning budget to actual costs is not a good way to assess whether variable costs are under control. True or False In a flexible budget, when the activity declines, the total variable cost also declines. True or False The main difference between a flexible budget and a static budget is that the static budget is not adjusted for changes in the level of activity. True or False To help assess how well a manager has controlled costs, actual costs should be compared to what the costs should have been for the actual level of activity. True or False Fixed costs should usually be included in performance reports because fixed costs are generally controllable. True or False
Under what circumstances would a static budget be appropriate?
Under what circumstances is a static budget appropriate?
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