Budgeting Paper 18

1

Flexible budgets






2

A company is focused on continuous improvement and wants to ensure that its budgeting process supports this goal. The company has already eliminated much of the waste from activities during previous budget periods and now wants to concentrate on value-added activities and improving relationships with suppliers and customers. Which of the following is the least beneficial budget solution for this company?






3

The difference between the actual amounts and the flexible budget amounts for the actual output achieved is the






4

An advantage of using a flexible budget compared to a static budget is that, in a flexible budget,






5

A major disadvantage of a static budget is that






6

Arkin Co.’s controller has prepared a flexible budget for the year just ended, adjusting the original static budget for the unexpected large increase in the volume of sales. Arkin’s costs are mostly variable. The controller is pleased to note that both actual revenues and actual costs approximated amounts shown on the flexible budget. If actual revenues and actual costs are compared with amounts shown on the original (static) budget, what variances would arise?






7

A method of budgeting in which the cost of each program must be justified, starting with the one most vital to the company, is






8

Comparing actual results with a budget based on achieved volume is possible with the use of a






9

The use of standard costs in the budgeting process signifies that an organization has most likely implemented a






10

All of the following are advantages of the use of budgets in a management control system except that budgets:






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