1. Consider the following statements: I. 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. II. 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. a. I is true; II is true b. I is true; II is false c. I is false; II is true d. I is false; II is false 2. Consider the following statements: I. The Spending variance for a cost is UNfavorable if the actual cost exceeds the cost in the applicable flexible budget. II. A Planning Budget is a budget created at the beginning of the budget period that is valid only for the planned level of activity. a. I is true; II is true b. I is true; II is false c. I is false; II is true d. I is false; II is false 3. Consider the following statements: I. Differences between the static planning budget and the flexible budget show what should have happened because the actual level of activity differed from what had been planned. II. If the actual level of activity differs from what was planned, it would be misleading to compare actual costs to the static, unchanged planning budget. a. I is true; II is true b. I is true; II is false c. I is false; II is true d. I is false; II is false 4. A budget that is based on the actual activity of a period is known as a: A) continuous budget. B) flexible budget. C) static budget. D) master budget. 5. Energy Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. When the company prepared its planning budget at the beginning of December, it assumed that 34 wells would have been serviced. However, 30 wells were actually serviced during December. The "Employee salaries and wages" in the flexible budget for December would have been closest to: a. $98,000 b. 63,000 c. 50,000 d. 42,000 e. None of the above. The answer is 6. Welcome Family Inn is a bed and breakfast establishment in a converted 100-year-old mansion. The Inn's guests appreciate its gourmet breakfasts and individually decorated rooms. The Inn's overhead budget for the most recent month appears below: The Inn's variable overhead costs are driven by the number of guests. What would be the total budgeted overhead cost for a month if the activity level is 100 guests? a. $7,685 b. $7,740 c. $8,658.89 d. $8,826 e. None of the above. The answer is