1. Expressing plans for a business in financial terms is commonly called: A. master planning. B. budgeting. C. strategic planning. D. operational planning. 2. Which of the following items is not needed to prepare a sales budget by product line? A. Expected purchase price of each product. B. Expected unit sales of each product. C. Expected selling price of each product. D. All of the answers are correct. 3. Which of the following items is not needed to prepare an inventory purchases budget for a merchandising business? A. Expected unit selling price B. Beginning inventory C. Expected unit sales D. Desired ending inventory 4. Which of the following would appear on a selling and administrative expense budget, but would not appear on a schedule of cash payments for selling and administrative expenses? A. Cost of goods sold B. Depreciation expense C. Salary expense D. Sales expense 5. Budgeted depreciation expense would not appear on a: A. Selling and administrative expense budget. B. Budgeted income statement. C. Cash budget. D. All of the answers are correct. 6. A budget prepared at a single volume of activity is referred to as a: A. Strategic budget. B. Standard budget. C. Static budget. D. Flexible budget. 7. When would a variance be labeled as favorable? A. When actual costs are less than standard costs B. When standard costs are equal to actual costs C. When standard costs are less than actual costs D. When estimated costs are greater than actual costs 8. A difference between the static budget based on planned volume and a flexible budget prepared at actual volume is called a: A. Flexible budget variance. B. Static budget variance. C. Production activity variance. D. Volume variance. 9. Which manager is normally held responsible for fixed cost volume variances? A. Production supervisor B. Upper level marketing managers C. Plant manager D. Purchasing agent 10. Select the correct statement regarding general, selling, and administrative (GS&A) costs. A. Variable general, selling, and administrative costs can have price variances. B. Variable general, selling, and administrative costs cannot have usage variances. C. Cost variances are not generally computed for fixed general, selling, and administrative costs. D. All of these answers are correct. 11. The practice of delegating authority and responsibility is referred to as: A. Centralization of authority. B. Standard costing. C. Management by exception. D. Decentralization. 12. Contribution margin would be the most important variable in evaluating the performance of: A. A cost center. B. A production center. C. An investment center. D. A profit center. 13. Which of the following statements about return on investment (ROI) is false? A. ROI equals margin divided by investment turnover. B. ROI is used to measure the performance of investment centers. C. Seeking to maximize ROI can result in a conflict between the interest of a particular manager and the interest of the business as a whole. D. Companies may minimize motivational problems by using original cost instead of book value in the denominator of the ROI formula. 14. Which of the following should not be included in the investment base used to compute residual income? A. Accounts receivable B. Inventory C. Cash D. Land held for future use 15. Which of the following may be used to establish transfer prices? A. Standard cost of a product B. A negotiated price C. Market price D. All of these are correct answers.