1: For which of the budgets in the master budget will a company prepare a flexible budget? A. Only the budgets that reflect operations B. All of the budgets C. Only the sales budget D. Only the income statement budget Question 2: Surf N Waves planned to sell 18,000 surfboards, however, the actual number sold totaled 19,000. Which one of the following provides the best comparison of the cost data associated with the sales? A. A budget of 18,000 units of activity B. A budget based on the original planned level of activity C. A budget of 19,000 units of activity. D. The master budget level of activity Question 3: Which statement is true concerning the selection of the level of activity used in the flexible budget? A. The activity level should be the same as actually achieved. B. The activity level should be the same as found in the master budget. C. Any activity level can be used in the flexible budget. D. The activity level should be the level which maximizes profit. Question 4: Which statement is true about the activity index used in preparing the flexible budget? A. It is irrelevant to total costs. B. It is the same for all departments of the company. C. It significantly influences the variable costs that are being budgeted. D. It applies only to fixed manufacturing costs. Question 5: In what situations will a static budget be most effective in evaluating a manager's effectiveness? A. The planned activity levels match actual activity levels. B. The company has no fixed costs. C. The company has substantial variable costs D. The company has substantial fixed costs