1. One advantage of budgeting is that it allows subunit managers independence from strategic planning.

True

False

2. The production budget, like the sales budget, is expressed in units and dollars.

True

False

3. If W Company expected to sell 3,000 units of product at a price of $4 each, but actually sold 2,500 units at a price of $5 each, the selling price variance would be $500.

True

False

4. A variable overhead efficiency variance could be caused by using poor quality material that needs more labor time to meet production standards.

True

False

5. Participative budgeting seeks to motivate employees.

True

False

6. A variance is the difference between a standard cost and a budgeted cost.

True

False

7. Ideal standards are effective in motivating employees to higher productivity.

True

False

8. Performance evaluation for managers should be done using flexible budgets, not static budgets.

True

False

9. If a company reports monthly production budget columns for January, February, and March as well as a "Total First Quarter" column, all amounts in the Quarter column will be the total of amounts shown in the January, February, and March columns.

True

False

10. No matter how sophisticated the budgeting process is, success, in general, only results if middle and lower-level managers believe that top management is truly interested in the final outcome and is willing to reward people for attaining the budget goals.

True

False