1) Which of the following is NOT an advantage of using the operating budget as a control device as compared to an ABC system:
a) An ABC system will enable the company to identify activities which can be controlled, and areas where miscosting has occurred due to a lack of information
b) An ABC system should accomplish more than just reducing costs.
c) The benefits will always outweigh the costs of implementing an ABC system.
d) Identifying activities provides more flexibility in that the company can control costs by controlling activities than simply limiting expenditures without any reasoning.

4) Assume a company sells crown moulding. The mouldings sell for $6.00. Management wants a target profit of 20% of sales. The sales are currently 200,000 units per year. What is the target cost to achieve their target profit?
a) $7.20
b) $4.00
c) $6.00
d) $4.80

7) When making decisions, managers are motivated to take those actions that are in the best interest of:
a) company executives
b) employees
c) shareholders
d) themselves