1. Why is the sales forecast the starting point in budgeting?

2. What is a perpetual budget?

3. Which is a better basis for evaluating actual results: budgeted performance or past performance? Why?

4. The materials price variance can be computed at what two different points in time? Which point is better and why?

5. What effect, if any, would you expect purchasing poor-quality materials to have on direct labour variances?

6. Distinguish between ideal and practical standards.

7. Costs associated with the quality of conformance can be broken down into four broad groups. What are these four groups and how do they differ?

8. What is likely the most effective way to reduce a company's total quality costs?

9. What are the three main uses of quality cost reports?