10. Chong Corporation has a highly automated production facility. Which of the following correctly shows the two factors that would likely have the most direct influence on the company's manufacturing overhead budget?

a. Sales volume and labor hours.

b. Contribution margin and cash payments.

c. Production volume and management judgment.

d. Management judgment and indirect labor cost.

e. Labor hours and management judgment.

11. Auditory Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended:

Actual units produced: 13,000 Actual fixed overhead incurred: $742,000 Standard fixed overhead rate: $15 per hour Budgeted fixed overhead: $720,000 Planned level of machine-hour activity: 48,000

If Auditory estimates four hours to manufacture a completed unit, the company's fixed-overhead budget variance would be:

a. $22,000 unfavorable.

b. $60,000 unfavorable.

c. None of the answers is correct.

d. $60,000 favorable.

e. $22,000 favorable.

12. Which of the following would have no effect, either direct or indirect, on an organization's cash budget?

a. Raw material purchases.

b. Sales revenues.

c. Advertising expenditures.

d. None of the answers is correct, since all of these items would have some influence.

e. Outlays for professional labor.

13. Which of the following organizations is not likely to use budgets?

a. None of the answers is correct, because all are likely to use budgets.

b. Manufacturing firms.

c. Firms in service industries.

d. Nonprofit organizations.

e. Merchandising firms.

14. Activity-based budgeting:

a. ends with a forecast of products and services to be produced, and customers served.

b. None of the answers is correct

c. begins with a forecast of products and services to be produced, and customers served.

d. parallels the flow of analysis that is associated with activity-based costing.

e. reverses the flow of analysis that is associated with activity-based costing.

15. Canister Industries uses labor hours to apply variable overhead to production. If the company's workers were very inefficient during the period, which of the following statements would be true about the variable-overhead efficiency variance?

a. The nature of the variance (favorable or unfavorable) would be unknown based on the facts presented.

b. The variance would be the same amount as the labor efficiency variance.

c. None of the answers is correct.

d. The variance would be unfavorable.

e. The variance would be favorable.