3. Long-run planning (strategic plans) involves the preparation of the*

A) operating budget.

B) cash budget.

C) budget standards.

D) profit plan.

E) capital budget.

4. Direct material purchases equal*

A) usage plus production needs.

B) production needs plus target ending inventories.

C) beginning inventories plus production needs.

D) usage plus target ending inventories less beginning inventories.

E) the number of units to be produced times the amount of direct material in each unit.

5. The budgeting process generally concludes with the preparation of

A) cash budget.

B) selling expense budget.

C) budgeted financial statements.

D) research and development budget.

E) production budget.

6. Which of the following statements is TRUE concerning controllability of costs?*

A) Fixed costs are controllable costs.

B) Controllable costs are easy to identify with much accuracy.

C) Senior managers rarely differ in their reliance on controllable costs for performance measurement.

D) All costs are controllable, given a sufficiently long time period.

E) Most costs are under the sole influence of any one manager.

7. A variance is considered

A) the gap between an actual result and a benchmark amount.

B) the required number of inputs for one standard output.

C) the difference between an actual result and a budget amount.

D) the difference between a budgeted amount and a standard amount.

E) a standard.

8. The budgeted balance sheet must be prepared prior to the cash budget so that the required cash balance can be determined.*

True

False

. The cash budget helps avoid unnecessary idle cash and at the same time maintain minimum cash balance

True

False

10. The usual starting point in budgeting is to forecast net income

True

False