Choose the most appropriate alternative to each statement and place it in the answers table below:- 1-Sales Budget is a forecast expressed in a. Quantity b. Money c. Both (A) and (B) d. None of the above 2-Which of the following statements regarding graphs of fixed and variable costs is true? a. Variable costs can be represented by a straight line where costs are the same for each data point. b. Fixed costs can be represented by a straight line starting at the origin and continuing through each data point. c. Fixed costs are zero when production is equal to zero. d. Variable costs are zero when production is equal to zero. e. Fixed and Variable costs are curvilinear form above zero on the "Y" axis. 3. All of the following statements regarding budgeting is true except;- a. Budgeting helps managers determine the resources needed to meet their goals and objectives. b. Budgeting is a key ingredient in good decision-making. c. Budgeting is a bookkeeping task. d. The focus of budgeting is planning. e. Budgeting is an executive responsibility. 4. Broihan Corporation has the following purchases budget for the last half of 2002: July $100,000 October $ 90,000 August $ 80,000 November $100,000 September $110,000 December $94,000 Historically, the company pays one half at the time of purchase and the remainder in the month following purchase. What are the expected cash disbursements in August? :- a. $ 80,000. B. $ 90,000. C. $ 95,000. D. $100,000 e. $ 105,000 5. The Unique Bookshelf Company is considering the purchase of a custom delivery van costing approximately $50,000. Using a discount rate of 20%, the present value of future cost savings is estimated at $51,200. To yield the 20% return, the actual cost of the van should not exceed the $50,000 estimate by more than: a. $50,000 b. $51,200 c. $25,000 d. $ 1,200 e. 20% 6. The Cape Cod Cotton Candy Company had the following information available regarding last year's operations: Sales (100,000 units) $200,000 Variable costs $ 100,000 Contribution margin 100,000 Fixed costs 50,000 Net Income 50,000 If sales were to increase by 200 units, what would be the effect on net income? a. $400 increase b. $200 increase loss c. $150 increase d. $100 increase e. $200 7. You are given the cost and volume information below: Volume Cost 1 unit $ 15 10 units $ 150 100 units $ 1500 What type of a cost is given? a. fixed cost b. variable cost c. step cost d. mixed cost. 8. Bubblemania has three product lines A, B, and C. A B total Total Sales $10,000 9,000 12,000 $31000 Variable costs 4,500 7,000 6,000 17,500 Contribution Margin 5,500 2,000 6,000 13,500 Fixed costs 3,500 6,000 3,000 12,500 Net income 2,000 _(4,000) 3,000 1,000 Product line B appears unprofitable, and management is considering discontinuing the line. How would the discontinuation of Product line B affect net income? a. increase by $4,000 b. decrease by $4,000 c. increase by $2,000 d. decrease by $2,000 e. increase by $6,000 9. W Ltd makes leather purses. It has drawn up the following budget for its next financial period: Selling price per unit $11.60 Variable production cost per unit $3.40 Sales commission 5% of selling price. Fixed production costs $430,500. Fixed selling and administration costs $198,150. Sales 90,000 units The margin of safety represents : a. 5.6% of budgeted sales b. 8.3% of budgeted sales c. 11.6% of budgeted sales d. 14.8% of budgeted sales 10. For decision-making purposes, which of the following are relevant costs? (1) Avoidable cost (ii) Future cost (iii) Opportunity cost (iv) Differential cost a. (i), (ii), (iii) and (iv) b. (i) and (ii) only c. (ii) and (iii) only d. (i) and (iv) only