Question 2

Which of the following statements is true?

A. A budget reconciliation report shows the difference between actual profit and budgeted profit and does not show the other variances.

B. Activity-based costing is not used to evaluate customer profitability.

C. Sales quantity (budgeted sales volume vs. actual sales volume) is the only item which differs between the master budget and the flexible budget.

D. Comparing the flexible budget to the as-if budget isolates a change in input price (e.g. budgeted input price vs. actual input price).

Question 3

Which of the following is not a benefit of budgeting?

A. It reduces the need for analysis with regard to company expenses.

B. It compels managers to develop objectives and to plan allocating resources to achieve the objective.

C. It allows for coordination between different departments within a firm.

D. It provides performance evaluation and feedback.