Question 6 An increase in of GHS1,000 in fixed selling overheads will affect the net profit reported under marginal and absorption cost methods as follows: a) Decrease net profit only where absorption costing is used b) Decrease net profit only where marginal costing is used c) Decrease net profit equally in both absorption and marginal costing d) Leave net profit unchanged in both cases Question 7 The purpose of a flexible budget is: a) To cap discretionary expenditure b) To produce a revised forecast by changing the original budget when actual costs are known c) To control resource efficiently d) To communicate target activity levels within the organization by setting a budget in advance of the period to which it relates Question 8 A budget is: a) a long-term plan b) only a control tool c) necessary only for large firms d) a short-term financial plan Question 9 Which of the following is not part of the control process? a) Monitoring of actual activity b) Comparing of actual with planned activity c) Investigating d) Developing a strategic plan e) Taking corrective action Question 10 Which of the following is not an advantage of budgeting? a) Forces managers to plan b) Provides information for decision making c) Guarantees an improvement in organizational efficiency d) Provides a standard for performance evaluation e) Improves communication and co-ordination