Question 6

Which of the following is NOT true regarding budget lapsing?

a.

Budget lapsing allows unused funds to be carried over to the next year

b.

Firms often incur substantial warehousing costs to hold extra end-of-year purchases

c.

Budget lapsing creates incentives for managers to spend all of their budget

d.

Budgets that lapse provide tighter controls on managers than budgets that do not lapse

Question 7

Which of the following is NOT true regarding static and flexible budgeting?

	a.	Static budgets force managers to be responsible for volume fluctuations
	b.	Flexible budgets are better than static budgets for determining the actual performance of a person or venture after controlling for volume effects.
	c.	Performance budgets are adjusted for changes in volume
	d.	Static budgets vary with volume

2 points

Question 8

What is the correct answer regarding short-run and long-run budgets?

a.

A short-run budget is generally less than a year in length and often tied to a particular project

b.

A long-run budget projects from two (2) to 10 years into the future

c.

A long-run budget is generally one year in length and often tied to a particular department or division

d.

None of the answers are correct

Question 9

Which of the following is true regarding how budgets are developed?

	a.	Effective planning of budgets require input from numerous individuals in the firm
	b.	All of the answers are correct
	c.	Budgets require basic estimating factors
	d.	Budgets are developed using key planning assumptions

2 points

Question 10

Budget variances occur when:

	a.	actual expenses do not natch budgeted expenses exactly
	b.	both actual expenses do not match budgeted expenses exactly and/or actual revenues do not match budgeted revenues exactly
	c.	None of the answers are correct
	d.	actual revenues do not match budgeted revenues exactly