. The margin of safety:

a. Equals break - even unit sales less actual unit

b. Shows how far sales can fall below the planned level before losses occur

c. Is the sales price minus all the variable expenses

d. Is the same as break - even point

. Which of the following costs are treated as period costs under the variable costing method?

a. Fixed manufacturing overhead and both variable and fixed selling and administrative expenses

b. Both variable and fixed manufacturing overhead and both variable and fixed selling and administrative expenses

c. Fixed manufacturing overhead and fixed selling and administrative expenses, but no variable costs of any kind

d. No costs are treated as period costs under the variable costing method

. For external reporting on financial statements, a company generally is:

a. Allowed to cost units of product by either the absorption or variable costing methods

b. Required to use variable costing to cost un its of product

c. Required to use absorption costing to cost units of product

d. Subject to no professional pronouncements nor government regulations regarding the costing of units of product

. Over an extended period of time, the net income reported under absorption costing and variable costing will tend to be the same.

a. True

b. F alse

In evaluating whether a company should keep a product division or dispose of it, the company should look at the division's:

a. Net income

b. Gross margin

c. Contribution margin

d. Segment margin

In order for budgets to be helpful in assisting an organization to accomplish its objectives:

a. They must be understood and accepted by the affected managers and employees who may have participated in constructing the budgets

b. They should be so rigid that employees re gard them as straight - jackets

c. They must be commanded from the top of the organization with no input from lower level managers and employees

d. They must be totally unrealistic and overly demanding

5 . Budgeting helps managers to uncover potential bottlenecks before they occur.

a. True

b. False

. Managers need budgets for all of the following reasons except :

a. To guide them in allocating resources

b. To maintain control

c. To enable them to measure and reward progress

d. To determine which individual to hire