1. The only difference between the static budget and flexible budget, is that the static budget is prepared using planned output.
2. True
3. False

2 points

QUESTION 2

1. The revenue budget and budgeted statement of income are not necessary to prepare the budgeted balance sheet and budgeted statement of cash flows.
2. True
3. False

2 points

QUESTION 3

1. The production-volume variance is favourable when actual outputs do not exceed the denominator level.
2. True
3. False

2 points

QUESTION 4

1. The denominator level, is a level of activity that is derived in the static budget.
2. True
3. False

2 points

QUESTION 5

1. Pro-forma means budgeted.
2. True
3. False

2 points

QUESTION 6

1. Manufacturing overhead costs for the budget would include factory utility costs, but not sales supervisor's salaries.
2. True
3. False

2 points

QUESTION 7

1. An income statement prepared under absorption costing is the method required for external reporting, when adhering to IFRS.
2. True
3. False

2 points

QUESTION 8

1. The direct materials usage budget is not based on direct materials purchased.
2. True
3. False

2 points

QUESTION 9

1. The denominator level is the quantity of the allocation base used to allocate fixed overhead costs to a cost object in developing a budgeted fixed overhead rate.
2. True
3. False

2 points

QUESTION 10

1. Lyman Co. has a production schedule of 18,000 units and a budgeted sales volume of 20,000 units for the current year. In addition, 4,000 units are in beginning finished goods inventory. Therefore, 14,000 units are targeted for ending finished goods inventory.
2. True
3. False