1. A budget a. is a substitute for management. b. is an aid to management. c. can operate or enforce itself. d. is the responsibility of the accounting department. 2. Budget development for the coming year usually starts a. a year in advance. b. the first month of the year to be budgeted. c. several months before the end of the current year. d. the last month of the previous year. 3. The equation which reflects a CVP income statement is a. Sales = Cost of goods sold + Operating expenses + Net income. b. Sales + Fixed costs = Variable costs + Net income. c. Sales Variable costs + Fixed costs = Net income. d. Sales Variable costs Fixed costs = Net income. 4. At the high level of activity in November, 7,000 machine hours were run and power costs were $16,000. In April, a month of low activity, 2,000 machine hours were run and power costs amounted to $8,000. Using the high-low method, the estimated fixed cost element of power costs is a. $16,000. b. $8,000. c. $4,800. d. $11,200. 5. Which one of the following is the best example of a variable cost? A. The corporate president's salary B. Cost of raw material C. Interst charges D. Property taxes 6. The break-even in units sold will decrease if there is an increase in: A. unit sales volume. B. total fixed expenses. C. unit variable expenses. D. selling price