TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. (3 points each) 1) Companies develop a set of operating budgets to project cash flow and likely cash shortfalls and/or surpluses. 1) 2) A budgeted income statement, a budgeted balance sheet, and a budgeted statement of cash flows are the end result of the master budgeting process. 2) 3) The first step in developing a master budget is always the creation of a cash budget. 3) 4) All conversion costs are included in the direct-labor budget. 4) 5) Budgetary slack often is used to cope with uncertainty. 5) MULTIPLE CHOICE (4 points each) 6) A formal budget program will almost always result in: A) a detailed plan against which actual results can be compared. B) decreased expenses. C) higher sales. D) more cash inflows than cash outflows. 6) 7) A company's plan for the acquisition of long-lived assets, such as buildings and equipment, is commonly called a: A) master budget. B) capital budget. C) profit plan. D) financial budget. 7) 8) Which of the following would depict the logical order for preparing (1) a production budget, (2) a cash budget, (3) a sales budget, and (4) a direct-labor budget? A) 3-1-2-4. B) 2-1-3-4. C) 3-1-4-2. D) 2-3-1-4. 8) 9) A company's sales forecast would likely consider all of the following factors except: A) past sales levels and trends. B) market research studies. C) the company's intended pricing policy. D) the company's product costing policy. 9) 10) If a manager builds slack into a budget, how would that manager handle estimates of revenues and expenses? Revenues Expenses A. Underestimate Underestimate B. Underestimate Overestimate C. Overestimate Underestimate D. Overestimate Overestimate A) Choice A B) Choice B C) Choice C D) Choice D