TRUEIFALSE QUESTIONS (2 points each): (6) - F 1. The production budget is typically prepared prior to the sales budget. TE. 2. The master budget is a compilation of many separate budgets that are interdependent. TF 3. Planning and control are essentially the same thing. TF 4. Sales forecasts are drawn up after the cash budget has been completed because only then are the funds available for marketing known. T- - F 5. An activity variance is due solely to the difference between the level of activity assumed in the planning budget and the actual level of activity used in the flexible budget. T- F 6. The revenue and spending variances are the differences between the static planning budget and the actual results for the period. T- F 7. A revenue variance is favorable if the revenue in the static planning budget exceeds the revenue in the flexible budget. T-F 8. Generally speaking, it is the responsibility of the production department to see that material usage is kept in line with standards. T- - 9. A materials price variance is favorable if the actual price exceeds the standard price. T- F 10. The standard quantity per unit for direct materials should not include an allowance for waste. T- F 11. Standard costs greatly increase the complexity of the bookkeeping process. * MULTIPLE-CHOICE QUESTIONS (4 points each): 12. Which of the following is not a benefit of budgeting? A. It reduces the need for tracking actual cost activity. B. It sets benchmarks for evaluation performance. C. It uncovers potential bottlenecks. D. It formalizes a manager's planning efforts. * 13. Self-imposed budgets typically are: A. not subject to review by higher levels of management since to do so would contradict the participative aspect of the budgeting processing. B. not subject to review by higher levels of management except in specific cases where the input of higher management is required. C. subject to review by higher levels of management in order to prevent the budgets from becoming too loose. D. not critical to the success of a budgeting program