Which of the following is needed in order to prepare the flexible budget?

Select one:

A. Standard variable overhead cost driver usages

B. Actual production levels

C. Actual overall variable costs

D. Budgeted per-unit direct materials costs

E. All of the above

Why is the cost function for the flexible budget only applicable within the relevant range?

Select one:

A. Management does not expect to have production levels outside of the relevant range

B. Some costs will behave differently outside of the relevant range

C. The cost levels affect the range of production levels available

D. Only the static budget matters when compared with results outside of the relevant range

E. None of the above

Which of the following are not reasons to involve lower management in making business decisions?

Select one:

A. Allows upper management to concentrate more on overall strategy and business development without being involved in the minutia of the day-to-day operations

B. Provides on-the-job training to less-experienced managers, allowing them to make mistakes and grow

C. Encourages job satisfaction among lower-level employees

D. Allows managers to set expectations for their departments, without having to consider the goals and capacity of other departments

E. All of the above are reasons to involve lower management

Who should be held responsible for department costs?

Select one:

A. The person who actually spent the money to incur the costs

B. The person who scheduled the production runs associated with the costs

C. The person who made the decisions that led to costs being incurred

D. The person who created the purchase order related to the costs

E. None of the above

When a supplying profit center is operating at full capacity, the minimum transfer price should be:

Select one:

A. Enough to cover all fixed and variable per-unit costs

B. Enough to cover all variable per-unit costs

C. Enough to cover all variable per-unit costs and any contribution margin lost by dropping customers

D. Enough to generate a reasonable gross profit

E. None of the above