(Appendix) How does zero-base budgeting assist in planning and controlling dis¬ cretionary costs?

29.(Matching) Match the following lettered terms on the left with the appropriate numbered description on the right.

30.(Cost control activities) The firm of Rezac & Gibson, CPAs, hires full- and part- time clerical employees. Full-time clerical staff can be hired for $27,500 per year; fringe benefit costs for each full-time employee amount to 20 percent of base salary. R&G pays part-time clerical employees $20 per hour, but does not pro¬ vide any fringe benefits. If, however, a part-time employee has worked for the firm for over 1,600 hours by year-end, he/she receives a $2,000 bonus.

a. Does the firm’s policy of hiring part-time clerical staff represent an example of cost containment, cost avoidance, or cost reduction? Explain.

b. For a given clerical position, at what level of annual hours worked should the firm consider hiring full-time clerical staff rather than part-time?

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a. Engineered cost b. Effectiveness c. Discretionary cost d. Committed cost e. Appropriation f. Cost containment g. Cost avoidance h. Cost consciousness i. Efficiency 1. An attitude regarding cost understanding, cost containment, cost avoidance, and cost reduction 2. A cost incurred to provide physical or organizational capacity 3. A measure of input-output yield 4. Any cost that bears an observable and known relationship to an activity base 5. A process of finding acceptable alternatives for high-priced items and not buying unnecessary goods or services 6. A maximum allowable expenditure