5. Deviations from a budget may occur because of a. Bad decisions b. Events beyo

Question

5. Deviations from a budget may occur because of a. Bad decisions b. Events beyond the company's control c. Good decisions d. All of these answers are correct 6. Which of the following budget approaches begins each year at $0 and each individual budget item must be justified? a. Dollar value based budgeting b. Government based budgeting c. Zero based budgeting d. Justification based budgeting 7. Which of the following is not a factor that managers use in deciding whether to investigate a variance? Materiality-or how big the variance is The existence of a trend Whether combining several accounts with large offsetting variances results in a small variance All of the above are factors that managers use in deciding whether to investigate a variance. a. b. c. d. 8. Why do variances have little meaning until their causes are identified? a. Because they cannot be calculated correctly until the causes are b. Because identifying their causes allows manages to take correct c. Because identifying their causes will immediately increase net d. None of the above known action income 9. Which of the following strategies would be used to reduce the break-even point? Fixed costs Contribution margin a. Increase b. Decrease c. Decrease d. Increase Increase Decrease Increase Decrease

Explanation / Answer

5-

all of the above

because all are the causes of variances

6-

zero based budgeting

because in zero base budgeting, fresh budgeting is done every time

7-

all of the above

8-

because identifying their causes allows manager to take correct actions

9-

decrease- decrease

5-

all of the above

because all are the causes of variances

6-

zero based budgeting

because in zero base budgeting, fresh budgeting is done every time

7-

all of the above

8-

because identifying their causes allows manager to take correct actions

9-

decrease- decrease

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