1) Butegary slack means that the manager has: A) Overestimated budgeted profit B

Question

1) Butegary slack means that the manager has:

A) Overestimated budgeted profit

B) Underestimated budgeted profit.

C) Overestimated budgeted revenues

D) Underestimated Budgeted revenues

2) A manger whose bonus compensation is based on favourable cost variance will likely;

A) Underestimate budgeted revenues

B) Overesimate budgeted revenues

C) Underestimate budgeted costs

D) Overestimate budgeted costs

3) The cost of direct materials spent on production exceeds what was budgeted, due to a higher quality materials purchased than what was budgeted. This may result in:

A) Increase in spoilage costs

B) Increase in labour costs

C) Increase in customer service costs

D) Increase in productivity

4) In going from the sales budget to the production budget, adjustments need to be made for;

A) Overhead charges

B) Sales Returns and allowances

C) Direct material inventories

D) Changing from revenue to costs

E) Finished goods inventories.

Explanation / Answer

Butegary slack means underestimate the income or revenue or overestimate expenses. Therefore, option d is correct answer.

A manger whose bonus compensation is based on favourable cost variance will likely underestimate budgeted costs. Therefore, option c is correct.

Productivity will be increased when higher quality of direct materials are used. Hence, option d is correct.

When going from the sales budget to the production budget, ending inventories and beginning inventories should be added and deducted respectively from sales budget. Hence, option e is correct.

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