PM D Budgeting and control

Which budgeting approach requires every activity to be justified from a zero base?

• 1 Rolling budgeting
• 2 Incremental budgeting
• 3 Fixed budgeting
• 4 Zero-based budgeting

A budget that adds a new period as each period ends is called:

• 1 An incremental budget
• 2 A rolling budget
• 3 A flexed budget
• 4 A zero-based budget

Which is an advantage of participative budgeting?

• 1 It is faster than imposed budgets
• 2 It needs no negotiation
• 3 It improves commitment and uses managers' knowledge
• 4 It removes budget slack

The first unit takes 100 hours and there is an 85 percent learning curve (cumulative average). What is the total time for the first 4 units?

• 1 289 hours
• 2 400 hours
• 3 255 hours
• 4 340 hours

The standard mix is 60 percent X at $2 and 40 percent Y at $3. 1,000 kg were used: 650 kg of X and 350 kg of Y. What is the mix variance?

• 1 $150 favourable
• 2 $50 adverse
• 3 $50 favourable
• 4 $100 adverse

A standard yield of 90 percent. 1,000 kg of input produced 855 kg of output. The standard average input cost is $2.40 a kg. What is the yield variance?

• 1 $120 adverse
• 2 $120 favourable
• 3 $2,052 adverse
• 4 $50 adverse

Mix and yield variances add up to which variance?

• 1 The labour rate variance
• 2 The sales price variance
• 3 The material usage variance
• 4 The material price variance

The original standard material price is $5 a kg. A market change makes a revised standard of $5.50 and the actual price is $5.40 for 1,000 kg. What is the planning variance?

• 1 $500 favourable
• 2 $400 adverse
• 3 $500 adverse
• 4 $100 favourable

The original standard material price is $5 a kg. A market change makes a revised standard of $5.50 and the actual price is $5.40 for 1,000 kg. What is the operational price variance?

• 1 $100 favourable
• 2 $100 adverse
• 3 $500 adverse
• 4 $400 adverse

A planning variance shows:

• 1 The manager's efficiency
• 2 The effect of changes outside the manager's control
• 3 The effect of the sales mix
• 4 The effect of waste

The sales mix variance shows the effect of:

• 1 Changes in selling prices
• 2 Selling more units in total than the budget
• 3 Selling a different proportion of products from the budget
• 4 Changes in material prices

A manager buys cheaper material and the usage variance becomes adverse. This shows that variances are:

• 1 Always favourable
• 2 Always independent
• 3 Interrelated
• 4 Not useful

What is the 'beyond budgeting' model?

• 1 It replaces fixed annual budgets with flexible targets and continuous planning
• 2 It adds more detail to the annual budget
• 3 It uses only incremental budgets
• 4 It removes all targets

Which technique can be used to forecast costs by finding the line that best fits historical data?

• 1 Regression analysis
• 2 Throughput accounting
• 3 Target costing
• 4 Zero-based budgeting