31. Which of the following is not a benefit of a careful and thorough budgeting process?
A. Budgeting increases management's awareness of the company's external economic environment.
B. Budgeted net income assures the company of operating profitably.
C. The budget may provide advance warning of pending problems.
D. Budgets provide a yardstick for evaluating future performance.
32. Which philosophy in setting budgeted amounts assumes both the complete elimination of inefficiencies and a level of absolute efficiency?
A. The behavioral approach.
B. The total quality management approach.
C. Both philosophies.
D. Neither philosophy.
33. Costs that rise and fall proportionately with the volume of output are often referred to as:
A. Variable costs.
B. Flexible costs.
C. Idle capacity costs.
D. Uncontrollable costs.
34. Which of the following is not a characteristic of the total quality approach to setting budgetary targets?
A. Absolute efficiency.
B. A perception that the budget is fair.
C. Budgetary targets that are unattainable.
D. Budgeted performance expectations that cannot be exceeded.
35. When budgeted amounts are set at reasonable and achievable levels:
A. They reflect a "total quality management" philosophy of management.
B. A highly efficient department should fall slightly short of budget standards.
C. Meeting the budgeted amounts ensures a maximum level of profitability.
D. Failure to stay within the budget is viewed as an unacceptable level of performance.
36. A segment of a master budget relating to that portion of a business under the control of a particular manager is termed a:
A. Performance report.
B. Production report.
C. Responsibility budget.
D. Cash budget.
37. Which of the following is not considered an operating budget?
A. Manufacturing cost budget.
B. Production schedule.
C. Capital expenditures budget.
D. Sales forecast.
38. Which element of a master budget would normally be prepared first?
A. A production budget.
B. A cash budget.
C. A budget of operating expenses.
D. A sales forecast.
39. Which of the following is a major component of a master budget?
A. A production throughput schedule.
B. A machinery maintenance schedule.
C. A manufacturing cost budget.
D. An employee training budget.
40. Which of the following is considered an operating budget estimate?
A. The prepayments budget.
B. The debt service budget.
C. The manufacturing cost budget.
D. The capital expenditures budget.