CMA I - Budgeting

The term “budget slack” refers to the

• Deliberate over-estimation of costs and under-estimation of revenues in a budget.

• Difference between the budgeted output and the breakeven output.

What do the costs in a flexed budget represent?

• Original costs at the fixed budget activity level.

• Actual costs for the budgeted activity level.

• Actual costs for actual level of activity level.

• Budgeted costs for the actual activity level achieved.

Which of the following BEST describes a flexed budget?

• A budget which shows variable production costs only.

• A monthly budget which is changed to reflect the number of days in the month.

• A budget revised to the actual level of activity during the period.

• A series of budget representing various levels of activity.

Which of the following budgets would not form part of the master budget?

• Cash budget

• Statement of profit or loss

• Sales budget

• Statement of financial position

What is meant by an incremental budget?

• A budget prepared from first principles

• The variable elements of a budget, excluding fixed costs

• A budget that is based on the previous year, adjusted for known changes

• A budget that breaks even

Which of the following statements can be considered to be an advantage of a bottom-up budget?

• Uses the knowledge of all staff to build a fair budget

• The cheapest method of producing a budget

• Reduces the level of budget negotiation between staff

• Prevents slack being built into budgets

Which of the following are functional budget?

• Production and sales budget

• Material budget

• Labour budget

• ALL

________ is the first step of budgetary system and all other budgets depends on it.

• Cost budget

• Sales budget

• Production budget

• NONE

Budgetary control is used to make cost accounting systematic and reliable.

• TRUE

• FALSE

The continuous budget is also known as

• Rolling budget

• Incremental budget

• Decremental budget

• Past budget