Costing - Study Mode

[#411] Focus on budget cost of all activities necessary to sell and produce market offerings is known as
Correct Answer

(B) activity based budgeting

Explanation

Solution: Focus on budget cost of all activities necessary to sell and produce market offerings is known as activity based budgeting. Activity based budgeting is a budgeting method in which budgets are prepared using Activity Based Costing after considering the overhead costs. In simple words, activity based budgeting is management accounting tool which does not consider the past year's budget to arrive at current year's budget.

[#412] Budgeted income statement and supporting budget schedules are categorized under
Correct Answer

(D) operating budget

Explanation

Solution: Budgeted income statement and supporting budget schedules are categorized under operating budget. An operating budget is a forecast of the revenues and expenses expected for one or more future periods.

[#413] If budget sales units are 5000, ending inventory is 4000 units and beginning inventory is 1000, then budget production will be
Correct Answer

(C) 8000 units

Explanation

Solution: Budget production = Budget sales + Ending inventory - Beginning inventory = 5000 + 4000 - 1000 = 8000 units.

[#414] Budget sales, plus target ending finished goods inventory, minus beginning finished goods inventory is equal to
Correct Answer

(A) budget production

Explanation

Solution: Budget sales, plus target ending finished goods inventory, minus beginning finished goods inventory is equal to budget production. The production budget contains details of the number of units that are intended to be produced by a business in a particular period.

[#415] Budget, which predicts effect of given level of operations on a cash position is classified as
Correct Answer

(D) cash budget

Explanation

Solution: Budget, which predicts effect of given level of operations on a cash position is classified as cash budget. A cash budget is an estimation of the cash inflows and outflows for a business over a specific period of time. This budget is used to assess whether the entity has sufficient cash to operate.