Posted: April 26th, 2016

The development of the operating budget is complete when??

19. How is performance evaluated for a cost center?
A. Actual costs incurred compared to budgeted costs.
B. Actual segment margin compared to budgeted segment margin.
C. Comparison of actual and budgeted return on investment (ROI) based on segment margin and assets
controlled by the segment.
D. None of the above.

20. A sunk cost is a cost that:
A. has been incurred and cannot be eliminated.
B. is never relevant in decision-making.
C. is never a differential cost.
D. all of the above.

21. The development of the operating budget is complete when:
A. the sales forecast for next year is complete.
B. the budgeted cash flow statement is complete.
C. the budgeted income statement is complete.
D. the budgeted balance sheet is complete.

22. A variance is the difference between actual costs and:
A. selling price.
B. expected costs.
C. activity-based costs.
D. historical costs.

23. Which of the following is not an important qualitative factor to consider in the capital budgeting decision?
A. Regulations that mandate investment to meet safety, environmental, or access requirements.
B. Technological developments within the industry may require new facilities to maintain customers or
market share at the cost of lower ROI for a period of time.
C. Commitment to a segment of the business that requires capital investments to achieve or regain
competitiveness even though that segment does not have as great an ROI as others.
D. All of the above are important qualitative factors to consider.