1. An order at a special price that is accepted will increase income if the revenue received exceeds the:
variable manufacturing costs associated with the order.
fixed and variable costs associated with the order.
incremental costs associated with the order.
variable manufacturing, selling, and administrative costs associated with the order.
2. Sutton Company produced 98,000 units in 46,000 direct labor hours. Production for the period was estimated at 100,000 units and 50,000 direct labor hours. A flexible budget would compare budgeted costs and actual costs, respectively, at:
50,000 hours and 46,000 hours.
46,000 hours and 46,000 hours.
49,000 hours and 50,000 hours.
49,000 hours and 46,000 hours.
3. Which of the following is true with regard to budgetary planning?
The cash budget is often considered to be the most important output in preparing financial budgets.
Generally accepted accounting principles require the budgets be prepared at least annually.
The likelihood of a realistic budget is greater when the budget is developed from top management down to lower management.
The human behavior aspects of budgeting, while they should not be ignored, are generally of little real significance.