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Budgeting, cost centers and responsibility.

1. Which one of the following factors would cause budgeted revenue to be less than the expected demand?
Excess capacity exists
Abundant resources are available
Excess supply of labor exists
Demand exceeds capacity

2. If a firm is using activity-based budgeting, the firm would use this in place of which of the following budgets?
Manufacturing overhead budget
Direct labor budget
Direct materials budget
Revenue budget

3. A responsibility center where the manager is accountable for only the revenues and costs is a(n)
profit center.
revenue center.
investment center.
cost center.

4. A cost that is primarily subject to the influence of a given responsibility center manager for a given period is a(n)
controllable cost.
allocated cost.
sunk cost.
uncontrollable cost.

Solution Preview

1. If budgeted revenue will be less than demand, the concept implies that the company can't meet demand. The first three responses are all the other way, but 'demand exceeds capacity' would indicate that the company cannot produce enough product to meet demand. This could be the result of inadequate resources, limited plant capacity or any ...

Solution Summary

The solution contains two or three sentences to explain the answer for each question about budgeting, cost centers and responsibility.