All CPA Business Environment and Concepts (BEC) Resources
Example Questions
Example Question #1 : Operations Management: Budgeting
A budget that accommodates many levels of production volume is a:
Flexible budget
Sales budget
Zero based budget
Cash budget
Flexible budget
A flexible budget allows for many levels of production volume.
Example Question #1 : Budgeting
Which of the following statements about flexible budgets is true? They are:
budgets used to evaluate capacity utilization
similar to static budgets but are adjusted for inflation
designed to accommodate changes in the inflation rate
designed to accommodate changes in the activity level
designed to accommodate changes in the activity level
A flexible budget would be chosen when a manager expects changes in activity level of production.
Example Question #1 : Operations Management: Budgeting
The most direct way to prepare a cash budget for a manufacturing firm is to include:
Projected purchases, percentages of purchases paid, and net income
Projected sales, credit terms, and net income
Projected sales and purchases, percentage of collections, and terms of payments
Projected net income, depreciation, and goodwill amortization
Projected sales and purchases, percentage of collections, and terms of payments
The simplest cash budget would include the components of cash collections and cash disbursements.
Example Question #1 : Budgeting
A plan that is created using budgeted revenue and costs but is based on the actual units of output is known as a:
Master budget
Static budget
Flexible budget
Continuous budget
Flexible budget
A flexible budget uses budgeted revenue and costs per unit, but it is adjusted based on actual units of output.
Example Question #5 : Operations Management: Budgeting
All of the following are considered operating/financial budgets, except the:
Production budget
Sales budget
Capital budget
Cash budget
Capital budget
Capital budgets plan for the purchase of capital assets which only affect the operating budget through their subsequent effect on expense via depreciation.
Example Question #6 : Operations Management: Budgeting
An annual budget would be classified as which type of plan?
None of the answer choices are correct.
Single-use
Multi-use
Operational
Single-use
Annual budgets are single-use tactical plans. This means they are relatively short-term in nature and cover periods of up to 18 months.
Example Question #1 : Operations Management: Budgeting
Which of the following statements is true regarding opportunity cost?
Opportunity cost is representative of actual dollar outlay
Idle space that has no alternative use has an opportunity cost of zero.
Opportunity cost is recorded in the accounts of an organization that has a full costing system
The potential benefit is not sacrificed when selecting an alternative
Idle space that has no alternative use has an opportunity cost of zero.
Opportunity cost is the potential benefit lost by selecting a particular course of action. If idle space has no alternative use, there is no benefit foregone, opportunity cost is zero.
Example Question #8 : Operations Management: Budgeting
Costs relevant to a make or buy decision include variable labor and variable materials as well as:
Factory management costs
Avoidable fixed costs
Depreciation
Property taxes
Avoidable fixed costs
Avoidable fixed costs attach to a specific decision and are incurred only if that decision is taken. They are relevant in marginal analysis.
Example Question #9 : Operations Management: Budgeting
An important concept in decision making is described as "the contribution to income that is foregone by not using a limited resource to its best alternative use." This concept is called:
Opportunity cost
Incremental cost
Marginal cost
Irrelevant cost
Opportunity cost
Opportunity cost is the contribution to income that is foregone by not using a limited resource for its best alternative use.
Example Question #10 : Operations Management: Budgeting
Pro forma financial statements are part of the budgeting process. Normally, the last pro forma statement prepared is:
Statement of cash flows
Income statement
Capital expenditure plan
Statement of cost of goods sold
Statement of cash flows
The statement of cash flows is the last pro forma statement prepared.
Certified Tutor
Certified Tutor
All CPA Business Environment and Concepts (BEC) Resources
![Learning Tools by Varsity Tutors](https://vt-vtwa-app-assets.varsitytutors.com/assets/problems/og_image_practice_problems-9cd7cd1b01009043c4576617bc620d0d5f9d58294f59b6d6556fd8365f7440cf.jpg)