a1 When uring overhead is applied to production which of the

a1. When uring overhead is applied to production, which of the following A. Raw B. work in process inventory C. Finished goods inventory D. Cost of goods sold 42. The relevant range concept A. Is the range of activity B. Only applies to fixed costs C. Is defined as total sales minus break-even sales b. increase in total as the activity level increases y over which our assumptions about cost behavior are true 43. Which of the following is not a component of the master budget? A. Operating budget B. Budgeted income statement C. Budgeted balance sheet D. Statement of return on investment 44. Which of the following statement is false? A. Participative budgeting is more likely to motivate people to work toward the organizational goals than a top down approach B. Budgets that are tight but attainable are more likely to motivate people than budgets that are too difficult C. Budgetary slack may sometimes be beneficial D. Zero-based budgeting uses a rolling budget to maintain a consistent time horizon. 17

Solution

41) The correct option is B) Work in process inventory because when manufacturing overhead is applied to production, Work in process inventory is debited and the manufacturing overhead account is credited.

42) The correct option is A) Is the range of activity over which our assumptions about cost bevaiour are true because the relevant range refers to a specific activity level that is bounded by a minimum and maximum amount. Within the designated boundaries, certain revenue or cost levels can be expected to occur.

43) The correct option is D) Statement of return on investment because Operating budget, Budgeted income statement and budgeted balance sheet are a component of master budget but statement of return on investment is not a component of master budget.

44) The correct option is C) Budgetary slack may sometimes be beneficial. This statement is false because budgetary slack is the deliberate under-estimation of budgeted revenue or over-estimation of budgeted expenses. Budgetary slack can have a long term negative impact on the profitability and competitive positioning of business, hence budgetary slack can never be beneficial.