MBA 620 COMPREHENSIVE SCRIPT 2026
QUESTIONS AND SOLUTIONS
◉ Ideal standards, plus expected machine downtimes, normal
materials waste, etc. Answer: attainable standards
◉ Analyzing differences between standard costs (on the flexible
budget) and actual costs; identifies general causes by breaking cost
components into separate price and quantity Answer: variance
analysis
◉ Companies using _____________ systems apply overhead to products
based on several activities, and therefore calculate a spending and
efficiency variance for each activity Answer: activity-based costing
◉ Which of the following budgets needs to be established first in the
budgeting process?
a. The production budget
b. The cash budget
c. The budgeted income statement
d. The sales budget Answer: d
, ◉ A benefit of the participative approach to budgeting (relative to
the top-down approach) is:
a. In participative budgeting, lower level management has less input
on the budget.
b. Participative budgeting is quicker and easier to administer.
c. In participative budgeting, outside community members have
more input on the budget.
d. Participative budgeting increases managers' buy-in and
motivation to achieve budget goals. Answer: d
◉ What is a flexible budget?
a. All the other answers
b. The master budget adjusted to the actual level of sales.
c. The budget most appropriate for use in evaluating performance of
production supervisors.
d. The budget used to calculate production variances (price and
quantity variances). Answer: a
◉ In a variance analysis, the 'standard quantity' or direct materials
is:
QUESTIONS AND SOLUTIONS
◉ Ideal standards, plus expected machine downtimes, normal
materials waste, etc. Answer: attainable standards
◉ Analyzing differences between standard costs (on the flexible
budget) and actual costs; identifies general causes by breaking cost
components into separate price and quantity Answer: variance
analysis
◉ Companies using _____________ systems apply overhead to products
based on several activities, and therefore calculate a spending and
efficiency variance for each activity Answer: activity-based costing
◉ Which of the following budgets needs to be established first in the
budgeting process?
a. The production budget
b. The cash budget
c. The budgeted income statement
d. The sales budget Answer: d
, ◉ A benefit of the participative approach to budgeting (relative to
the top-down approach) is:
a. In participative budgeting, lower level management has less input
on the budget.
b. Participative budgeting is quicker and easier to administer.
c. In participative budgeting, outside community members have
more input on the budget.
d. Participative budgeting increases managers' buy-in and
motivation to achieve budget goals. Answer: d
◉ What is a flexible budget?
a. All the other answers
b. The master budget adjusted to the actual level of sales.
c. The budget most appropriate for use in evaluating performance of
production supervisors.
d. The budget used to calculate production variances (price and
quantity variances). Answer: a
◉ In a variance analysis, the 'standard quantity' or direct materials
is:
