The correct answer is: Budgetary slack is built into the line budget. Good budgetary systems would provide incentives to managers who manage their controllable costs well. In addition, good budgetary systems provide feedback regularly. If the firm's budget had slack built in, managers should be able to meet the budget.

The correct answer is: Depreciation expense Depreciation is a non-cash entry and would not appear on a cash budget.

The correct answer is: 3,700. Budgeted production is calculated as follows:

Budgeted production = (expected sales) + (expected ending inventory) – (expected beginning inventory) Budgeted production = 4,000 units + 600 units – 900 units = 3,700 units

That’s correct! Reduces the time required for budgeting. In an authoritative budgeting process,

there is a top-down approach to budgeting. Therefore, the divisional managers who are being affected by an authoritative budgeting process do not necessarily have the ability to provide input and qualifications to the budget process. With this, an authoritative approach to budgeting would have a much more reduced time to develop the budget as the input of those divisional and operational employees are not included in the decision process.

The correct answer is: an irregular component. An irregular component is random variability in a time series that deviates from values that can be observed as a trend or a pattern.

The correct answer is: 70 percent. The probability of selling between 101 and 300 units is calculated by taking the probability of selling 101 to 200 units (0.45) plus the probability of selling 201 to 300 units (0.25) = (0.45 + 0.25) = 0.70, or 70 percent.

The correct answer is: $9 per output unit Direct cost items such as direct materials and direct labor are measured by determining the number of units of each type of input required to get one unit of output. This amount (0.6) is multiplied by the standard cost per input unit ($15), thus 0.6 labor hours per unit x $15 labor cost per hour = $9 labor cost per unit.

The correct answer is: Kaizen budgeting A potential drawback of a kaizen budget is that managers may lower quality levels or move practices to cheaper labor markets in order to meet the goals set by a system that stresses continuous improvement.

That’s correct! Learning curve analysis. With learning curve analysis, the more that a process is performed, the less time it takes to complete that process.

The correct answer is: implementing the change quickly. Quick implementation will not allow management and employees the time needed to “get on board” and accept (or “buy into”) the new system.

That’s correct! Capital Budget, Yes; Pro-forma Balance Sheet, Yes; Cash Budget, Yes. In a financial budget, all budgets and pro-forma information that represent the true financial well-being of the organization is included. These items include the capital budget, pro-forma balance sheet, and cash budget.

The correct answer is: It should introduce product B because it has an expected profit of $910,000.

The expected revenue from sales of product A is $1,210,000 (800,000 x 0.2 + 1,200,000 x 0.5 + 1,500,000 x 0.3). Since the cost of introducing this product is $500,000, the expected profit from sales of product A is $710,000 (1,210,000 - 500,000).

On the other hand, the expected revenue from sales of product B is $1,560,000 (900,000 x 0.4 + 2,000,000 x 0.6). Since the cost of introducing this product is $650,000, the expected profit from sales of product B is $910,000 (1,560,000 - 650,000). The company should introduce product B because it has a higher expected profit.

The correct answer is: budgetary slack. An extra cushion built into the budget to protect against the unexpected is called budget slack. It involves over-budgeting (or padding) expenses and under-budgeting revenues to make the budget targets easier to meet.

The correct answer is: A direct labor budget can be broken down into fixed and variable direct labor.

Direct labor budgets are not broken down into fixed and variable direct labor because all direct labor is variable.

The correct answer is: Financial forecasts provide a basis for creditors to gain comfort that debt covenants will be met Debt covenants are clauses in debt contracts that organizations must meet to be in compliance with lender requirements. Financial forecasts are often used in predicting whether performance related debt covenants will be met.

The correct answer is: research and development costs. Research and development costs are period costs that must be expensed in the period incurred and are therefore not part of a capital budget.

The correct answer is: Activity-based budgeting An activity-based budget places emphasis on teamwork, synchronized activity, and customer satisfaction. Traditional budgeting places emphasis on increasing management performance.

The correct answer is: There are factors other than number of training hours received that can

better explain an employee's performance rating. The R2 of 0.1 means that the number of training hours received can explain only 10% of the variation in an employee's performance rating (according to the regression analysis). Other factors can explain the remaining 90% of the variation in an employee's performance rating. As a result, the firm should have performed a multiple regression analysis (with multiple independent variables) rather than a simple regression analysis (with just one independent variable).

The correct answer is: $11,500 For the current year, sales are $100,000, and the projected growth rate in sales is 15%, thus $100,000 x 1.15 = $115,000. Since Sales and Administrative Expense(S&A) is 10% of sales, the projected S&A is $11,500 ($115,000 x 10%).