COST ACCOUNTING
FLEXIBLE BUDGETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Detailed explanation-1: -The statement is TRUE. Suppose, for example, a company uses direct labor hours as its overhead application activity. The standard says that each unit should use 1.5 direct labor hours and the company manufactured 100, 000 units using 140, 000 direct labor hours.
Detailed explanation-2: -Viger Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs).
Detailed explanation-3: -Overhead costs can include fixed monthly and annual expenses such as rent, salaries and insurance or variable costs such as advertising expenses that can vary month-on-month based on the level of business activity.
Detailed explanation-4: -A budget that is based on the actual activity of a period is known as a: master budget.