Budgeting A-Level Business

Question 1

Which of the following most closely describes zero budgeting?

Accepted Answer

Managers having to justify every penny of their budget

Question 2

A budget variance of £14000A occurs on a labour budget. What might have caused this?

Accepted Answer

Sales of 10% above budget, Increase in overtime workload

Question 3

A firms budget for materials is £45000, actual spending is £49300. What is the variance?

Accepted Answer

£4300 Adverse

Question 4

Variance analysis is used to

Accepted Answer

Improve predictions of profitability, Improve management control of departments

Question 5

Which of the following is likely to lead to a favourable budget variance?

Accepted Answer

A major competitor going bust

Question 6

Which of the following can result from a poorly managed budgeting process?

Accepted Answer

Demotivated staff, Increased variances

Question 7

Inflation causes cost of materials to rise by 7%. Budget was for 5%, materials cost £49000

Accepted Answer

The change in cost of raw materials would be £980 Adverse

Question 8

A firms variances from budget are revenue £4700A materials £5100F labour £2100F Total variance?

Accepted Answer

£1700 Adverse

Question 9

A revenue budget price increases were 3%. Sales were £59000. Last year they were £56000.

Accepted Answer

The variance from last year to this year would be £1320 F

Question 10

Which of the following is likely to lead to an adverse budget variance?

Accepted Answer

An increase in raw material prices

Questions 10