Question

5.        The master budget for governmental organizations differs from that of public companies because the budget for governmental organizations provides the

a.	legal authorization for expenditures.
b.	organization’s authority to produce and provide services.
c.	organization’s authority to produce and sell goods.
d.	all of the above

6.        Who often encounter ethical dilemmas in the budgeting process because they are involved in the creation of the budget, and their performances are subsequently evaluated by comparing the budget to actual results?

a.	customers
b.	advertising firms
c.	managers
d.	shareholders

7.        What cost centers have input-output relationships sufficiently well established so that a particular set of inputs will provide a predictable and measurable set of outputs?

a.	engineered cost centers.
b.	direct cost centers.
c.	opportunity cost centers.
d.	discretionary cost centers.

8.        What is the primary difference between a fixed budget and a flexible budget?

a.	A fixed budget includes only fixed costs, while a flexible budget includes only variable costs.
b.	A fixed budget is concerned only with future acquisitions of fixed assets, while a flexible budget is concerned with expenses, which vary with sales.
c.	A fixed budget cannot be changed after the period begins, while a flexible budget can be changed after the period begins.
d.	A fixed budget is a plan for a single level of sales (or other measure of activity), while a flexible budget consists of several plans, one for each of several levels of sales (or other measure of activity).

Answer 1

5. Answer is option A. Legal authorization for expenditure.

Expenditure made by govt org need to be first legally authorized because it's public money.

6. Answer is option C managers. They are the ones who participated in creation of budget. And their own performance that is how well they are managing is analysed on the basis of budget.

7. Answer is option A. Engineered cost centres.which standardizes costs.

8. Answer is option D. Fixed budget is a plan of single level while flexible budget keeps changing based on what the sales level is.