Reference no: EM132933496

Problem 1: A flexible budget is;

Option 1: A budget which by recognising different cost behaviour patterns is designed to change as the volume of activity changes.

Option 2: A budget for a defined period of time which includes planned revenues, expenses, assets, liabilities and cash flow.

Option 3: A budget which is prepared for a period of one year which is reviewed monthly, whereby each time actual results are reported, a further forecast period is added and the intermediate period forecasts are updated.

Option 4: A budget of semi-variable production costs only.

The following extract is taken from the overhead budget of X:

Budgeted activity         50%              75%

Budgeted overhead    Khs.100,000      Khs.112,500

Problem 2: The overhead budget for an activity level of 80% would be

Option 1: Khs.115,000

Option 2: Khs.120,000

Option 3: Khs.136,000

Option 4: Khs.160,000

Problem 3: The term "budget slack" refers to the

Option 1: Extended lead time between the preparation of the functional budgets and the master budget.

Option 2: Difference between the budgeted output and the breakeven output.

Option 3: Additional capacity available which can be budgeted for.

Option 4: Deliberate over-estimation of costs and under-estimation of revenues in a budget.