The starting point for preparing a master budget is? When negotiating a transfer price, the highest price the buyer will be willing to pay is the _______ while the lowest price the seller will be willing to accept is the ______

1. The starting point for preparing a master budget is?

Sales Budget

2. When negotiating a transfer price, the highest price the buyer will be willing to pay is the _______ while the lowest price the seller will be willing to accept is the ______.

Market Price.......Variable Cost

3. Which of the following is irrelevant to the decision to eliminate an unprofitable segment

Common Fixed Costs

4. Residual Income equals

Net operating income- (Average invested assets X Hurdle Rate)

5. If the ROI of a project is greater than the hurdle rate, then the residual income will be

Greater than zero

6. A flexible budget is a budget that

Is updated to reflect the actual level of activity during the period

7. ROI=

Net operating income/ Average Invested Assets

8. ......Change across decision alternatives are

Incremental Costs

9. The responsibility center in which the manager has responsibility and authority over only revenues and costs is

Profit Center

10. Using perfection (or ideal) performance levels to define standard costs:

Is problematic because it risks damaging motivation

11. Direct Materials Spending Variance=

Price Variance + Quantity Variance

12. Direct Materials Price Variance=

AQ(SP-AP)

13. DIrect Materials Quantity Variance=

SP(SQ-AQ)