Deck 21: Budgeting and Cost Control

Question 1

Budgets are best assembled in their entirety by the finance department, the people best acquainted with matters of cost.

Answer 1

False

Question 2

As a control mechanism, a budget can be a cost-containment tool that helps keep costs in line with available resources.

Answer 2

True

Question 3

The involvement of individual supervisors in the budgeting process encourages their commitment; committed, they are more likely to strive to make it work.

Answer 3

True

Question 4

Preparation of the statistical or activity budget is the sole province of the finance department.

Question 5

The individual department manager fills a key role in developing the organization's cash budget.

Question 6

The terms staffing and scheduling are essentially contradictory terms that; care must be taken in keeping them differentiated.

Question 7

A full-time equivalent (FTE) refers to the amount of labor input that adds up to the time worked by one full-time employee.

Question 8

Productivity standards are economically established through the use of stopwatch time studies and predetermined motion times.

Question 9

A budget committee is a standing committee of the organization that sees its most activity at budget preparation time.

Question 10

Answering to variances that are under budget is almost as important as answering to those that are over budget.

Question 11

Cost control consists primarily of working to bring actual expenditures into line with anticipated costs as reflected in the department's budget.

Question 12

The first-line supervisor must depend on a capable finance section to control all of the department's costs.

Question 13

The supervisor should work closely with human resources to challenge all unemployment claims that appear inappropriate.

Question 14

Simple awareness of the cost of supplies and common sense monitoring of usage should be enough for the control of supply costs in most departments.

Question 15

All of the significant causes of overtime are essentially well beyond the control of the individual department supervisor.

Question 16

An extremely important use of reports of actual results versus budget projections is:

A) Identifying supervisors whose departments have gone substantially over budget.
B) Identifying potentially troublesome areas so that corrective action can be taken.
C) Determining how much can be cut from the budget during the next period.
D) Highlighting areas of potential cost savings.

Question 17

The statistical budget is a part of the:

A) Capital budget.
B) Revenue budget.
C) Operating budget.
D) None of the above.

Question 18

A budget serves several purposes for the institution and the individual supervisor, including:

A) Being a quantitative expression of the institution's operating intentions.
B) Providing a means of scheduling employees.
C) Identifying positions that could be eliminated.
D) Relieving the supervisor of concern for ongoing expenditures.

Question 19

The expense budget ordinarily includes:

A) Every department's allocated share of overhead costs.
B) A reckoning of estimated cash in versus estimated cash out.
C) The supervisors' proposed equipment purchases.
D) Projections of personnel costs and all other costs.

Question 20

Among the advantages of the participative approach to budgeting is:

A) It relieves the finance department of most potential involvement.
B) It produces a more realistic plan than could be developed by other means.
C) It affords the supervisor ultimate budget approval.
D) It makes acceptance easier for administration and the board of directors..

Question 21

In participating in the development of the annual budget for his or her department the individual supervisor will ordinarily:

A) Provide an estimate of the department's expected impact on incoming cash.
B) Provide the finance division with recommended reductions in expenditures.
C) Submit a capital budget request for consideration.
D) Let the finance division recommend a budget for the department.

Question 22

One of the biggest headaches encountered in budgeting involves differences in the ___________ of the periods for which some data are accumulated

Question 23

There is often a direct relationship between a department's level of __________ and the amount of overtime worked.

Question 24

The organization's _______ position at any given time is critical.

Question 25

_________ is determining how many people of what skills are needed and making them available.

Question 26

In complete participative budgeting the supervisor is provided with guidelines for analyzing the budget report and answering for _________.

Question 27

An organization can be rich on paper with accounts receivable and other assets but can nevertheless fail because of a lack of __________.