1) What is budget slack? What are the pros and cons of building slack into the budget
from the point of view of (a) an employee and (b) a senior manager?
2) An example of a direct cost in a car repair shop would include:
A) parts used in repair
B) supervisory labor
C) depreciation on tools
D) property taxes on car repair shop
3) The following information for the second quarter of 2011 pertains to Huffington
Company:
Cash is collected from customers in the following manner:
40% of purchases are paid for in cash in the month of purchase, and the balance is paid
the following month.
Labor costs are 20% of sales. Other operating costs are $45,000 per month (including
$12,000 of depreciation). Both of these are paid in the month incurred.
The cash balance on June 1 is $6,000. A minimum cash balance of $4,500 is required at
the end of the month. Money can be borrowed in multiples of $3,000.
No loans outstanding on June 1 .
How much cash will be collected from customers in June?
A) $129,000
B) $141,000
C) $150,000
D) None of the above is correct.
4) The break-even point is the level at which revenues:
A) equal fixed costs
B) equal variable costs
C) equal fixed costs minus flexible costs
D) equal variable costs plus capacity-related costs