The Practice of Preparing Budgets for Each of Several Future

question 47

Multiple Choice

The practice of preparing budgets for each of several future periods and revising those budgets as each period is completed, adding a new budget each period so that the budgets always cover the same number of future periods, is called:

• A) Participatory budgeting.
• B) Capital budgeting.
• C) Balanced budgeting.
• D) Continuous budgeting.
• E) Primary budgeting.

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Definitions:

Underapplied Manufacturing Overhead

Occurs when the allocated manufacturing overhead costs are less than the actual overhead costs incurred, leading to a shortfall that needs to be adjusted.

Overapplied Manufacturing Overhead

A situation where the allocated manufacturing overhead costs exceed the actual overhead costs incurred; this leads to an adjustment in cost accounting records.

Work in Process

Goods in various stages of completion throughout the factory, not yet ready for sale, comprising direct labor, material, and manufacturing overhead.

Overapplied Manufacturing Overhead

This occurs when the allocated manufacturing overhead costs are more than the actual overhead costs incurred.