Which of the Following Is True of Budgets When They

question 118

Multiple Choice

Which of the following is true of budgets when they are administered thoughtfully?

• A) They eliminate subjectivity in performance evaluation.
• B) They can eliminate the uncertainty faced by a company.
• C) They promote coordination within the subunits of a company.
• D) They are a substitute the planning and coordination functions of management.

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Definitions:

Underapplied Overhead

A situation where the actual manufacturing overhead costs are higher than the allocated costs during a period.

Direct Labor Cost

The total cost of wages for employees who work directly on the manufacturing of products or delivery of services.

Overapplied Overhead

A scenario in which the overhead costs assigned for manufacturing surpass the real overhead costs that were incurred.

Actual Overhead Costs

The real costs incurred for overhead in a specific period, as opposed to budgeted or standard overhead costs.