Finance and Accounting Budgeting & Cost Management 1

Question 1

Which budgeting method starts from scratch and justifies every expense?

Accepted Answer

Zero-Based Budgeting

Answer

Incremental Budgeting

Answer

Activity-Based Budgeting

Answer

Flexible Budgeting

Question 2

What is the main purpose of variance analysis in budgeting?

Accepted Answer

To compare actual results with budgeted figures

Answer

To eliminate all costs

Answer

To create new budget categories

Answer

To increase expenditures

Question 3

Which cost classification remains constant in total regardless of production volume?

Accepted Answer

Fixed Costs

Answer

Variable Costs

Answer

Mixed Costs

Answer

Semi-Variable Costs

Question 4

What is the primary objective of cost control?

Accepted Answer

To reduce costs without sacrificing efficiency

Answer

To increase all expenditures

Answer

To create new cost structures

Answer

To eliminate all overhead costs

Question 5

Which financial metric helps assess a company's ability to cover its fixed costs?

Accepted Answer

Contribution Margin

Answer

Gross Profit Margin

Answer

Break-even Point

Answer

Operating Profit Margin

Question 6

What is the break-even point in cost management?

Accepted Answer

The point where total revenue equals total costs

Answer

When total costs exceed revenue

Answer

When variable costs exceed fixed costs

Answer

When revenue is at its peak