Question 1. Which of the following is a TRUE statement?
- The direct materials purchases budget is determined from the direct labor budget.
- The selling and administrative expense budget is input into the forecasted cost of goods sold.
- The direct materials purchases budget and the capital expenditures budget are both determined from the production budget.
- The direct materials purchases budget is prepared after the production budget is completed.
Question 2. Which of the following statements is true about ABB (activity-based budgeting)?
- ABB is an alternative costing method allowable by GAAP.
- ABB is a good match to GAAP financial statement since ABB focuses on cost functions.
- ABB focuses on outputs expected in order to evaluate how many resources are needed to perform the activities necessary to produce them.
- When using ABB, total manufacturing costs will be different than when using traditional costing.