1 Management Accounting · Create a title page following the APA format · Save the file as “ Exam 1_Management Accounting_Name(Student N.)” Question 1-6 for 1 mark 1. Question: Budgeted financial...

1. Budgeted financial statements are sometimes called pro forma statements.
True
2. A standard is a carefully predetermined price, cost, or quantity used for judging performance.
True
3. Centralized organizational structures allow a freedom of decision making to its managers.
False
4. Flexible budget not adjusted or altered after it is set.
False
5. Management Accounting is responsible to make strategic decisions directly.
False
6. The breakeven point is the level of production at which the costs of production are lower than the revenues for a product.
False
7. What is a cash budget?

Ans: A cash budget is a type of budget prepared to estimate the magnitude of cash outflows and cash inflows during a particular period. It can be made weekly, monthly, quarterly, or annually. The main aim of the cash budget is to access the cash needs and cash surplus in the organization. If cash inflow is more than outflow, surplus cash would be there, otherwise, if cash outflow is more than cash inflow then more cash is needed to operate the business. Also, the idea about the allocation of cash can be derived and control can be an exercise to use cash effectively. The company can manage its sales and credit policies to adjust the cash requirement of the business.
8. What are two attributes of performance? Define them.

Ans: Effectiveness:  The effectiveness is measured by comparing the actual result with the pre-determined criteria or standard. For example, the sales target is decided earlier as per past information and future predictions. The percentage of sales achieved is known as the level of effectiveness.
Efficiency: The amount of input used to produce a particular level of output is known as efficiency. The lesser the requirement of inputs for producing a level of output, the more efficient the process is.
9. What are 7 types of wastes in Lean management?
Ans: These are overproduction, motion waste, inventory waste, defects, over-processing, waiting, and transport. Excess production is the reason for overproduction waste on account of storage cost and wasted material. Motion waste may be of machine or human emotions that do not add value for the business. Inventory wastage is due to unprocessed inventory so storage cost and capital are tied up. Over-processing refers to the manufacturing of extra inventories which is not required. Waiting refers to the idle time between two processes or steps and transport waste refers to wastage of resources on moving items from one place to another.
    
10. Define product over costing and product under costing?
Ans: Over-costing: When the goods produced have used fewer resources like raw material, labor, machinery time, etc. but the cost per unit attributed to it is higher as compared to resources used. This is termed as over-costing. 
Under-costing: When the...