A    Graph A

B    Graph B

C    Graph C

D    Graph D

9    Which of the following are benefits of budgeting?

1   It helps coordinate the activities of different departments

2   It fulfils legal reporting obligations

3   It establishes a system of control

4   It is a starting point for strategic planning

A    1 and 4 only

B    1 and 3 only

C    2 and 3 only

D    2 and 4 only

10   The following statements relate to the participation of junior management in setting budgets:

1.   It speeds up the setting of budgets

2.   It increases the motivation of junior managers

3.   It reduces the level of budget padding

Which statements are true?

A    1 only

B    2 only

C    2 and 3 only

D    1, 2 and 3

11   A company has a capital employed of $200,000. It has a cost of capital of 12% per year. Its residual income is

$36,000.

What is the company's return on investment?

A    30%

B    12%

C    18%

D    22%

12   A company has calculated a $10,000 adverse direct material variance by subtracting its flexed budget direct material

cost from its actual direct material cost for the period.

Which of the following could have caused the variance?

(1)  An increase in direct material prices

(2)  An increase in raw material usage per unit

(3)  Units produced being greater than budgeted

(4)  Units sold being greater than budgeted

A    2 and 3 only

B    3 and 4 only

C    1 and 2 only

D    1 and 4 only