10) To prepare budgets based on actual data from past periods is preferred since past inefficiencies are EXCLUDED.
Diff: 2Objective: 4AACSB: Analytical thinking11) A firm's inefficiencies, such as the wastage of direct materials, are incorporated in past data. Hence the data represents the ideal performance of a firm.
Diff: 2Objective: 4AACSB: Analytical thinking12) A standard is attainable through efficient operations but allows for normal disruptions such as machine breakdowns and defective production.
Diff: 2Objective: 4AACSB: Analytical thinking13) One advantage of using standard times to develop a budget is they are simple to compile, are based solely on the past actual history, and do not require expected future changes to be taken into account.
Diff: 1Objective: 4AACSB: Analytical thinking