Question 1

The following data for the Safety Company pertain to the production of 3,000 clay bottles during July:   What is the variable overhead spending variance?

Accepted Answer

A) $560 Unfavorable 
B) $800 Favorable 
C) $800 Unfavorable 
D) $1,000 Favorable 
A) $560 Unfavorable 
B) $800 Favorable 
C) $800 Unfavorable 
D) $1,000 Favorable

Question 2

One of the first questions a manager should consider when explaining a large variance is whether expectations are valid.

Accepted Answer

A) True 
 B)False

Question 3

A flexible budget adjusts for changes in sales volume and other cost-driver activities.

Accepted Answer

A) True 
 B)False

Question 4

A budget that can be changed to reflect different levels of activity is called a ________ budget.

Accepted Answer

A) rolling 
B) continuous 
C) flexible 
D) static 
A) rolling 
B) continuous 
C) flexible 
D) static

Question 5

The difference between static budget amounts and flexible budget amounts are ________.The difference between flexible budget amounts and actual results are ________.

Accepted Answer

A) static variances; flexible budget variances 
B) master variances; flexible budget variances 
C) quantity variances; static budget variances 
D) activity level variances; flexible budget variances 
A) static variances; flexible budget variances 
B) master variances; flexible budget variances 
C) quantity variances; static budget variances 
D) activity level variances; flexible budget variances

Question 6

As the terms are used in the budgeting process,it is possible for a company to be efficient at the same time it is ineffective.

Accepted Answer

A) True 
 B)False

Question 7

The static budget variance equals the ________ variance plus the ________ variance.

Accepted Answer

A) flexible budget; activity-level 
B) flexible budget; variable budget 
C) variable budget; fixed budget 
D) sales activity; strategic budget 
A) flexible budget; activity-level 
B) flexible budget; variable budget 
C) variable budget; fixed budget 
D) sales activity; strategic budget

Question 8

Which of the following is NOT an example of efficient performance?

Accepted Answer

A) Direct labor hours used per unit were less than expected. 
B) Direct material used per unit was less than expected. 
C) More outputs were achieved with less inputs than predicted. 
D) More outputs were produced than expected. 
A) Direct labor hours used per unit were less than expected. 
B) Direct material used per unit was less than expected. 
C) More outputs were achieved with less inputs than predicted. 
D) More outputs were produced than expected.

Question 9

Tomorrow Company has the following information available:   The cost driver of product costs is units of output.What is the static budget variance for direct material costs?

Accepted Answer

A) $20,000 Unfavorable 
B) $20,000 Favorable 
C) $60,000 Favorable 
D) $60,000 Unfavorable 
A) $20,000 Unfavorable 
B) $20,000 Favorable 
C) $60,000 Favorable 
D) $60,000 Unfavorable

Question 10

Which of the following statements is FALSE?

Accepted Answer

A) Flexible budgets are prepared for a range of activity. 
B) Flexible budgets are matched to actual levels of activity. 
C) Flexible budgets facilitate management by exception. 
D) Flexible budgets are based on different assumptions about cost behavior than those used for static budgets. 
A) Flexible budgets are prepared for a range of activity. 
B) Flexible budgets are matched to actual levels of activity. 
C) Flexible budgets facilitate management by exception. 
D) Flexible budgets are based on different assumptions about cost behavior than those used for static budgets.

Question 11

Variances should be investigated if they ________.

Accepted Answer

A) are favorable 
B) are unfavorable 
C) are smaller than the prior period 
D) exceed certain dollar or percentage deviations from the budget 
A) are favorable 
B) are unfavorable 
C) are smaller than the prior period 
D) exceed certain dollar or percentage deviations from the budget

Question 12

The Charger Company makes tables and the following standards have been developed:   Production of 230 tables was expected in July,but 250 tables were actually completed.Direct materials purchased and used were 2,200 pounds at an actual price of $4.50 per pound.Direct labor cost for the month was $10,620,and the actual pay per hour was $18.00.What is the direct material price variance for July?

Accepted Answer

A) $800 Favorable 
B) $800 Unfavorable 
C) $1,100 Favorable 
D) $1,100 Unfavorable 
A) $800 Favorable 
B) $800 Unfavorable 
C) $1,100 Favorable 
D) $1,100 Unfavorable

Question 13

The following data are for the month of January for the Sterling Company:
Static budget data:
Sales of 9,000 pairs at $90 per pair
Variable costs of $69 per pair
Total fixed costs $108,000
Actual results:
Sales of 9,600 pairs at $87 per pair
Variable costs of $72 per pair
Total fixed costs $109,200
Required:
A)What is the static budget operating income?
B)What is the sales activity variance for operating income?
C)What is the flexible budget variance for operating income?

Accepted Answer

@#IMG-DLM& A)$81,000 B)$12,600

Question 14

Unfavorable activity level variances are due to ________.

Accepted Answer

A) planned costs exceeding actual costs 
B) actual costs exceeding planned costs 
C) planned output exceeding actual output 
D) actual output exceeding planned output 
A) planned costs exceeding actual costs 
B) actual costs exceeding planned costs 
C) planned output exceeding actual output 
D) actual output exceeding planned output

Question 15

Strongsville Company produces 2,500 units.Each unit was expected to require 2 labor hours at a cost of $10 per hour.Total labor cost was $52,250 for 4,750 hours worked.Direct labor is measured in labor hours.What is the direct labor price variance?

Accepted Answer

A) $2,500 Favorable 
B) $2,500 Unfavorable 
C) $4,750 Favorable 
D) $4,750 Unfavorable 
A) $2,500 Favorable 
B) $2,500 Unfavorable 
C) $4,750 Favorable 
D) $4,750 Unfavorable

Question 16

A favorable expense variance is when budgeted expenses are less than actual expenses.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements about perfection standards is TRUE?

Accepted Answer

A) It is generally believed that they have a negative influence on employee morale. 
B) They are expressions of the most efficient performance possible. 
C) They usually result in unfavorable variances. 
D) All of the above 
A) It is generally believed that they have a negative influence on employee morale. 
B) They are expressions of the most efficient performance possible. 
C) They usually result in unfavorable variances. 
D) All of the above

Question 18

A favorable materials price variance may lead to an unfavorable materials usage variance.

Accepted Answer

Direct material: Price variance: ($14 -

Question 19

The Paul Company makes tables for which the following standards have been developed:   Production of 200 tables was expected in June,but 220 tables were actually completed.Direct materials purchased and used were 2,100 pounds at an actual price of $4.40 per pound.Direct labor cost for the month was $10,620,and the actual pay per hour was $18.00.What is the direct labor quantity variance for the month of June?

Accepted Answer

A) $1,120 Favorable 
B) $1,120 Unfavorable 
C) $1,260 Favorable 
D) $1,260 Unfavorable 
A) $1,120 Favorable 
B) $1,120 Unfavorable 
C) $1,260 Favorable 
D) $1,260 Unfavorable

Question 20

Which is NOT a reason for a static budget variance?

Accepted Answer

A) Actual sales volume was higher than projected sales volume. 
B) Actual variable costs per unit were higher than expected variable costs per unit. 
C) Actual fixed costs per unit were higher than expected fixed costs per unit. 
D) Actual sales volume in current period was higher than projected sales volume in last period. 
A) Actual sales volume was higher than projected sales volume. 
B) Actual variable costs per unit were higher than expected variable costs per unit. 
C) Actual fixed costs per unit were higher than expected fixed costs per unit. 
D) Actual sales volume in current period was higher than projected sales volume in last period.

The following data for the Safety Company pertain to the production of 3,000 clay bottles during July: What is the variable overhead spending variance?

One of the first questions a manager should consider when explaining a large variance is whether expectations are valid.

A flexible budget adjusts for changes in sales volume and other cost-driver activities.

A budget that can be changed to reflect different levels of activity is called a ________ budget.

The difference between static budget amounts and flexible budget amounts are .The difference between flexible budget amounts and actual results are .

As the terms are used in the budgeting process,it is possible for a company to be efficient at the same time it is ineffective.

The static budget variance equals the variance plus the variance.

Which of the following is NOT an example of efficient performance?

Tomorrow Company has the following information available: The cost driver of product costs is units of output.What is the static budget variance for direct material costs?

Which of the following statements is FALSE?

Variances should be investigated if they ________.

Unfavorable activity level variances are due to ________.

Strongsville Company produces 2,500 units.Each unit was expected to require 2 labor hours at a cost of $10 per hour.Total labor cost was $52,250 for 4,750 hours worked.Direct labor is measured in labor hours.What is the direct labor price variance?

A favorable expense variance is when budgeted expenses are less than actual expenses.

Which of the following statements about perfection standards is TRUE?

A favorable materials price variance may lead to an unfavorable materials usage variance.

Which is NOT a reason for a static budget variance?

Managerial Accounting, the Business Organization

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus

Relevant Information for Decision Making With a Focus

Introduction to Budgets and Preparing the Master Budget

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 8: Flexible Budgets and Variance Analysis

The following data for the Safety Company pertain to the production of 3,000 clay bottles during July: What is the variable overhead spending variance?

One of the first questions a manager should consider when explaining a large variance is whether expectations are valid.

A flexible budget adjusts for changes in sales volume and other cost-driver activities.

A budget that can be changed to reflect different levels of activity is called a ________ budget.

The difference between static budget amounts and flexible budget amounts are ________.The difference between flexible budget amounts and actual results are ________.

As the terms are used in the budgeting process,it is possible for a company to be efficient at the same time it is ineffective.

The static budget variance equals the ________ variance plus the ________ variance.

Which of the following is NOT an example of efficient performance?

Tomorrow Company has the following information available: The cost driver of product costs is units of output.What is the static budget variance for direct material costs?

Which of the following statements is FALSE?

Variances should be investigated if they ________.

Unfavorable activity level variances are due to ________.

Strongsville Company produces 2,500 units.Each unit was expected to require 2 labor hours at a cost of $10 per hour.Total labor cost was $52,250 for 4,750 hours worked.Direct labor is measured in labor hours.What is the direct labor price variance?

A favorable expense variance is when budgeted expenses are less than actual expenses.

Which of the following statements about perfection standards is TRUE?

A favorable materials price variance may lead to an unfavorable materials usage variance.

Which is NOT a reason for a static budget variance?

Managerial Accounting, the Business Organization

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus

Relevant Information for Decision Making With a Focus

Introduction to Budgets and Preparing the Master Budget

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

The difference between static budget amounts and flexible budget amounts are .The difference between flexible budget amounts and actual results are .

The static budget variance equals the variance plus the variance.