Question 1

Variances should be investigated ________.

Accepted Answer

A)  when they are kept below a certain amount 
B)  when there is a small variance for critical items such as product defects 
C)  even though the cost of investigation exceeds the benefit 
D)  when there is an in-control occurrence 
A)  when they are kept below a certain amount 
B)  when there is a small variance for critical items such as product defects 
C)  even though the cost of investigation exceeds the benefit 
D)  when there is an in-control occurrence

Question 2

Dynozz Corporation currently produces cardboard boxes in an automated process.Expected production per month is 15,000 units,direct material costs are $0.50 per unit,and manufacturing overhead costs are $15,000 per month.Manufacturing overhead is all fixed costs.What are the flexible budget for 10,000 and 15,000 units,respectively?

Accepted Answer

A)  $15,000; $22,500 
B)  $15,000; $17,500 
C)  $20,000; $22,500 
D)  $20,000; $17,500 
A)  $15,000; $22,500 
B)  $15,000; $17,500 
C)  $20,000; $22,500 
D)  $20,000; $17,500

Question 3

In variance analysis,if any single performance measure is underemphasized,managers will tend to make decisions that will cause the particular performance measure to look good.

Accepted Answer

A) True 
 B)False

Question 4

Answer the following questions using the information below:
Domose Inc. planned to use $150 of material per unit but actually used $147 of material per unit, and planned to make 1,100 units but actually made 900 units.
-The flexible-budget variance for materials is ________.

Accepted Answer

A)  $2,700 favorable 
B)  $2,700 unfavorable 
C)  $3,300 unfavorable 
D)  $3,300 favorable 
A)  $2,700 favorable 
B)  $2,700 unfavorable 
C)  $3,300 unfavorable 
D)  $3,300 favorable

Question 5

Managers must not interpret variances in isolation of each other.

Accepted Answer

A) True 
 B)False

Question 6

Answer the following questions using the information below:
Genent Company manufactures tires. Some of the company's data was misplaced. Use the following information to replace the lost data:
 $\begin{array}{|l|r|r|r|r|r|}
\hline &\text { Actual } & \text { Flexible Budget } & \text { Flexible } & \text { Sales-Volume } & \text { Static } \
&\text { Results } & \text { Variances } & \text { Budget } & \text { Variances } & \text { Budget } \
\hline\text { Units sold } & 495,000 & & 495,000 & & 453,750 \
\hline \text { Revenues } & \$ 185,150 & \$ 4,400 \mathrm{~F} & (\mathrm{~A}) & \$ 6,160 \mathrm{U} & (\mathrm{B}) \
\hline \text { Variable } & & & & & \
\text { costs } & (\mathrm{C}) & \$ 880 \mathrm{U} & \$ 69,780 & \$ 10,300 \mathrm{~F} & \$ 88,080 \
\hline \text { Fixed costs } & \$ 36,430 & \$ 3,770 \mathrm{~F} & \$ 40,200 & 0 & \$ 40,200 \
\hline \text { Operating } & & & & & \
\text { income } & \$ 78,060 & (\mathrm{D}) & \$ 70,770 & (\mathrm{E}) & \$ 66,630\\hline
\end{array}$
-What is the total sales-volume variance (E)?

Accepted Answer

A)  $14,960 unfavorable 
B)  $7,290 unfavorable 
C)  $4,140 favorable 
D)  $14,960 favorable 
A)  $14,960 unfavorable 
B)  $7,290 unfavorable 
C)  $4,140 favorable 
D)  $14,960 favorable

Question 7

Describe the purpose of variance analysis.

Accepted Answer

Variance analysis should help

Question 8

A standard is attainable through efficient operations but allows for normal disruptions such as machine breakdowns and defective production.

Accepted Answer

A) True 
 B)False

Question 9

Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In 2015, GII estimated the following standard costs for one of their major products, the 30-gallon heavy-duty plastic container.
 $\begin{array}{lll}&\text { Budgeted quantity }&\text { Budgeted price }\
\text { Direct materials } & 0.30 \text { pounds } & \$ 20 \text { per pound } \
\text { Direct labor } & 0.20 \text { hours } & \$ 12 \text { per hour }
\end{array}$ During July, GII produced and sold 3,000 containers using 1,000 pounds of direct materials at an average cost per pound of $19 and 625 direct manufacturing labor hours at an average wage of $11.75 per hour.
-The direct manufacturing labor efficiency variance during July is ________.

Accepted Answer

A)  $300.00 unfavorable 
B)  $156.25 favorable 
C)  $143.75 favorable 
D)  $131.75 unfavorable 
A)  $300.00 unfavorable 
B)  $156.25 favorable 
C)  $143.75 favorable 
D)  $131.75 unfavorable

Question 10

Give at least three good reasons why an unfavorable efficiency variance for direct manufacturing labor might be reported.

Accepted Answer

Any three of the following:
a.More lower

Question 11

A favorable variance should be ignored by management.

Accepted Answer

A) True 
 B)False

Question 12

Answer the following questions using the information below:
Animent Industries, Inc. (AII), developed standard costs for direct material and direct labor. In 2015, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container.
 $\begin{array}{lll}&\text { Budgeted quantity }&\text { Budgeted price }\
\text { Direct materials } & 0.10 \text { pounds } & \$ 60 \text { per pound } \
\text { Direct labor } & 0.05 \text { hours } & \$ 30 \text { per hour }
\end{array}$ During June, AII produced and sold 20,000 containers using 1,900 pounds of direct materials at an average cost per pound of $64 and 1,000 direct manufacturing labor-hours at an average wage of $30.50 per hour.
-The direct manufacturing labor efficiency variance during June is ________.

Accepted Answer

A)  $125 unfavorable 
B)  $500 favorable 
C)  $1,600 unfavorable 
D)  $0 
A)  $125 unfavorable 
B)  $500 favorable 
C)  $1,600 unfavorable 
D)  $0

Question 13

Answer the following questions using the information below:
The actual information pertains to the third quarter. As part of the budgeting process, the Duck Decoy Department of Paralith Incorporated had developed the following static budget for the third quarter. Duck Decoy is in the process of preparing the flexible budget and understanding the results.
 $\begin{array}{lccc} 
& \text { Actual } & \text { Flexible } & \text { Static } \
& \text { Results } & \text { Budget } & \text { Budget } \
\text { Sales volume (in units) } & 11,000 & & 10,000\\
\text { Sales revenues } & \$ 238,000 & \$ & \$230,000 \
\text { Variable costs } & 150,000 & \$ & 180,000\\
\text { Contribution margin }& 88,000& \$ &50,000\\
\text { Fixed costs } & 36,000 & \$ & 35,000\
\text { Operating profit } & \$ 52,000& \$& \$ 15,000
\end{array}$
-The flexible budget will report ________ for the fixed costs.

Accepted Answer

A)  $536,000 
B)  $35,000 Favorable 
C)  $35,000 
D)  $1,000 Unfavorable 
A)  $536,000 
B)  $35,000 Favorable 
C)  $35,000 
D)  $1,000 Unfavorable

Question 14

Demizio Valley Orchards, Inc. (DVO), developed standard costs for direct material and direct labor. In 2015, DVO estimated the following standard costs for one of their most well loved products, the DVO classic Grandma's large apple pie which had a brown sugar coating on the top of the crust as well as including cranberry and mince ingredients in addition to the apples.
 $\begin{array}{lll}&\text { Budgeted quantity  } &\text {Budgeted price }\
\text { Direct materials } & 2.0 \text { pounds } & \$ 6.25 \text { per pound } \
\text { Direct labor } & 0.20 \text { hours } & \$ 13.00 \text { per hour }
\end{array}$ During September, DVO produced and sold 1,100 pies using 2,300 pounds of direct materials at an average cost per pound of $6.00 and 200 direct labor hours at an average wage of $13.25 per hour.
-The direct labor efficiency variance during September is ________.

Accepted Answer

A)  $260.00 favorable 
B)  $250.00 unfavorable 
C)  $280.00 favorable 
D)  $210.00 unfavorable 
A)  $260.00 favorable 
B)  $250.00 unfavorable 
C)  $280.00 favorable 
D)  $210.00 unfavorable

Question 15

Answer the following questions using the information below:
Genent Company manufactures tires. Some of the company's data was misplaced. Use the following information to replace the lost data:
 $\begin{array}{|l|r|r|r|r|r|}
\hline &\text { Actual } & \text { Flexible Budget } & \text { Flexible } & \text { Sales-Volume } & \text { Static } \
&\text { Results } & \text { Variances } & \text { Budget } & \text { Variances } & \text { Budget } \
\hline\text { Units sold } & 495,000 & & 495,000 & & 453,750 \
\hline \text { Revenues } & \$ 185,150 & \$ 4,400 \mathrm{~F} & (\mathrm{~A}) & \$ 6,160 \mathrm{U} & (\mathrm{B}) \
\hline \text { Variable } & & & & & \
\text { costs } & (\mathrm{C}) & \$ 880 \mathrm{U} & \$ 69,780 & \$ 10,300 \mathrm{~F} & \$ 88,080 \
\hline \text { Fixed costs } & \$ 36,430 & \$ 3,770 \mathrm{~F} & \$ 40,200 & 0 & \$ 40,200 \
\hline \text { Operating } & & & & & \
\text { income } & \$ 78,060 & (\mathrm{D}) & \$ 70,770 & (\mathrm{E}) & \$ 66,630\\hline
\end{array}$
-What amounts are reported for revenues in the flexible-budget (A)and the static-budget (B),respectively?

Accepted Answer

A)  $164,320; $178,990 
B)  $180,750; $186,910 
C)  $185,150; $177,920 
D)  $178,990; $186,910 
A)  $164,320; $178,990 
B)  $180,750; $186,910 
C)  $185,150; $177,920 
D)  $178,990; $186,910

Question 16

Direct material price variance is likely to be unfavorable if the purchasing manager switched to a lower-price supplier.

Accepted Answer

A) True 
 B)False

Question 17

Answer the following questions using the information below:
Aurous Incorporated planned to use $35 of material per unit but actually used $34 of material per unit, and planned to make 1,500 units but actually made 1,300 units.
-The sales-volume variance for materials is ________.

Accepted Answer

A)  $7,000 favorable 
B)  $7,000 unfavorable 
C)  $6,800 unfavorable 
D)  $6,800 favorable 
A)  $7,000 favorable 
B)  $7,000 unfavorable 
C)  $6,800 unfavorable 
D)  $6,800 favorable

Question 18

Which of the following can be a reason for a favorable price variance for direct materials?

Accepted Answer

A)  a decrease in the price of materials due to an oversupply of materials 
B)  an unexpected increase in the price of materials 
C)  less amount of material used during production than planned for actual output 
D)  workers taking less time to produce the products 
A)  a decrease in the price of materials due to an oversupply of materials 
B)  an unexpected increase in the price of materials 
C)  less amount of material used during production than planned for actual output 
D)  workers taking less time to produce the products

Question 19

Standard material cost per kg of raw material is $5.Standard material allowed per unit is 2 Kg.Actual material used per unit is 2.5 Kg.Actual cost per kg is $4.5.What is the standard cost per output unit?

Accepted Answer

A)  $9 
B)  $11.25 
C)  $10 
D)  $12.5 
A)  $9 
B)  $11.25 
C)  $10 
D)  $12.5

Question 20

Which of the following items will be same for a flexible budget and a master budget?

Accepted Answer

A)  total variable cost 
B)  total fixed costs 
C)  total contribution margin 
D)  total revenues 
A)  total variable cost 
B)  total fixed costs 
C)  total contribution margin 
D)  total revenues

Variances should be investigated ________.

In variance analysis,if any single performance measure is underemphasized,managers will tend to make decisions that will cause the particular performance measure to look good.

Answer the following questions using the information below: Domose Inc. planned to use $150 of material per unit but actually used $147 of material per unit, and planned to make 1,100 units but actually made 900 units. -The flexible-budget variance for materials is ________.

Managers must not interpret variances in isolation of each other.

Describe the purpose of variance analysis.

A standard is attainable through efficient operations but allows for normal disruptions such as machine breakdowns and defective production.

Give at least three good reasons why an unfavorable efficiency variance for direct manufacturing labor might be reported.

A favorable variance should be ignored by management.

Direct material price variance is likely to be unfavorable if the purchasing manager switched to a lower-price supplier.

Answer the following questions using the information below: Aurous Incorporated planned to use $35 of material per unit but actually used $34 of material per unit, and planned to make 1,500 units but actually made 1,300 units. -The sales-volume variance for materials is ________.

Which of the following can be a reason for a favorable price variance for direct materials?

Standard material cost per kg of raw material is $5.Standard material allowed per unit is 2 Kg.Actual material used per unit is 2.5 Kg.Actual cost per kg is $4.5.What is the standard cost per output unit?

Which of the following items will be same for a flexible budget and a master budget?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters

Exam 7: Flexible Budgets, direct-Cost Variances, and Management Control

Variances should be investigated ________.

In variance analysis,if any single performance measure is underemphasized,managers will tend to make decisions that will cause the particular performance measure to look good.

Answer the following questions using the information below: Domose Inc. planned to use $150 of material per unit but actually used $147 of material per unit, and planned to make 1,100 units but actually made 900 units. -The flexible-budget variance for materials is ________.

Managers must not interpret variances in isolation of each other.

Describe the purpose of variance analysis.

A standard is attainable through efficient operations but allows for normal disruptions such as machine breakdowns and defective production.

Give at least three good reasons why an unfavorable efficiency variance for direct manufacturing labor might be reported.

A favorable variance should be ignored by management.

Direct material price variance is likely to be unfavorable if the purchasing manager switched to a lower-price supplier.

Answer the following questions using the information below: Aurous Incorporated planned to use $35 of material per unit but actually used $34 of material per unit, and planned to make 1,500 units but actually made 1,300 units. -The sales-volume variance for materials is ________.

Which of the following can be a reason for a favorable price variance for direct materials?

Standard material cost per kg of raw material is $5.Standard material allowed per unit is 2 Kg.Actual material used per unit is 2.5 Kg.Actual cost per kg is $4.5.What is the standard cost per output unit?

Which of the following items will be same for a flexible budget and a master budget?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters