Question 1

A flexible-budget variance can be subdivided into the static-budget variance and the sales-volume variance.

Accepted Answer

A) True 
 B)False

Question 2

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 material price variance during September is ________.

Accepted Answer

A)  $575 favorable 
B)  $575 unfavorable 
C)  $50.00 unfavorable 
D)  $50.00 favorable 
A)  $575 favorable 
B)  $575 unfavorable 
C)  $50.00 unfavorable 
D)  $50.00 favorable

Question 3

Answer the following questions using the information below:
Dynondo Incorporated planned to use materials of $12 per unit but actually used materials of $13 per unit, and planned to make 1,500 units but actually made 1,800 units.
-The flexible-budget amount for materials is ________.

Accepted Answer

A)  $18,000 
B)  $19,500 
C)  $21,600 
D)  $23,400 
A)  $18,000 
B)  $19,500 
C)  $21,600 
D)  $23,400

Question 4

Which of the following is true of flexible budget?

Accepted Answer

A)  It calculates total variable cost by multiplying actual units by budgeted variable cost per unit. 
B)  It calculates total fixed cost by multiplying actual units by budgeted fixed cost per unit. 
C)  It calculates revenues by multiplying budgeted units by actual selling price per unit. 
D)  It calculates contribution margin by multiplying budgeted units by actual contribution margin per unit. 
A)  It calculates total variable cost by multiplying actual units by budgeted variable cost per unit. 
B)  It calculates total fixed cost by multiplying actual units by budgeted fixed cost per unit. 
C)  It calculates revenues by multiplying budgeted units by actual selling price per unit. 
D)  It calculates contribution margin by multiplying budgeted units by actual contribution margin per unit.

Question 5

The actual information pertains to the month of September.As part of the budgeting process,Kriger Fencing Company developed the following static budget for September.Kriger is in the process of preparing the flexible budget and understanding the results. $\begin{array}{lccc} 
& \text { Actual } & \text { Flexible } & \text { Static } \
& \text { Results } & \text { Budget } & \text { Budget } \
\text { Sales volume (in units) } & 10,000 & & 12,500\
\text { Sales revenues } & \$ 500,000 & \$ & \$ 625,000 \
\text { Variable costs } & 256,000 & \$ & 300,000\
\text { Contribution margin }& 244,000& \$ &325,000\
\text { Fixed costs } & 229,000 & \$ & 225,000\
\text { Operating profit } & \$ 15,000& \$& \$ 100,000
\end{array}$ The primary reason for low operating profits was ________.

Accepted Answer

A)  the variable-cost variance 
B)  increased fixed costs 
C)  a poor management accounting system 
D)  lower sales volume than planned 
A)  the variable-cost variance 
B)  increased fixed costs 
C)  a poor management accounting system 
D)  lower sales volume than planned

Question 6

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 material price variance during June is ________.

Accepted Answer

A)  $7,600 unfavorable 
B)  $1,600 favorable 
C)  $1,600 unfavorable 
D)  $500 favorable 
A)  $7,600 unfavorable 
B)  $1,600 favorable 
C)  $1,600 unfavorable 
D)  $500 favorable

Question 7

Which of the following is an advantage of using actual input data from past periods to develop a budget?

Accepted Answer

A)  Past inefficiencies are excluded in the preparation of new budget. 
B)  Expected future changes are incorporated in the preparation of new budget. 
C)  Information is available at a low cost. 
D)  Data represents the ideal performance. 
A)  Past inefficiencies are excluded in the preparation of new budget. 
B)  Expected future changes are incorporated in the preparation of new budget. 
C)  Information is available at a low cost. 
D)  Data represents the ideal performance.

Question 8

Answer the following questions using the information below:
Contrafic Corporation used the following data to evaluate its current operating system. The company sells items for $21 each and used a budgeted selling price of $21 per unit.
 $$\begin{array} { l r r } 
 & \underline { \text { Actual } } & \text { Budgeted } \
\text { Units sold }& 180,000 \text { units } & 185,000 \text { units } \
\text { Variable costs }  & \$ 1,080,000 & \$ 1,295,000 \
\text { Fixed costs }&\$ 800,000 & \$ 775,000
\end{array}$$
-What is the static-budget variance of revenues?

Accepted Answer

A)  $105,000 favorable 
B)  $105,000 unfavorable 
C)  $8,000 favorable 
D)  $8,000 unfavorable 
A)  $105,000 favorable 
B)  $105,000 unfavorable 
C)  $8,000 favorable 
D)  $8,000 unfavorable

Question 9

A favorable efficiency variance for direct materials might indicate that ________.

Accepted Answer

A)  lower-quality materials were purchased 
B)  work is scheduled efficiently 
C)  there is an unexpected increase in direct labor rates 
D)  management hired underskilled workers 
A)  lower-quality materials were purchased 
B)  work is scheduled efficiently 
C)  there is an unexpected increase in direct labor rates 
D)  management hired underskilled workers

Question 10

The process by which a company's products or services are measured relative to the best possible levels of performance is known as ________.

Accepted Answer

A)  efficiency 
B)  benchmarking 
C)  a standard costing system 
D)  variance analysis 
A)  efficiency 
B)  benchmarking 
C)  a standard costing system 
D)  variance analysis

Question 11

Standard cost per output unit for each variable direct cost input is calculated by multiplying ________.

Accepted Answer

A)  standard input allowed for one output unit by standard price per input unit 
B)  standard input allowed for one output unit by actual price per input unit 
C)  actual input allowed for one output unit by standard price per input unit 
D)  actual input allowed for one output unit by actual price per input unit 
A)  standard input allowed for one output unit by standard price per input unit 
B)  standard input allowed for one output unit by actual price per input unit 
C)  actual input allowed for one output unit by standard price per input unit 
D)  actual input allowed for one output unit by actual price per input unit

Question 12

A company has a policy "investigate all variances exceeding $3,000 or 15% of the budgeted cost,whichever is lower." There is a variance of $2,000 in repair and maintenance costs of $12,000.What does the company do in the given situation?

Accepted Answer

A)  It should be ignored as it is less than $3,000. 
B)  It deserves more attention as it is more than 15% of total repair cost. 
C)  It should be considered an in-control occurrence. 
D)  It should be investigated as all variances are equally important. 
A)  It should be ignored as it is less than $3,000. 
B)  It deserves more attention as it is more than 15% of total repair cost. 
C)  It should be considered an in-control occurrence. 
D)  It should be investigated as all variances are equally important.

Question 13

A sales-volume variance may be the result of quality problems leading to customer dissatisfaction.

Accepted Answer

A) True 
 B)False

Question 14

An unfavorable price variance for direct materials might indicate ________.

Accepted Answer

A)  that the purchasing manager purchased in smaller quantities due to a change to just-in-time inventory methods 
B)  congestion due to scheduling problems 
C)  that the purchasing manager skillfully negotiated a better purchase price 
D)  that the market had an unexpected oversupply of those materials 
A)  that the purchasing manager purchased in smaller quantities due to a change to just-in-time inventory methods 
B)  congestion due to scheduling problems 
C)  that the purchasing manager skillfully negotiated a better purchase price 
D)  that the market had an unexpected oversupply of those materials

Question 15

A percentage of products started and completed without requiring any rework is an example of nonfinancial performance measure.

Accepted Answer

A) True 
 B)False

Question 16

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.

Accepted Answer

A) True 
 B)False

Question 17

Answer the following questions using the information below:
Contrafic Corporation used the following data to evaluate its current operating system. The company sells items for $21 each and used a budgeted selling price of $21 per unit.
 $$\begin{array} { l r r } 
 & \underline { \text { Actual } } & \text { Budgeted } \
\text { Units sold }& 180,000 \text { units } & 185,000 \text { units } \
\text { Variable costs }  & \$ 1,080,000 & \$ 1,295,000 \
\text { Fixed costs }&\$ 800,000 & \$ 775,000
\end{array}$$
-What is the static-budget variance of operating income?

Accepted Answer

A)  $85,000 favorable 
B)  $90,000 unfavorable 
C)  $110,000 favorable 
D)  $105,000 unfavorable 
A)  $85,000 favorable 
B)  $90,000 unfavorable 
C)  $110,000 favorable 
D)  $105,000 unfavorable

Question 18

Unfavorable direct material price variances are ________.

Accepted Answer

A)  always credits 
B)  always debits 
C)  credited to the Materials Control account 
D)  credited to the Accounts Payable Control account 
A)  always credits 
B)  always debits 
C)  credited to the Materials Control account 
D)  credited to the Accounts Payable Control account

Question 19

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 price variance during September is ________.

Accepted Answer

A)  $260.00 unfavorable 
B)  $280.00 favorable 
C)  $50.00 unfavorable 
D)  $50.00 favorable 
A)  $260.00 unfavorable 
B)  $280.00 favorable 
C)  $50.00 unfavorable 
D)  $50.00 favorable

Question 20

Answer the following questions using the information below:
Lander Corporation used the following data to evaluate their current operating system. The company sells items for $18 each and used a budgeted selling price of $18 per unit.
 $$\begin{array} { l r r } &\text { Actual } &\text { Budgeted }\

\text { Units sold }& 41,000 \text { units } & 40,000 \text { units } \
\text { Variable costs }  & \$ 164,000 & \$ 156,000 \
\text { Fixed costs }&\$ 46,000 & \$ 48,000
\end{array}$$
-What is the static-budget variance of variable costs?

Accepted Answer

A)  $2,000 favorable 
B)  $8,000 unfavorable 
C)  $4,000 favorable 
D)  $6,000 unfavorable 
A)  $2,000 favorable 
B)  $8,000 unfavorable 
C)  $4,000 favorable 
D)  $6,000 unfavorable

A flexible-budget variance can be subdivided into the static-budget variance and the sales-volume variance.

Answer the following questions using the information below: Dynondo Incorporated planned to use materials of $12 per unit but actually used materials of $13 per unit, and planned to make 1,500 units but actually made 1,800 units. -The flexible-budget amount for materials is ________.

Which of the following is true of flexible budget?

Which of the following is an advantage of using actual input data from past periods to develop a budget?

A favorable efficiency variance for direct materials might indicate that ________.

The process by which a company's products or services are measured relative to the best possible levels of performance is known as ________.

Standard cost per output unit for each variable direct cost input is calculated by multiplying ________.

A company has a policy "investigate all variances exceeding $3,000 or 15% of the budgeted cost,whichever is lower." There is a variance of $2,000 in repair and maintenance costs of $12,000.What does the company do in the given situation?

A sales-volume variance may be the result of quality problems leading to customer dissatisfaction.

An unfavorable price variance for direct materials might indicate ________.

A percentage of products started and completed without requiring any rework is an example of nonfinancial performance measure.

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.

Unfavorable direct material price variances are ________.

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

A flexible-budget variance can be subdivided into the static-budget variance and the sales-volume variance.

Answer the following questions using the information below: Dynondo Incorporated planned to use materials of $12 per unit but actually used materials of $13 per unit, and planned to make 1,500 units but actually made 1,800 units. -The flexible-budget amount for materials is ________.

Which of the following is true of flexible budget?

Which of the following is an advantage of using actual input data from past periods to develop a budget?

A favorable efficiency variance for direct materials might indicate that ________.

The process by which a company's products or services are measured relative to the best possible levels of performance is known as ________.

Standard cost per output unit for each variable direct cost input is calculated by multiplying ________.

A company has a policy "investigate all variances exceeding $3,000 or 15% of the budgeted cost,whichever is lower." There is a variance of $2,000 in repair and maintenance costs of $12,000.What does the company do in the given situation?

A sales-volume variance may be the result of quality problems leading to customer dissatisfaction.

An unfavorable price variance for direct materials might indicate ________.

A percentage of products started and completed without requiring any rework is an example of nonfinancial performance measure.

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.

Unfavorable direct material price variances are ________.

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