Question 1

Which of the following statements is true about analyzing a single variance?

Accepted Answer

A)  It should be overemphasized to take proper decision. 
B)  It should be evaluated in isolation from other variances. 
C)  It can lead to different other variances. 
D)  It should be used for quality evaluation. 
A)  It should be overemphasized to take proper decision. 
B)  It should be evaluated in isolation from other variances. 
C)  It can lead to different other variances. 
D)  It should be used for quality evaluation.

Question 2

When actual revenues exceed budgeted revenues,a favorable variance arises.

Accepted Answer

A) True 
 B)False

Question 3

Answer the following questions using the information below:
Midend's Camera Shop has prepared the following flexible budget for September and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance.
 $\begin{array}{lrrr} &\text { Flexible }&\text { Variances }\
& \text { Budget } & \text { Price } & \text { Efficiency } \
\text { Material A } & \$ 25,000 & \$ 1,500 \mathrm{U} & \$ 1,800 \mathrm{~F} \
\text { Material B } & 32,000 & 600 \mathrm{~F} & 900 \mathrm{U} \
\text { Material C } & 42,000 & 1,300 \mathrm{U} & 900 \mathrm{~F}
\end{array}$
-The actual amount spent for Material B was ________.

Accepted Answer

A)  $31,700 
B)  $30,500 
C)  $33,500 
D)  $32,300 
A)  $31,700 
B)  $30,500 
C)  $33,500 
D)  $32,300

Question 4

A master budget is called a static budget because it is developed around a single planned output level.

Accepted Answer

A) True 
 B)False

Question 5

An unfavorable efficiency variance for direct manufacturing labor might indicate that ________.

Accepted Answer

A)  there is unexpected increase in direct labor rates 
B)  work is scheduled inefficiently 
C)  lower-quality materials were purchased 
D)  more higher-skilled workers were scheduled than planned 
A)  there is unexpected increase in direct labor rates 
B)  work is scheduled inefficiently 
C)  lower-quality materials were purchased 
D)  more higher-skilled workers were scheduled than planned

Question 6

Answer the following questions using the information below:
Coroid Corporation used the following data to evaluate their current operating system. The company sells items for $11 each and had used a budgeted selling price of $12 per unit.
 $$\begin{array} { l r r } 
 & \underline { \text { Actual } } & \text { Budgeted } \
\text { Units sold } & 280,000 \text { units } & 275,000 \text { units } \
\text { Variable costs } & \$ 900,000 & \$ 885,000 \
\text { Fixed costs } & \$ 55,000 & \$ 52,000
\end{array}$$
-What is the static-budget variance of revenues?

Accepted Answer

A)  $55,000 favorable 
B)  $220,000 favorable 
C)  $220,000 unfavorable 
D)  $55,000 unfavorable 
A)  $55,000 favorable 
B)  $220,000 favorable 
C)  $220,000 unfavorable 
D)  $55,000 unfavorable

Question 7

Nonfinancial performance measures ________.

Accepted Answer

A)  are usually used in combination with financial measures for control purposes 
B)  are used to evaluate overall cost efficiency 
C)  allow managers to make informed tradeoffs 
D)  are often the sole basis of a manager's performance evaluations 
A)  are usually used in combination with financial measures for control purposes 
B)  are used to evaluate overall cost efficiency 
C)  allow managers to make informed tradeoffs 
D)  are often the sole basis of a manager's performance evaluations

Question 8

Management by exception is the practice of concentrating on areas not operating as anticipated (such as a cost overrun)and placing less attention on areas operating as anticipated.

Accepted Answer

A) True 
 B)False

Question 9

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 flexible-budget variance during September is ________.

Accepted Answer

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

Question 10

Which of the following statements is true of benchmarking?

Accepted Answer

A)  It is a systematic approach of optimizing business processes. 
B)  It fails to help to improve organizational performance as benchmarking data does not provide insight into why costs or revenues differ across companies. 
C)  It is difficult to ensure that the benchmark numbers are comparable due to the existence of differences across companies. 
D)  It considers four major business aspects such as financial, customer, internal business processes, and learning and growth. 
A)  It is a systematic approach of optimizing business processes. 
B)  It fails to help to improve organizational performance as benchmarking data does not provide insight into why costs or revenues differ across companies. 
C)  It is difficult to ensure that the benchmark numbers are comparable due to the existence of differences across companies. 
D)  It considers four major business aspects such as financial, customer, internal business processes, and learning and growth.

Question 11

The following data for the Prender Company pertain to the production of 800 urns during August.
 Direct Materials (all materials purchased were used):
Standard cost: $\$ 4.80$ per pound of urn.
Total actual cost: $\$ 4,480$.
Standard cost allowed for units produced was $\$ 4,800$.
Materials efficiency variance was $\$ 96$ unfavorable.
Direct Manufacturing Labor:
Standard cost is 2 urns per hour at $\$ 19.20$ per hour.
Actual cost per hour was $\$ 19.60$.
Labor efficiency variance was $\$ 288$ favorable. Required:
a.What is standard direct material amount per urn?
b.What is the direct material price variance?
c.What is the total actual cost of direct manufacturing labor?
d.What is the labor price variance for direct manufacturing labor?

Accepted Answer

The answer of The following data for the Prender Company...

Question 12

The degree to which a predetermined

Accepted Answer

A)  efficiency 
B)  variance 
C)  effectiveness 
D)  benchmarking 
A)  efficiency 
B)  variance 
C)  effectiveness 
D)  benchmarking

Question 13

A flexible-budget variance is $600 favorable for unit-related costs.This indicates that costs were ________.

Accepted Answer

A)  $600 more than the master budget 
B)  $600 less than for the planned level of activity 
C)  $600 more than standard for the achieved level of activity 
D)  $600 less than standard for the achieved level of activity 
A)  $600 more than the master budget 
B)  $600 less than for the planned level of activity 
C)  $600 more than standard for the achieved level of activity 
D)  $600 less than standard for the achieved level of activity

Question 14

Which of the following is true of variance?

Accepted Answer

A)  Managers should interpret a favorable variance as "good news" or assume it means their subordinates performed well. 
B)  A variance within an acceptable range is considered to be an "in-control occurrence" and calls for no investigation or action by managers. 
C)  The purchasing manager secured a discount for buying in bulk with fewer purchase orders which results in unfavorable material price variance. 
D)  Managers' performance must be evaluated solely on single variance. 
A)  Managers should interpret a favorable variance as "good news" or assume it means their subordinates performed well. 
B)  A variance within an acceptable range is considered to be an "in-control occurrence" and calls for no investigation or action by managers. 
C)  The purchasing manager secured a discount for buying in bulk with fewer purchase orders which results in unfavorable material price variance. 
D)  Managers' performance must be evaluated solely on single variance.

Question 15

Answer the following questions using the information below:
Midend's Camera Shop has prepared the following flexible budget for September and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance.
 $\begin{array}{lrrr} &\text { Flexible }&\text { Variances }\
& \text { Budget } & \text { Price } & \text { Efficiency } \
\text { Material A } & \$ 25,000 & \$ 1,500 \mathrm{U} & \$ 1,800 \mathrm{~F} \
\text { Material B } & 32,000 & 600 \mathrm{~F} & 900 \mathrm{U} \
\text { Material C } & 42,000 & 1,300 \mathrm{U} & 900 \mathrm{~F}
\end{array}$
-The explanation that lower-quality materials were purchased is most likely for ________.

Accepted Answer

A)  Material A 
B)  Material B 
C)  Material C 
D)  both Material A and C 
A)  Material A 
B)  Material B 
C)  Material C 
D)  both Material A and C

Question 16

The flexible budget contains ________.

Accepted Answer

A)  budgeted amounts for actual output 
B)  budgeted amounts for planned output 
C)  actual costs for actual output 
D)  actual costs for planned output 
A)  budgeted amounts for actual output 
B)  budgeted amounts for planned output 
C)  actual costs for actual output 
D)  actual costs for planned output

Question 17

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 price variance during July is ________.

Accepted Answer

A)  $375.00 unfavorable 
B)  $156.25 favorable 
C)  $243.75 favorable 
D)  $1,000 unfavorable 
A)  $375.00 unfavorable 
B)  $156.25 favorable 
C)  $243.75 favorable 
D)  $1,000 unfavorable

Question 18

Variance analysis should be used ________.

Accepted Answer

A)  to understand why variances arise and to improve future performance 
B)  as the sole source of information for performance evaluation 
C)  to punish employees that do not meet standards 
D)  to set the standards which are very easy to achieve to encourage employees to focus on meeting standards 
A)  to understand why variances arise and to improve future performance 
B)  as the sole source of information for performance evaluation 
C)  to punish employees that do not meet standards 
D)  to set the standards which are very easy to achieve to encourage employees to focus on meeting standards

Question 19

Which of the following is a reason for a favorable material price variance?

Accepted Answer

A)  the purchasing manager bargaining effectively with suppliers 
B)  the purchasing manager giving orders for small quantity to reduce storage cost 
C)  the purchasing manager accepting a bid from the highest-priced supplier to ensure the quality of material 
D)  the personnel manager hiring underskilled workers 
A)  the purchasing manager bargaining effectively with suppliers 
B)  the purchasing manager giving orders for small quantity to reduce storage cost 
C)  the purchasing manager accepting a bid from the highest-priced supplier to ensure the quality of material 
D)  the personnel manager hiring underskilled workers

Question 20

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 material price variance during July is ________.

Accepted Answer

A)  $1,100 unfavorable 
B)  $1,100 favorable 
C)  $1,000 unfavorable 
D)  $2,000 unfavorable 
A)  $1,100 unfavorable 
B)  $1,100 favorable 
C)  $1,000 unfavorable 
D)  $2,000 unfavorable

Which of the following statements is true about analyzing a single variance?

When actual revenues exceed budgeted revenues,a favorable variance arises.

A master budget is called a static budget because it is developed around a single planned output level.

An unfavorable efficiency variance for direct manufacturing labor might indicate that ________.

Nonfinancial performance measures ________.

Management by exception is the practice of concentrating on areas not operating as anticipated (such as a cost overrun)and placing less attention on areas operating as anticipated.

Which of the following statements is true of benchmarking?

The degree to which a predetermined

A flexible-budget variance is $600 favorable for unit-related costs.This indicates that costs were ________.

Which of the following is true of variance?

The flexible budget contains ________.

Variance analysis should be used ________.

Which of the following is a reason for a favorable material price variance?

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

Which of the following statements is true about analyzing a single variance?

When actual revenues exceed budgeted revenues,a favorable variance arises.

A master budget is called a static budget because it is developed around a single planned output level.

An unfavorable efficiency variance for direct manufacturing labor might indicate that ________.

Nonfinancial performance measures ________.

Management by exception is the practice of concentrating on areas not operating as anticipated (such as a cost overrun)and placing less attention on areas operating as anticipated.

Which of the following statements is true of benchmarking?

The degree to which a predetermined

A flexible-budget variance is $600 favorable for unit-related costs.This indicates that costs were ________.

Which of the following is true of variance?

The flexible budget contains ________.

Variance analysis should be used ________.

Which of the following is a reason for a favorable material price variance?

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