Question 1

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 2

Which of the following is the correct formula for the materials price variance?

Accepted Answer

A) (Actual price of input - Budgeted price of input)x Budgeted quantity of input 
B) (Actual quantity of input used - Budgeted quantity of input allowed for actual output)x Budgeted price of input 
C) (Actual price of input - Budgeted price of input)x Actual quantity of input 
D) (Actual quantity of input used - Budgeted quantity of input allowed for actual output)x Actual price of input 
A) (Actual price of input - Budgeted price of input)x Budgeted quantity of input 
B) (Actual quantity of input used - Budgeted quantity of input allowed for actual output)x Budgeted price of input 
C) (Actual price of input - Budgeted price of input)x Actual quantity of input 
D) (Actual quantity of input used - Budgeted quantity of input allowed for actual output)x Actual price of input

Question 3

An unfavorable sales-volume variance could result from ________.

Accepted Answer

A) an inappropriate assignment of labor or machines to specific jobs 
B) competitors taking market share 
C) an inefficiency of a purchasing manager in bargaining with suppliers 
D) a decrease in actual selling price compared to anticipated selling price 
A) an inappropriate assignment of labor or machines to specific jobs 
B) competitors taking market share 
C) an inefficiency of a purchasing manager in bargaining with suppliers 
D) a decrease in actual selling price compared to anticipated selling price

Question 4

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 5

Handley Manufacturing Company has prepared the following flexible budget for August and is in the process of interpreting the variances.F denotes a favorable variance and U denotes an unfavorable variance.
 
The most likely explanation of the above variances for Material A is that ________.

Accepted Answer

A) a lower price than expected was paid for Material A 
B) higher-quality raw materials were used than were planned 
C) the company used a higher-priced supplier 
D) Material A used during September was $2,000 less than expected 
A) a lower price than expected was paid for Material A 
B) higher-quality raw materials were used than were planned 
C) the company used a higher-priced supplier 
D) Material A used during September was $2,000 less than expected

Question 6

Continuous improvement through the use of standard costs is the process of repeatedly identifying the causes of variances,taking corrective actions,and evaluating results.

Accepted Answer

A) True 
 B)False

Question 7

Mid City Products Inc.(MCP),developed standard costs for direct material and direct labor.In 2017,MCP estimated the following standard costs for one of their most popular products.
 
During September,MCP produced and sold 2,000 units using 14,400 pounds of direct materials at an average cost per pound of $7.00 and 950 direct labor hours at an average wage of $10.40 per hour.
The direct labor flexible-budget variance during September is ________.

Accepted Answer

A) $120.00 favorable 
B) $120.00 unfavorable 
C) $520.00 favorable 
D) $520.00 unfavorable 
A) $120.00 favorable 
B) $120.00 unfavorable 
C) $520.00 favorable 
D) $520.00 unfavorable

Question 8

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 9

Coffey Company maintains a very large direct materials inventory because of critical demands placed upon it for rush orders from large hospitals.Item A contains hard-to-get material Y.Currently,the standard cost of material Y is $4.25 per gram.During February,22,000 grams were purchased for $4.40 per gram,while only 20,000 grams were used in production.There was no beginning inventory of material Y.
Required:
a.Determine the direct materials price variance,assuming that all materials costs are the responsibility of the materials purchasing manager.
b.Determine the direct materials price variance,assuming that all materials costs are the responsibility of the production manager.
c.Discuss the issues involved in determining the price variance at the point of purchase versus the point of consumption.

Accepted Answer

@#IMG-DLM&_TB5540_00_TB5540_00 @#IMG-DLM&_TB5540_00_TB5540_0

Question 10

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

Accepted Answer

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

Question 11

Effectiveness is the degree to which a predetermined objective or target is met.

Accepted Answer

A) True 
 B)False

Question 12

Genent Industries,Inc.(GII),developed standard costs for direct material and direct labor.In 2017,GII estimated the following standard costs for one of their major products,the 30-gallon heavy-duty plastic container.
 
During July,GII produced and sold 4,000 containers using 1,700 pounds of direct materials at an average cost per pound of $15 and 3,225 direct manufacturing labor hours at an average wage of $15.25 per hour.
The direct material price variance during July is ________.

Accepted Answer

A) $20,000 unfavorable 
B) $8,500 favorable 
C) $8,500 unfavorable 
D) $2,000 unfavorable 
A) $20,000 unfavorable 
B) $8,500 favorable 
C) $8,500 unfavorable 
D) $2,000 unfavorable

Question 13

Static-budget variance for operating income is calculated by taking a difference between static-budget operating income and actual operating income.

Accepted Answer

A) True 
 B)False

Question 14

The flexible budget contains ________.

Accepted Answer

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

Question 15

A favorable expense variance results when actual costs exceed budgeted costs.

Accepted Answer

A) True 
 B)False

Question 16

Schooner Corporation used the following data to evaluate its current operating system.The company sells items for $25 each and used a budgeted selling price of $25 per unit.
 
What is the static-budget variance of variable costs?

Accepted Answer

A) $36,000 favorable 
B) $36,000 unfavorable 
C) $204,000 favorable 
D) $204,000 unfavorable 
A) $36,000 favorable 
B) $36,000 unfavorable 
C) $204,000 favorable 
D) $204,000 unfavorable

Question 17

Efficiency is the relative amount of inputs used to achieve a given output level.

Accepted Answer

A) True 
 B)False

Question 18

Daniels Corporation used the following data to evaluate their current operating system.The company sells items for $19 each and had used a budgeted selling price of $20 per unit.
 
What is the static-budget variance of variable costs?

Accepted Answer

A) $116,000 favorable 
B) $116,000 unfavorable 
C) $103,000 favorable 
D) $103,000 unfavorable 
A) $116,000 favorable 
B) $116,000 unfavorable 
C) $103,000 favorable 
D) $103,000 unfavorable

Question 19

Classic Products Company manufactures colonial style desks.Some of the company's data was misplaced.Use the following information to replace the lost data:
 
What are the actual variable costs (C)?

Accepted Answer

A) $71,220 
B) $72,920 
C) $72,070 
D) $82,470 
A) $71,220 
B) $72,920 
C) $72,070 
D) $82,470

Question 20

To prepare budgets based on actual data from past periods is preferred since past inefficiencies are EXCLUDED.

Accepted Answer

A) True 
 B)False

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

Which of the following is the correct formula for the materials price variance?

An unfavorable sales-volume variance could result from ________.

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

Handley Manufacturing Company has prepared the following flexible budget for August and is in the process of interpreting the variances.F denotes a favorable variance and U denotes an unfavorable variance. The most likely explanation of the above variances for Material A is that ________.

Continuous improvement through the use of standard costs is the process of repeatedly identifying the causes of variances,taking corrective actions,and evaluating results.

Which of the following is true of flexible budget?

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

Effectiveness is the degree to which a predetermined objective or target is met.

Static-budget variance for operating income is calculated by taking a difference between static-budget operating income and actual operating income.

The flexible budget contains ________.

A favorable expense variance results when actual costs exceed budgeted costs.

Schooner Corporation used the following data to evaluate its current operating system.The company sells items for $25 each and used a budgeted selling price of $25 per unit. What is the static-budget variance of variable costs?

Efficiency is the relative amount of inputs used to achieve a given output level.

Daniels Corporation used the following data to evaluate their current operating system.The company sells items for $19 each and had used a budgeted selling price of $20 per unit. What is the static-budget variance of variable costs?

Classic Products Company manufactures colonial style desks.Some of the company's data was misplaced.Use the following information to replace the lost data: What are the actual variable costs (C)?

To prepare budgets based on actual data from past periods is preferred since past inefficiencies are EXCLUDED.

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

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

Which of the following is the correct formula for the materials price variance?

An unfavorable sales-volume variance could result from ________.

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

Handley Manufacturing Company has prepared the following flexible budget for August and is in the process of interpreting the variances.F denotes a favorable variance and U denotes an unfavorable variance. The most likely explanation of the above variances for Material A is that ________.

Continuous improvement through the use of standard costs is the process of repeatedly identifying the causes of variances,taking corrective actions,and evaluating results.

Which of the following is true of flexible budget?

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

Effectiveness is the degree to which a predetermined objective or target is met.

Static-budget variance for operating income is calculated by taking a difference between static-budget operating income and actual operating income.

The flexible budget contains ________.

A favorable expense variance results when actual costs exceed budgeted costs.

Schooner Corporation used the following data to evaluate its current operating system.The company sells items for $25 each and used a budgeted selling price of $25 per unit. What is the static-budget variance of variable costs?

Efficiency is the relative amount of inputs used to achieve a given output level.

Daniels Corporation used the following data to evaluate their current operating system.The company sells items for $19 each and had used a budgeted selling price of $20 per unit. What is the static-budget variance of variable costs?

Classic Products Company manufactures colonial style desks.Some of the company's data was misplaced.Use the following information to replace the lost data: What are the actual variable costs (C)?

To prepare budgets based on actual data from past periods is preferred since past inefficiencies are EXCLUDED.

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