Question 1

The terms "master budget" and "flexible budget" mean the same thing and can be used interchangeably.

Accepted Answer

A) True 
 B)False

Question 2

A debit balance in the labor-efficiency variance account indicates that

Accepted Answer

A) standard hours exceed actual hours. 
B) actual hours exceed standard hours. 
C) standard rate and standard hours exceed actual rate and actual hours. 
D) actual rate and actual hours exceed standard rate and standard hours. 
A) standard hours exceed actual hours. 
B) actual hours exceed standard hours. 
C) standard rate and standard hours exceed actual rate and actual hours. 
D) actual rate and actual hours exceed standard rate and standard hours.

Question 3

What was Goodman's actual direct-labor rate?

Accepted Answer

A) $3.60 
B) $3.80 
C) $4.00 
D) $5.80 
A) $3.60 
B) $3.80 
C) $4.00 
D) $5.80

Question 4

Which variance will be unfavorable due to employees working more hours than allowed for the actual number of units produced?

Accepted Answer

A) Price (rate) 
B) Efficiency 
C) Sales activity 
D) Production volume 
A) Price (rate) 
B) Efficiency 
C) Sales activity 
D) Production volume

Question 5

In the general model,an efficiency variance is calculated as

Accepted Answer

A) (SP$\times$ AQ)- (SP$\times$ SQ) 
B) (AP$\times$ SQ)- (SP$\times$ SQ) 
C) (AP$\times$ AQ)- (SP$\times$ SQ) 
D) (AP$\times$ AQ)- (SP$\times$ AQ) 
A) (SP$\times$ AQ)- (SP$\times$ SQ) 
B) (AP$\times$ SQ)- (SP$\times$ SQ) 
C) (AP$\times$ AQ)- (SP$\times$ SQ) 
D) (AP$\times$ AQ)- (SP$\times$ AQ)

Question 6

A variance can best be described as

Accepted Answer

A) benchmarks common to other firms in the same industry. 
B) differences between planned results and actual results. 
C) useful for performance evaluations but not making decisions. 
D) generally accepted accounting principles when standards are used. 
A) benchmarks common to other firms in the same industry. 
B) differences between planned results and actual results. 
C) useful for performance evaluations but not making decisions. 
D) generally accepted accounting principles when standards are used.

Question 7

The fixed factory overhead application rate is a function of a predetermined activity level.If standard hours allowed for good output equal this predetermined activity level for a given period,the volume variance will be (CPA adapted)

Accepted Answer

A) Zero. 
B) Favorable. 
C) Unfavorable. 
D) Either favorable or unfavorable,depending on the budgeted overhead. 
A) Zero. 
B) Favorable. 
C) Unfavorable. 
D) Either favorable or unfavorable,depending on the budgeted overhead.

Question 8

What is the actual sales revenue?

Accepted Answer

A) $156,000. 
B) $169,000. 
C) $180,000. 
D) $191,000. 
A) $156,000. 
B) $169,000. 
C) $180,000. 
D) $191,000.

Question 9

In setting standards,allowances usually include normal inefficiencies (e.g.,defects in the direct material,inexperienced workers,and coffee breaks).

Accepted Answer

A) True 
 B)False

Question 10

Is the direct labor efficiency variance favorable or unfavorable?

Accepted Answer

A) favorable 
B) unfavorable 
A) favorable 
B) unfavorable

Question 11

In general,and holding all other things constant,an unfavorable variance decreases operating profits.

Accepted Answer

A) True 
 B)False

Question 12

What is the fixed overhead spending (budget)variance?

Accepted Answer

A) $200 
B) $400 
C) $300 
D) $240 
A) $200 
B) $400 
C) $300 
D) $240

Question 13

In essence,the terms "master budget" and "operating budget" mean the same thing and can be used interchangeably.

Accepted Answer

A) True 
 B)False

Question 14

The production volume variance is the difference between fixed costs on the flexible budget and the fixed costs on the master budget.

Accepted Answer

A) True 
 B)False

Question 15

The difference between operating profits in the master budget and operating profits in the flexible budget is called

Accepted Answer

A) sales activity variance. 
B) flexible budget variance. 
C) production volume variance. 
D) total operating profit variance. 
A) sales activity variance. 
B) flexible budget variance. 
C) production volume variance. 
D) total operating profit variance.

Question 16

What is the direct materials efficiency (quantity)variance for November?

Accepted Answer

A) $14,250 
B) $14,400 
C) $16,000 
D) $17,100 
A) $14,250 
B) $14,400 
C) $16,000 
D) $17,100

Question 17

Is the direct labor price (rate)variance favorable or unfavorable?

Accepted Answer

A) favorable 
B) unfavorable 
A) favorable 
B) unfavorable

Question 18

If the total materials variance for a given operation is favorable,why must this variance be further evaluated as to price and usage?

Accepted Answer

A) There is no need to further evaluate the total materials variance if it is favorable. 
B) Generally accepted accounting principles require that all variances be analyzed in three stages. 
C) All variances must appear in the annual report to equity owners for proper disclosure. 
D) A further evaluation lets management evaluate the activities of the purchasing and production functions. 
A) There is no need to further evaluate the total materials variance if it is favorable. 
B) Generally accepted accounting principles require that all variances be analyzed in three stages. 
C) All variances must appear in the annual report to equity owners for proper disclosure. 
D) A further evaluation lets management evaluate the activities of the purchasing and production functions.

Question 19

What is the direct materials price variance for November?

Accepted Answer

A) $14,250 
B) $14,400 
C) $16,000 
D) $17,100 
A) $14,250 
B) $14,400 
C) $16,000 
D) $17,100

Question 20

The Redrock Company uses flexible budgeting for cost control.Redrock produced 10,800 units of product during October,incurring indirect material costs of $13,000.Its master budget for the reflected indirect material costs of $180,000 at a production volume of 144,000 units.What was the flexible budget variance for the indirect material costs in October?

Accepted Answer

A) $1,100 favorable 
B) $1,100 unfavorable 
C) $2,000 favorable 
D) $2,000 unfavorable 
E) $500 favorable 
A) $1,100 favorable 
B) $1,100 unfavorable 
C) $2,000 favorable 
D) $2,000 unfavorable 
E) $500 favorable

The terms "master budget" and "flexible budget" mean the same thing and can be used interchangeably.

A debit balance in the labor-efficiency variance account indicates that

What was Goodman's actual direct-labor rate?

Which variance will be unfavorable due to employees working more hours than allowed for the actual number of units produced?

In the general model,an efficiency variance is calculated as

A variance can best be described as

The fixed factory overhead application rate is a function of a predetermined activity level.If standard hours allowed for good output equal this predetermined activity level for a given period,the volume variance will be (CPA adapted)

What is the actual sales revenue?

In setting standards,allowances usually include normal inefficiencies (e.g.,defects in the direct material,inexperienced workers,and coffee breaks).

Is the direct labor efficiency variance favorable or unfavorable?

In general,and holding all other things constant,an unfavorable variance decreases operating profits.

What is the fixed overhead spending (budget)variance?

In essence,the terms "master budget" and "operating budget" mean the same thing and can be used interchangeably.

The production volume variance is the difference between fixed costs on the flexible budget and the fixed costs on the master budget.

The difference between operating profits in the master budget and operating profits in the flexible budget is called

What is the direct materials efficiency (quantity)variance for November?

Is the direct labor price (rate)variance favorable or unfavorable?

If the total materials variance for a given operation is favorable,why must this variance be further evaluated as to price and usage?

What is the direct materials price variance for November?

Cost Accounting: Information for Decision Making

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Fundamentals of Product and Service Costing

Job Costing

Process Costing

Activity-Based Costing

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Additional Topics in Variance Analysis

Nonfinancial and Multiple Measures of Performance

Filters

Exam 16: Fundamentals of Variance Analysis

The terms "master budget" and "flexible budget" mean the same thing and can be used interchangeably.

A debit balance in the labor-efficiency variance account indicates that

What was Goodman's actual direct-labor rate?

Which variance will be unfavorable due to employees working more hours than allowed for the actual number of units produced?

In the general model,an efficiency variance is calculated as

A variance can best be described as

The fixed factory overhead application rate is a function of a predetermined activity level.If standard hours allowed for good output equal this predetermined activity level for a given period,the volume variance will be (CPA adapted)

What is the actual sales revenue?

In setting standards,allowances usually include normal inefficiencies (e.g.,defects in the direct material,inexperienced workers,and coffee breaks).

Is the direct labor efficiency variance favorable or unfavorable?

In general,and holding all other things constant,an unfavorable variance decreases operating profits.

What is the fixed overhead spending (budget)variance?

In essence,the terms "master budget" and "operating budget" mean the same thing and can be used interchangeably.

The production volume variance is the difference between fixed costs on the flexible budget and the fixed costs on the master budget.

The difference between operating profits in the master budget and operating profits in the flexible budget is called

What is the direct materials efficiency (quantity)variance for November?

Is the direct labor price (rate)variance favorable or unfavorable?

If the total materials variance for a given operation is favorable,why must this variance be further evaluated as to price and usage?

What is the direct materials price variance for November?

Cost Accounting: Information for Decision Making

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Fundamentals of Product and Service Costing

Job Costing

Process Costing

Activity-Based Costing

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Business Unit Performance Measurement

Transfer Pricing

Additional Topics in Variance Analysis

Nonfinancial and Multiple Measures of Performance

Filters