Question 1

Standard costs are the amount that managers expect to incur to produce a good or service under standard operating conditions.

Accepted Answer

A) True 
 B)False

Question 2

Standards may be derived using:

Accepted Answer

A)  historical data 
B)  the assistance of industrial engineers 
C)  benchmarking 
D)  all of the above 
A)  historical data 
B)  the assistance of industrial engineers 
C)  benchmarking 
D)  all of the above

Question 3

A tool that managers use to estimate the effects of deviations from budget assumptions is known as:

Accepted Answer

A)  sensitivity analysis 
B)  variance analysis 
C)  standard costing 
D)  benchmarking 
A)  sensitivity analysis 
B)  variance analysis 
C)  standard costing 
D)  benchmarking

Question 4

A flexible budget is a set of cost relationships that can be used to estimate costs and cash flows for any level of operations within the relevant range.

Accepted Answer

A) True 
 B)False

Question 5

Standard cost for actual output is also called the:

Accepted Answer

A)  flexible budget 
B)  static budget 
C)  master budget 
D)  quantity variance 
A)  flexible budget 
B)  static budget 
C)  master budget 
D)  quantity variance

Question 6

A price variance is the difference between standard and actual prices paid for resources purchased and used.

Accepted Answer

A) True 
 B)False

Question 7

The difference between the standard and actual prices paid for resources purchased is a:

Accepted Answer

A)  price variance 
B)  efficiency variance 
C)  volume variance 
D)  quantity variance 
A)  price variance 
B)  efficiency variance 
C)  volume variance 
D)  quantity variance

Question 8

If managers could accurately predict actual volume when preparing the master budget there would be no need for flexible budgets.

Accepted Answer

A) True 
 B)False

Question 9

The master budget is also called a:

Accepted Answer

A)  static budget 
B)  flexible budget 
C)  direct budget 
D)  cost budget 
A)  static budget 
B)  flexible budget 
C)  direct budget 
D)  cost budget

Question 10

Fickle Factory Ltd produces unique large ceramic frogs. The accountant has collected the following information regarding standard costs. $$\begin{array} { | l | l | } 
\hline \text { Praductim Input } & \text { Standard Cast } \
\hline \text { Direct Materials } & \begin{array} { l } 
\text { 2 kilos of raw material } \
\text { Each kilo } = \$ 5
\end{array} \
\hline \text { Direct Labour } & \begin{array} { l } 
\text { 1 hour } \
\text { Direct Labour is charged at } \$ 10 \text { per hour }
\end{array} \
\hline \text { Variable Overhead } & \text { \$2 per direct labour hour } \
\hline \text { Fixed Overhead } & \$ 4 \text { per frog } \
\hline
\end{array}$$ Total fixed overhead for the year is estimated to be $80,000. The selling price for each frog is $45. Actual sales and production was 22,000.
The flexible budget for fixed overhead for the year is:

Accepted Answer

A)  $88,000 
B)  $72,727 
C)  $80,000 $ $10,000 
A)  $88,000 
B)  $72,727 
C)  $80,000 $ $10,000

Question 11

Organisations should always use ideal standards to motivate employees.

Accepted Answer

A) True 
 B)False

Question 12

Flexible budgets in a standard costing environment are based on the standard cost for actual output.

Accepted Answer

A) True 
 B)False

Question 13

If the conclusion from a variance analysis is that the benchmark is inappropriate then the correct management action is to:

Accepted Answer

A)  Write off the variance against cost of goods sold 
B)  Do nothing 
C)  Revise benchmark 
D)  Replace the manager who set the benchmark 
A)  Write off the variance against cost of goods sold 
B)  Do nothing 
C)  Revise benchmark 
D)  Replace the manager who set the benchmark

Question 14

Thai Connection Ltd is a travel agency. They budget monthly costs of $50,000 plus $125 per customer served. They plan to serve 550 customers per month. During June they served 580 customers. Actual costs for June were $53,000 fixed costs and $65,000 variable costs. The flexible budget variance for fixed costs in June is:

Accepted Answer

A)  $3750 unfavourable 
B)  $12,000 favourable 
C)  $0 
D)  $3,000 unfavourable 
A)  $3750 unfavourable 
B)  $12,000 favourable 
C)  $0 
D)  $3,000 unfavourable

Question 15

If actual revenue is less than budgeted revenue then the variance will be:

Accepted Answer

A)  favourable 
B)  unfavourable 
C)  immaterial 
D)  a and c 
A)  favourable 
B)  unfavourable 
C)  immaterial 
D)  a and c

Question 16

The difference between the standard quantity of an input and the actual quantity of an input is a:

Accepted Answer

A)  price variance 
B)  efficiency variance 
C)  operating variance 
D)  none of the above 
A)  price variance 
B)  efficiency variance 
C)  operating variance 
D)  none of the above

Standard costs are the amount that managers expect to incur to produce a good or service under standard operating conditions.

Standards may be derived using:

A tool that managers use to estimate the effects of deviations from budget assumptions is known as:

A flexible budget is a set of cost relationships that can be used to estimate costs and cash flows for any level of operations within the relevant range.

Standard cost for actual output is also called the:

A price variance is the difference between standard and actual prices paid for resources purchased and used.

The difference between the standard and actual prices paid for resources purchased is a:

If managers could accurately predict actual volume when preparing the master budget there would be no need for flexible budgets.

The master budget is also called a:

Organisations should always use ideal standards to motivate employees.

Flexible budgets in a standard costing environment are based on the standard cost for actual output.

If the conclusion from a variance analysis is that the benchmark is inappropriate then the correct management action is to:

If actual revenue is less than budgeted revenue then the variance will be:

The difference between the standard quantity of an input and the actual quantity of an input is a:

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Costvolumeprofit Cvp Analysis

Planning Budgeting and Behaviour

Operational Budgets

Job and Process Costing Systems

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

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Exam 8: Flexible Budgets, Standard Costs and Variance Analysis

Standard costs are the amount that managers expect to incur to produce a good or service under standard operating conditions.

Standards may be derived using:

A tool that managers use to estimate the effects of deviations from budget assumptions is known as:

A flexible budget is a set of cost relationships that can be used to estimate costs and cash flows for any level of operations within the relevant range.

Standard cost for actual output is also called the:

A price variance is the difference between standard and actual prices paid for resources purchased and used.

The difference between the standard and actual prices paid for resources purchased is a:

If managers could accurately predict actual volume when preparing the master budget there would be no need for flexible budgets.

The master budget is also called a:

Organisations should always use ideal standards to motivate employees.

Flexible budgets in a standard costing environment are based on the standard cost for actual output.

If the conclusion from a variance analysis is that the benchmark is inappropriate then the correct management action is to:

If actual revenue is less than budgeted revenue then the variance will be:

The difference between the standard quantity of an input and the actual quantity of an input is a:

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Costvolumeprofit Cvp Analysis

Planning Budgeting and Behaviour

Operational Budgets

Job and Process Costing Systems

Variance Analysis: Revenue and Cost

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Strategy and Control

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Rewards, Incentives and Risk Management

Sustainability Management Accounting

Filters