Question 1

The primary limitations of variance analysis pertain to

Accepted Answer

A) Controllability and budgeting. 
B) Timeliness and specificity. 
C) Timeliness and controllability. 
D) Controllability and specificity. 
E) Budgeting and controllability. 
A) Controllability and budgeting. 
B) Timeliness and specificity. 
C) Timeliness and controllability. 
D) Controllability and specificity. 
E) Budgeting and controllability. B

Question 2

The two major components of the total profit variance are:

Accepted Answer

A) Sales volume variance and flexible budget variance. 
B) Price variance and quantity variance. 
C) Sales volume variance and sales mix variance. 
D) Flexible budget variance and quantity variance. 
E) None of the above. 
A) Sales volume variance and flexible budget variance. 
B) Price variance and quantity variance. 
C) Sales volume variance and sales mix variance. 
D) Flexible budget variance and quantity variance. 
E) None of the above. A

Question 3

Which of the following would not result in a variance from budget:

Accepted Answer

A) A machine breaks down. 
B) Budgets are set in a manner making them difficult to achieve. 
C) A supplier raises prices. 
D) The Chief Executive Officer takes a week of vacation. 
A) A machine breaks down. 
B) Budgets are set in a manner making them difficult to achieve. 
C) A supplier raises prices. 
D) The Chief Executive Officer takes a week of vacation. D

Question 4

The following material budgets have been developed for the Criders Company. $\begin{array}{ll}
\text { Price per pound } & \$ 6.50 \
\text { Pounds per unit } & 1 \
\text { Purchase price variance } & \$ 3,200 \text { unfavorable }
\end{array}$ If the company purchased 16,000 units, the actual price per pound of material purchased must have been:

Accepted Answer

A) $6.70 
B) $5.00 
C) $6.30 
D) $5.80 
A) $6.70 
B) $5.00 
C) $6.30 
D) $5.80

Question 5

A favorable materials price variance will occur when:

Accepted Answer

A) Actual costs of materials were less than budgeted 
B) More material was used than was budgeted 
C) Actual cost of materials were greater than budgeted 
D) Less material was used than was budgeted 
A) Actual costs of materials were less than budgeted 
B) More material was used than was budgeted 
C) Actual cost of materials were greater than budgeted 
D) Less material was used than was budgeted

Question 6

The starting point for preparing a monthly budget is:

Accepted Answer

A) Projecting sales. 
B) Projecting production. 
C) Projecting cash inflows. 
D) Projecting cash outflows. 
E) Projecting material needs. 
A) Projecting sales. 
B) Projecting production. 
C) Projecting cash inflows. 
D) Projecting cash outflows. 
E) Projecting material needs.

Question 7

Which of the following would lead to a variance resulting from a permanent change in a firm's operating environment?

Accepted Answer

A) An abnormally high incidence of employees calling in sick during a period. 
B) A new competitor entering the market. 
C) Upper-level management failing to consult lower level workers and instituting extremely tight budgetary controls. 
D) A critical machine unexpectedly breaking down for a number of days. 
A) An abnormally high incidence of employees calling in sick during a period. 
B) A new competitor entering the market. 
C) Upper-level management failing to consult lower level workers and instituting extremely tight budgetary controls. 
D) A critical machine unexpectedly breaking down for a number of days.

Question 8

Which of the following is not a component of the total profit variance?

Accepted Answer

A) Sales volume variance. 
B) Flexible budget variance. 
C) Sales price variance. 
D) Market size and share variance. 
E) All of the above are components of the total profit variance. 
A) Sales volume variance. 
B) Flexible budget variance. 
C) Sales price variance. 
D) Market size and share variance. 
E) All of the above are components of the total profit variance.

Question 9

The formula for calculating an input price variance is:

Accepted Answer

A) (Actual volume less budgeted volume) x actual price. 
B) (Budgeted volume less actual volume) x budgeted price. 
C) (Budgeted price less actual price) x actual volume. 
D) (Actual price less budgeted price) x budgeted volume, 
A) (Actual volume less budgeted volume) x actual price. 
B) (Budgeted volume less actual volume) x budgeted price. 
C) (Budgeted price less actual price) x actual volume. 
D) (Actual price less budgeted price) x budgeted volume,

Question 10

The primary limitations of variance analysis pertain to relevance and feedback.

Accepted Answer

A) True 
 B)False

Question 11

Small variances probably indicate random factors at work while large variances could signal a permanent change in the operating environment.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is a method firms used to help track employee performance on a real-time basis?

Accepted Answer

A) Budget reconciliation report. 
B) Process control charts. 
C) Labor efficiency variance. 
D) Spending variance. 
E) None of the above. 
A) Budget reconciliation report. 
B) Process control charts. 
C) Labor efficiency variance. 
D) Spending variance. 
E) None of the above.

Question 13

A company may experience a favorable labor rate variance but an unfavorable labor efficiency variance when:

Accepted Answer

A) Sales lagged behind the budgeted amounts of the sales department. 
B) There were breakdowns in machinery. 
C) The product mix changed during the period. 
D) The company experienced a high amount of turnover in its workforce. 
A) Sales lagged behind the budgeted amounts of the sales department. 
B) There were breakdowns in machinery. 
C) The product mix changed during the period. 
D) The company experienced a high amount of turnover in its workforce.

Question 14

The input quantity variance is also referred to as the input efficiency variance because it captures the efficiency of input resource use.

Accepted Answer

A) True 
 B)False

Question 15

A good plan is the foundation for effective control.

Accepted Answer

A) True 
 B)False

Question 16

The Parsons Company has budgeted to capture 25% of the market in which they operate which currently contains 1,000 stores.The budgeted contribution margin per unit sold is $4.50.If they were actually able to capture only 20% of the market, but their actual contribution margin was $5.00 per unit, their market share variance was:

Accepted Answer

A) $250 favorable 
B) $225 unfavorable 
C) $250 unfavorable 
D) $225 favorable 
A) $250 favorable 
B) $225 unfavorable 
C) $250 unfavorable 
D) $225 favorable

Question 17

For what purpose is a flexible budget used?

Accepted Answer

A) To provide various possible outcomes for management to consider. 
B) To adjust input prices so that future variances are eliminated. 
C) To insure that profit does not drop below a predetermined level. 
D) To identify the sources of variances. 
A) To provide various possible outcomes for management to consider. 
B) To adjust input prices so that future variances are eliminated. 
C) To insure that profit does not drop below a predetermined level. 
D) To identify the sources of variances.

Question 18

Cico Buckets had budgeted unit sales of 41,600 buckets.Actual sales during May totaled 42,000 buckets at $4.25 per bucket.Its budgeted sales price was $4.00 per bucket.The master budget contribution margin totaled $62,400 and the budgeted variable cost per unit was $2.50.How much is Haslo's sales volume variance?

Accepted Answer

A) $600 F 
B) $100 F 
C) $1,600 F 
D) $1,700 F 
A) $600 F 
B) $100 F 
C) $1,600 F 
D) $1,700 F

Question 19

Jackie's Jewelry Company reported the following budgeted and actual results based on sales of 100 units of product: $\begin{array}{llll}&\text { Flexible Budget }&\text { "As if" Budget }&\text { Actual Results }\
\text { Direct Labor } & \$ 800 & \$ 700 & \$ 850 \
\text { Direct Materials } & \$ 400 & \$ 450 & \$ 450 \
\text { Overhead } & \$ 600 & \$ 600 & \$ 610
\end{array}$ The company's total input quantity variance is:

Accepted Answer

A) $50 favorable. 
B) $160 unfavorable. 
C) $150 favorable. 
D) $50 unfavorable. 
A) $50 favorable. 
B) $160 unfavorable. 
C) $150 favorable. 
D) $50 unfavorable.

Question 20

If sales volume exceeds expectations, actual profit will always be higher than budgeted profit.

Accepted Answer

A) True 
 B)False

The primary limitations of variance analysis pertain to

The two major components of the total profit variance are:

Which of the following would not result in a variance from budget:

The following material budgets have been developed for the Criders Company. Price per pound \ 6.50 Pounds per unit 1 Purchase price variance \ 3,200 unfavorable If the company purchased 16,000 units, the actual price per pound of material purchased must have been:

A favorable materials price variance will occur when:

The starting point for preparing a monthly budget is:

Which of the following would lead to a variance resulting from a permanent change in a firm's operating environment?

Which of the following is not a component of the total profit variance?

The formula for calculating an input price variance is:

The primary limitations of variance analysis pertain to relevance and feedback.

Small variances probably indicate random factors at work while large variances could signal a permanent change in the operating environment.

Which of the following is a method firms used to help track employee performance on a real-time basis?

A company may experience a favorable labor rate variance but an unfavorable labor efficiency variance when:

The input quantity variance is also referred to as the input efficiency variance because it captures the efficiency of input resource use.

A good plan is the foundation for effective control.

For what purpose is a flexible budget used?

If sales volume exceeds expectations, actual profit will always be higher than budgeted profit.

Accounting: Information for Decision Making

Identifying and Estimating Costs and Benefits

Cost Flows and Cost Terminology

Techniques for Estimating Fixed and Variable Costs

Cost-Volume-Profit Analysis

Decision Making in the Short Term

Operating Budgets: Bridging Planning and Control

Cost Allocations

Activity-Based Costing Management

Capital Budgeting

Performance Evaluation in Decentralized Organizations

Strategic Planning and Control

Job-Costing Systems

Process-Costing Systems

Refining Systems: Support Activity

Filters

Exam 8: Budgetary Control and Variance Analysis

The primary limitations of variance analysis pertain to

The two major components of the total profit variance are:

Which of the following would not result in a variance from budget:

The following material budgets have been developed for the Criders Company. Price per pound \ 6.50 Pounds per unit 1 Purchase price variance \ 3,200 unfavorable If the company purchased 16,000 units, the actual price per pound of material purchased must have been:

A favorable materials price variance will occur when:

The starting point for preparing a monthly budget is:

Which of the following would lead to a variance resulting from a permanent change in a firm's operating environment?

Which of the following is not a component of the total profit variance?

The formula for calculating an input price variance is:

The primary limitations of variance analysis pertain to relevance and feedback.

Small variances probably indicate random factors at work while large variances could signal a permanent change in the operating environment.

Which of the following is a method firms used to help track employee performance on a real-time basis?

A company may experience a favorable labor rate variance but an unfavorable labor efficiency variance when:

The input quantity variance is also referred to as the input efficiency variance because it captures the efficiency of input resource use.

A good plan is the foundation for effective control.

For what purpose is a flexible budget used?

If sales volume exceeds expectations, actual profit will always be higher than budgeted profit.

Accounting: Information for Decision Making

Identifying and Estimating Costs and Benefits

Cost Flows and Cost Terminology

Techniques for Estimating Fixed and Variable Costs

Cost-Volume-Profit Analysis

Decision Making in the Short Term

Operating Budgets: Bridging Planning and Control

Cost Allocations

Activity-Based Costing Management

Capital Budgeting

Performance Evaluation in Decentralized Organizations

Strategic Planning and Control

Job-Costing Systems

Process-Costing Systems

Refining Systems: Support Activity

Filters