Question 1

Flexible budgets are used as a tool for

Accepted Answer

A) control, planning, and materiality. 
B) evaluation, materiality, and flexibility. 
C) planning flexibility, and evaluation. 
D) control, planning, and evaluation. 
A) control, planning, and materiality. 
B) evaluation, materiality, and flexibility. 
C) planning flexibility, and evaluation. 
D) control, planning, and evaluation.

Question 2

Kevin Jarvis is the controller of Bitterroot Industries.He prepared the following budgeted income statement at various levels of sales.After careful review, and after discussions with the sales and production managers, the CEO determines that the best alternative is to base the budget on a sales volume of 30,000 units.   Actual results for the year were 28,000 units, reflected in the following income statement:   What is the flexible budget variance for direct material?

Accepted Answer

A) $28,000 favorable 
B) $28,000 unfavorable 
C) $6,000 favorable 
D) $34,000 unfavorable 
A) $28,000 favorable 
B) $28,000 unfavorable 
C) $6,000 favorable 
D) $34,000 unfavorable

Question 3

The direct materials quantity variance is part of the direct materials flexible budget variance that is caused by

Accepted Answer

A) using more or less material than the standard quantity allowed for actual production. 
B) using more or less material than the standard quantity allowed for budgeted production. 
C) purchasing more inventory than used. 
D) paying more or less than the standard cost per unit for direct materials. 
A) using more or less material than the standard quantity allowed for actual production. 
B) using more or less material than the standard quantity allowed for budgeted production. 
C) purchasing more inventory than used. 
D) paying more or less than the standard cost per unit for direct materials.

Question 4

R&N Manufacturing produces music boxes.This year's budget was based on the production of 3,000 music boxes using a standard of 3 direct labor hours per music box and $4 variable overhead per direct labor hour.R&N incurred 9,200 hours to produce 2,950 music boxes.If actual variable overhead for the year is $32,000, what is R&N's variable overhead spending variance?

Accepted Answer

A) $4,000 favorable 
B) $4,000 unfavorable 
C) $4,800 favorable 
D) $4,800 unfavorable 
A) $4,000 favorable 
B) $4,000 unfavorable 
C) $4,800 favorable 
D) $4,800 unfavorable

Question 5

The direct materials quantity variance is caused by using more or less material than the standard quantity allowed for actual production.

Accepted Answer

A) True 
 B)False

Question 6

Kevin Jarvis is the controller of Bitterroot Industries.Kevin prepared the following budgeted income statement at various levels of sales.After careful review of the budgeted income statements, and after discussions with the sales and production managers, the CEO determines that the best alternative is to base the budget on a sales volume of 30,000 units.   Actual results for the year were 28,000 units, reflected in the following income statement:   What is the flexible budget variance for direct labor?

Accepted Answer

A) $14,000 favorable 
B) $14,000 unfavorable 
C) $16,000 favorable 
D) $30,000 unfavorable 
A) $14,000 favorable 
B) $14,000 unfavorable 
C) $16,000 favorable 
D) $30,000 unfavorable

Question 7

If the actual average wage rate is $4.50 per direct labor hour, but the standard wage rate is $4.70 per direct labor hour, the direct labor

Accepted Answer

A) efficiency variance will be favorable. 
B) efficiency variance will be unfavorable. 
C) rate variance will be favorable. 
D) rate variance will be unfavorable. 
A) efficiency variance will be favorable. 
B) efficiency variance will be unfavorable. 
C) rate variance will be favorable. 
D) rate variance will be unfavorable.

Question 8

The difference between static budget revenue and flexible budget revenue is referred to as the

Accepted Answer

A) flexible budget variance. 
B) static budget variance. 
C) sales price variance. 
D) sales volume variance. 
A) flexible budget variance. 
B) static budget variance. 
C) sales price variance. 
D) sales volume variance.

Question 9

When a variable overhead efficiency variance is identified, managers will want to talk with the production manager to evaluate the use of the activity base.

Accepted Answer

A) True 
 B)False

Question 10

Assume you have been assigned to a team responsible for using the flexible budget to assist in determining managers' bonuses.When you approach the production manager about some variances, he says, "I don't know why your team can't just use the budget we developed at the beginning of the year.It was based on last year's actual numbers which seems reasonable.I don't understand this 'flexible budget' stuff.When I compare my actual results with our beginning of the year budget, I have beat the budget, so that should be sufficient.That will save us all a lot of time and effort." Explain to the production manager why a flexible budget is better than a static budget and its use in evaluating performance.

Accepted Answer

A flexible budget is a budget that is pr

Question 11

Which of the following is typically held responsible for direct labor rate variances?

Accepted Answer

A) The human resources manager 
B) The controller 
C) The production manager 
D) The line supervisor in the factory 
A) The human resources manager 
B) The controller 
C) The production manager 
D) The line supervisor in the factory

Question 12

Variable overhead cost consists of indirect production costs that are expected to vary with production activity.How is the variable overhead spending variance calculated and list potential causes of the variance?

Accepted Answer

The variable overhead spending variance

Question 13

The flexible budget variance for materials has which of the following two components?

Accepted Answer

A) Direct materials price variance and direct materials quantity variance 
B) Direct materials price variance and indirect materials price variance 
C) Direct materials quantity variance and indirect materials quantity variance 
D) Direct materials rate variance and direct materials quality variance 
A) Direct materials price variance and direct materials quantity variance 
B) Direct materials price variance and indirect materials price variance 
C) Direct materials quantity variance and indirect materials quantity variance 
D) Direct materials rate variance and direct materials quality variance

Question 14

The flexible budget breaks down into the price and quantity variances for direct materials.
Required:
a.List two reasons why actual prices might differ from standard prices, resulting in a direct materials price variance.
b.List two reasons why actual materials usage might differ from standard material usage, resulting in a direct materials quantity variance.

Accepted Answer

a.The direct materials price variance ca

Question 15

Camping Supplies produces light-weight cots.The company plans to produce 10,000 cots this year.Fixed overhead costs for the factory are budgeted to be $50,000.The company actually spent $48,000 on fixed overhead and produced 8,000 cots.
Required:
Calculate the fixed overhead spending variance.

Accepted Answer

$50,000 ̶

Question 16

Because fixed overhead does not vary with changes in the level of activity, some managers do not see a need to investigate variances relating to fixed costs.However, that is not the case.
a.How is the fixed overhead spending variance calculated?
b.Discuss items that generally do not affect the fixed overhead variance and those that might affect the fixed overhead variances.

Accepted Answer

a.The fixed overhead spending variance i

Question 17

Actual direct labor costs may differ from the flexible budget amounts because

Accepted Answer

A) the company may set a standard wage rate, and the market forces may require a change in that rate. 
B) employees may be compensated based on the number of units produced. 
C) the labor contract may require a higher wage rate than what the company is paying. 
D) employees always operate at the desired efficiency level. 
A) the company may set a standard wage rate, and the market forces may require a change in that rate. 
B) employees may be compensated based on the number of units produced. 
C) the labor contract may require a higher wage rate than what the company is paying. 
D) employees always operate at the desired efficiency level.

Question 18

The direct materials price variance is calculated using which three amounts?

Accepted Answer

A) Actual quantity purchased, standard quantity purchased, actual price paid 
B) Actual quantity purchased, standard quantity purchased, standard price paid 
C) Standard quantity purchased, actual price paid, standard price paid 
D) Actual quantity purchased, actual price paid, standard price paid 
A) Actual quantity purchased, standard quantity purchased, actual price paid 
B) Actual quantity purchased, standard quantity purchased, standard price paid 
C) Standard quantity purchased, actual price paid, standard price paid 
D) Actual quantity purchased, actual price paid, standard price paid

Question 19

Which of the following is a method companies use to reduce their labor costs?

Accepted Answer

A) Paying overtime to get a job done in fewer days 
B) Offshoring 
C) Mandating across the board wage rate decreases 
D) Produce more units of product 
A) Paying overtime to get a job done in fewer days 
B) Offshoring 
C) Mandating across the board wage rate decreases 
D) Produce more units of product

Question 20

The following standards for variable manufacturing overhead have been established for Windsor, Inc.a manufacturer of reproduction vintage hats.   Required:
Calculate the variable overhead spending variance and the variable overhead efficiency variance for July and indicate whether the variances are favorable or unfavorable.

Accepted Answer

Variable overhead spending var

Flexible budgets are used as a tool for

The direct materials quantity variance is part of the direct materials flexible budget variance that is caused by

The direct materials quantity variance is caused by using more or less material than the standard quantity allowed for actual production.

If the actual average wage rate is $4.50 per direct labor hour, but the standard wage rate is $4.70 per direct labor hour, the direct labor

The difference between static budget revenue and flexible budget revenue is referred to as the

When a variable overhead efficiency variance is identified, managers will want to talk with the production manager to evaluate the use of the activity base.

Which of the following is typically held responsible for direct labor rate variances?

Variable overhead cost consists of indirect production costs that are expected to vary with production activity.How is the variable overhead spending variance calculated and list potential causes of the variance?

The flexible budget variance for materials has which of the following two components?

Camping Supplies produces light-weight cots.The company plans to produce 10,000 cots this year.Fixed overhead costs for the factory are budgeted to be $50,000.The company actually spent $48,000 on fixed overhead and produced 8,000 cots. Required: Calculate the fixed overhead spending variance.

Actual direct labor costs may differ from the flexible budget amounts because

The direct materials price variance is calculated using which three amounts?

Which of the following is a method companies use to reduce their labor costs?

Accounting As a Tool for Management

Cost Behavior and Cost Estimation

Costvolumeprofit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting in a Manufacturing Setting

Activity-Based Costing and Activity-Based Management

Using Accounting Information to Make Managerial Decisions

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralization and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

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Exam 6: Performance Evaluation: Variance Analysis

Flexible budgets are used as a tool for

The direct materials quantity variance is part of the direct materials flexible budget variance that is caused by

The direct materials quantity variance is caused by using more or less material than the standard quantity allowed for actual production.

If the actual average wage rate is $4.50 per direct labor hour, but the standard wage rate is $4.70 per direct labor hour, the direct labor

The difference between static budget revenue and flexible budget revenue is referred to as the

When a variable overhead efficiency variance is identified, managers will want to talk with the production manager to evaluate the use of the activity base.

Which of the following is typically held responsible for direct labor rate variances?

Variable overhead cost consists of indirect production costs that are expected to vary with production activity.How is the variable overhead spending variance calculated and list potential causes of the variance?

The flexible budget variance for materials has which of the following two components?

Camping Supplies produces light-weight cots.The company plans to produce 10,000 cots this year.Fixed overhead costs for the factory are budgeted to be $50,000.The company actually spent $48,000 on fixed overhead and produced 8,000 cots. Required: Calculate the fixed overhead spending variance.

Actual direct labor costs may differ from the flexible budget amounts because

The direct materials price variance is calculated using which three amounts?

Which of the following is a method companies use to reduce their labor costs?

Accounting As a Tool for Management

Cost Behavior and Cost Estimation

Costvolumeprofit Analysis and Pricing Decisions

Product Costs and Job Order Costing

Planning and Forecasting in a Manufacturing Setting

Activity-Based Costing and Activity-Based Management

Using Accounting Information to Make Managerial Decisions

Using Accounting Information to Make Managerial Decisions

Capital Budgeting

Decentralization and Performance Evaluation

Performance Evaluation Revisited: a Balanced Approach

Financial Statement Analysis

Filters