Question 1

A favorable efficiency variance for direct manufacturing labor indicates that ________.

Accepted Answer

A)  a lower wage rate than planned was paid for direct labor 
B)  a higher wage rate than planned was paid for direct labor 
C)  less direct manufacturing labor-hours were used during production than planned for actual output 
D)  more direct manufacturing labor-hours were used during production than planned for actual output 
A)  a lower wage rate than planned was paid for direct labor 
B)  a higher wage rate than planned was paid for direct labor 
C)  less direct manufacturing labor-hours were used during production than planned for actual output 
D)  more direct manufacturing labor-hours were used during production than planned for actual output

Question 2

It is best to rely totally on financial performance measures rather than using a combination of financial and nonfinancial performance measures.

Accepted Answer

A) True 
 B)False

Question 3

A favorable variance should be ignored by management.

Accepted Answer

A) True 
 B)False

Question 4

An efficiency variance reflects the difference between ________.

Accepted Answer

A)  actual input quantities used last period and current period 
B)  an actual input quantity and a budgeted input quantity 
C)  an actual input quantity used in a company and its main competitors 
D)  a standard input quantity in a company and its main competitors 
A)  actual input quantities used last period and current period 
B)  an actual input quantity and a budgeted input quantity 
C)  an actual input quantity used in a company and its main competitors 
D)  a standard input quantity in a company and its main competitors

Question 5

Schooner Corporation used the following data to evaluate its current operating system. The company sells items for $24 each and used a budgeted selling price of $24 per unit.
 
What is the static-budget variance of operating income?

Accepted Answer

A)  $8,000 favorable 
B)  $176,000 unfavorable 
C)  $32,000 favorable 
D)  $7,000 unfavorable 
A)  $8,000 favorable 
B)  $176,000 unfavorable 
C)  $32,000 favorable 
D)  $7,000 unfavorable

Question 6

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 actual amount spent for Material B was ________.

Accepted Answer

A)  $58,200 
B)  $59,800 
C)  $61,000 
D)  $62,200 
A)  $58,200 
B)  $59,800 
C)  $61,000 
D)  $62,200

Question 7

The flexible-budget variance is the total of price variance and efficiency variance.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Describe the purpose of variance analysis.

Accepted Answer

Variance analysis should help

Question 10

J.C Coats Inc. carefully develops standards for its coat making operation. Its specifications call for 2 square yards of wool per coat. The budgeted price of wool is $44 per square yard. The actual price for the wool was $36 and the usage was only 1.70 yards of wool per coat. What would be the standard cost per output for the wool?

Accepted Answer

A)  $61.20 per coat 
B)  $72.00 per coat 
C)  $88.00 per coat 
D)  $74.80 per coat 
A)  $61.20 per coat 
B)  $72.00 per coat 
C)  $88.00 per coat 
D)  $74.80 per coat

Question 11

The actual information pertains to the third quarter. As part of the budgeting process, the Duck Decoy Department of Paralith Incorporated had developed the following static budget for the third quarter. Duck Decoy is in the process of preparing the flexible budget and understanding the results.
 
The flexible-budget variance for variable costs is ________. (Round the final answer to the nearest dollar.)

Accepted Answer

A)  $17,000 favorable 
B)  $33,400 unfavorable 
C)  $17,000 unfavorable 
D)  $63,000 favorable 
A)  $17,000 favorable 
B)  $33,400 unfavorable 
C)  $17,000 unfavorable 
D)  $63,000 favorable

Question 12

Midend's Camera Shop has prepared the following flexible budget for September and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance.
 
The actual amount spent for Material A was ________.

Accepted Answer

A)  $30,200 
B)  $26,200 
C)  $27,800 
D)  $23,800 
A)  $30,200 
B)  $26,200 
C)  $27,800 
D)  $23,800

Question 13

For critical items such as product defects, a small variance may prompt investigation.

Accepted Answer

A) True 
 B)False

Question 14

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 15

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

Accepted Answer

A) True 
 B)False

Question 16

The emphasis on variance analysis and its use in performance evaluation must be such that:

Accepted Answer

A)  managers focus on setting easy to attain targets 
B)  larger unfavorable variances should result in negative consequences for personnel held accountable 
C)  management should set targets that challenge but are reasonably achievable and require creativity and resourcefulness by personnel held accountable 
D)  Management should stretch resources to meet goals even if continuous improvement and quality suffers 
A)  managers focus on setting easy to attain targets 
B)  larger unfavorable variances should result in negative consequences for personnel held accountable 
C)  management should set targets that challenge but are reasonably achievable and require creativity and resourcefulness by personnel held accountable 
D)  Management should stretch resources to meet goals even if continuous improvement and quality suffers

Question 17

With disregard to other factors, direct manufacturing labor efficiency variance is likely to be unfavorable if underskilled workers are put on a job.

Accepted Answer

A) True 
 B)False

Question 18

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 1,000 units using 2,200 pounds of direct materials at an average cost per pound of $2.00 and 360 direct labor hours at an average wage of $15.15 per hour.
The direct material efficiency variance during September is ________.

Accepted Answer

A)  $660 favorable 
B)  $660 unfavorable 
C)  $460 favorable 
D)  $460 unfavorable 
A)  $660 favorable 
B)  $660 unfavorable 
C)  $460 favorable 
D)  $460 unfavorable

Question 19

A favorable variance can be automatically interpreted as "good news."

Accepted Answer

A) True 
 B)False

Question 20

The degree to which a predetermined objective or target is met is known as ________.

Accepted Answer

A)  efficiency 
B)  variance 
C)  effectiveness 
D)  marking 
A)  efficiency 
B)  variance 
C)  effectiveness 
D)  marking

A favorable efficiency variance for direct manufacturing labor indicates that ________.

It is best to rely totally on financial performance measures rather than using a combination of financial and nonfinancial performance measures.

A favorable variance should be ignored by management.

An efficiency variance reflects the difference between ________.

Schooner Corporation used the following data to evaluate its current operating system. The company sells items for $24 each and used a budgeted selling price of $24 per unit. What is the static-budget variance of operating income?

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 actual amount spent for Material B was ________.

The flexible-budget variance is the total of price variance and efficiency variance.

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

Describe the purpose of variance analysis.

Midend's Camera Shop has prepared the following flexible budget for September and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance. The actual amount spent for Material A was ________.

For critical items such as product defects, a small variance may prompt investigation.

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)?

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

The emphasis on variance analysis and its use in performance evaluation must be such that:

With disregard to other factors, direct manufacturing labor efficiency variance is likely to be unfavorable if underskilled workers are put on a job.

A favorable variance can be automatically interpreted as "good news."

The degree to which a predetermined objective or target is met is known as ________.

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

A favorable efficiency variance for direct manufacturing labor indicates that ________.

It is best to rely totally on financial performance measures rather than using a combination of financial and nonfinancial performance measures.

A favorable variance should be ignored by management.

An efficiency variance reflects the difference between ________.

Schooner Corporation used the following data to evaluate its current operating system. The company sells items for $24 each and used a budgeted selling price of $24 per unit. What is the static-budget variance of operating income?

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 actual amount spent for Material B was ________.

The flexible-budget variance is the total of price variance and efficiency variance.

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

Describe the purpose of variance analysis.

Midend's Camera Shop has prepared the following flexible budget for September and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance. The actual amount spent for Material A was ________.

For critical items such as product defects, a small variance may prompt investigation.

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)?

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

The emphasis on variance analysis and its use in performance evaluation must be such that:

With disregard to other factors, direct manufacturing labor efficiency variance is likely to be unfavorable if underskilled workers are put on a job.

A favorable variance can be automatically interpreted as "good news."

The degree to which a predetermined objective or target is met is known as ________.

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