Question 1

From the perspective of control, the direct materials price variance should be isolated at the time of sales.

Accepted Answer

A) True 
 B)False

Question 2

The process by which a company's products or services are measured relative to the best possible levels of performance is known as ________.

Accepted Answer

A)  efficiency 
B)  benchmarking 
C)  a standard costing system 
D)  variance analysis 
A)  efficiency 
B)  benchmarking 
C)  a standard costing system 
D)  variance analysis

Question 3

A variance is ________.

Accepted Answer

A)  the difference between actual fixed cost per unit and standard variable cost per unit 
B)  the standard units of inputs for one output 
C)  the difference between an actual result and a budgeted performance 
D)  the difference between actual variable cost per unit and standard fixed cost per unit 
A)  the difference between actual fixed cost per unit and standard variable cost per unit 
B)  the standard units of inputs for one output 
C)  the difference between an actual result and a budgeted performance 
D)  the difference between actual variable cost per unit and standard fixed cost per unit

Question 4

For revenue items, a favorable variance means that actual revenues are less than expected.

Accepted Answer

A) True 
 B)False

Question 5

Nonfinancial performance measures ________.

Accepted Answer

A)  are usually used in combination with financial measures for control purposes 
B)  are rarely used to evaluate overall efficiency 
C)  allow managers to make informed tradeoffs 
D)  are often the sole basis of a manager's performance evaluations 
A)  are usually used in combination with financial measures for control purposes 
B)  are rarely used to evaluate overall efficiency 
C)  allow managers to make informed tradeoffs 
D)  are often the sole basis of a manager's performance evaluations

Question 6

A company budgets 10,000 units of sales based on a projected selling price of $13.00. The actual units sold were 15,000 at a price of $10. What is the flexible budget for sales?

Accepted Answer

A)  $195,000 
B)  $150,000 
C)  $130,000 
D)  $100,000 
A)  $195,000 
B)  $150,000 
C)  $130,000 
D)  $100,000

Question 7

Goodard Inc. planned to use $155 of material per unit but actually used $147 of material per unit, and planned to make 1,110 units but actually made 1,000 units.
The sales-volume variance for materials is ________.

Accepted Answer

A)  $8,000 favorable 
B)  $16,170 unfavorable 
C)  $17,050 unfavorable 
D)  $8,000 unfavorable 
A)  $8,000 favorable 
B)  $16,170 unfavorable 
C)  $17,050 unfavorable 
D)  $8,000 unfavorable

Question 8

A purchasing manager's performance is best evaluated using information such as

Accepted Answer

A)  usage efficiency and direct materials price variance 
B)  direct materials flexible-budget variance 
C)  direct manufacturing labor flexible-budget variance 
D)  price and terms bargaining effectiveness, achievement of quality goals, and direct materials price variance 
A)  usage efficiency and direct materials price variance 
B)  direct materials flexible-budget variance 
C)  direct manufacturing labor flexible-budget variance 
D)  price and terms bargaining effectiveness, achievement of quality goals, and direct materials price variance

Question 9

The actual information pertains to the month of June. As part of the budgeting process, Colonial Fencing Company developed the following static budget for September. Colonial is in the process of preparing the flexible budget and understanding the results.
 
The flexible budget for sales revenues will be?

Accepted Answer

A)  $615,000 
B)  $510,000 
C)  $635,500 
D)  $570,000 
A)  $615,000 
B)  $510,000 
C)  $635,500 
D)  $570,000

Question 10

Standard material cost per kg of raw material is $6.50. Standard material allowed per unit is 5 Kg. Actual material used per unit is 6.00 Kg. Actual cost per kg is $6.00. What is the standard cost per output unit?

Accepted Answer

A)  $30.00 
B)  $36.00 
C)  $32.50 
D)  $39.00 
A)  $30.00 
B)  $36.00 
C)  $32.50 
D)  $39.00

Question 11

Nicholas Company manufacturers TVs. Some of the company's data was misplaced. Use the following information to replace the lost data:
   
Required:
a.What are the respective flexible-budget revenues (A)?
b.What are the static-budget revenues (B)?
c.What are the actual variable costs (C)?
d.What is the total flexible-budget variance (D)?
e.What is the total sales-volume variance (E)?
f.What is the total static-budget variance?

Accepted Answer

a.$42,080 - $1,000 = $41,080
b

Question 12

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 2,000 units using 8,200 pounds of direct materials at an average cost per pound of $7.00 and 1,160 direct labor hours at an average wage of $17.50 per hour.
The direct labor efficiency variance during September is ________.

Accepted Answer

A)  $680 favorable 
B)  $700 unfavorable 
C)  $600 favorable 
D)  $100 unfavorable 
A)  $680 favorable 
B)  $700 unfavorable 
C)  $600 favorable 
D)  $100 unfavorable

Question 13

The flexible-budget variance for materials is $2,000 (U). The sales-volume variance is $18,000 (U). The price variance for material is $38,000 (F). The efficiency variance for direct manufacturing labor is $12,000 (F). Calculate the efficiency variance for materials.

Accepted Answer

A)  $40,000 favorable 
B)  $18,000 unfavorable 
C)  $6,000 favorable 
D)  $40,000 unfavorable 
A)  $40,000 favorable 
B)  $18,000 unfavorable 
C)  $6,000 favorable 
D)  $40,000 unfavorable

Question 14

Which of the following is true of flexible budget?

Accepted Answer

A)  It calculates total variable cost by multiplying actual units by budgeted variable cost per unit. 
B)  It calculates total fixed cost by multiplying actual units by budgeted fixed cost per unit. 
C)  It calculates revenues by multiplying budgeted units by actual selling price per unit. 
D)  It calculates contribution margin by multiplying budgeted units by actual contribution margin per unit. 
A)  It calculates total variable cost by multiplying actual units by budgeted variable cost per unit. 
B)  It calculates total fixed cost by multiplying actual units by budgeted fixed cost per unit. 
C)  It calculates revenues by multiplying budgeted units by actual selling price per unit. 
D)  It calculates contribution margin by multiplying budgeted units by actual contribution margin per unit.

Question 15

A flexible-budget variance can be subdivided into the static-budget variance and the sales-volume variance.

Accepted Answer

A) True 
 B)False

Question 16

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 most likely explanation of the above variances for Material A is that ________.

Accepted Answer

A)  a lower price than expected was paid for Material A 
B)  higher-quality raw materials were used than were planned 
C)  the company used a higher-priced supplier 
D)  Material A used during September was $2,000 less than expected 
A)  a lower price than expected was paid for Material A 
B)  higher-quality raw materials were used than were planned 
C)  the company used a higher-priced supplier 
D)  Material A used during September was $2,000 less than expected

Question 17

Which of the following is the correct formula for the materials price variance?

Accepted Answer

A)  (Actual price of input - Budgeted price of input) x Budgeted quantity of input 
B)  (Actual quantity of input used - Budgeted quantity of input allowed for actual output) x Budgeted price of input 
C)  (Actual price of input - Budgeted price of input) x Actual quantity of input 
D)  (Actual quantity of input used - Budgeted quantity of input allowed for actual output) x Actual price of input 
A)  (Actual price of input - Budgeted price of input) x Budgeted quantity of input 
B)  (Actual quantity of input used - Budgeted quantity of input allowed for actual output) x Budgeted price of input 
C)  (Actual price of input - Budgeted price of input) x Actual quantity of input 
D)  (Actual quantity of input used - Budgeted quantity of input allowed for actual output) x Actual price of input

Question 18

A flexible budget ________.

Accepted Answer

A)  is another name for management by exception 
B)  is developed at the end of the period 
C)  is based on the budgeted level of output 
D)  provides favorable operating results 
A)  is another name for management by exception 
B)  is developed at the end of the period 
C)  is based on the budgeted level of output 
D)  provides favorable operating results

Question 19

Johnson Company had planned for operating income of $10 million in the master budget with a contribution margin of $3 million, but actually achieved operating income of only $7 million and a contribution margin of $2.5 million.

Accepted Answer

A)  The static-budget variance for operating income is $3 million favorable. 
B)  The static-budget variance for operating income is $3 million unfavorable. 
C)  The flexible-budget variance for operating income is $3 million favorable. 
D)  The flexible-budget variance for operating income is $3 million unfavorable. 
A)  The static-budget variance for operating income is $3 million favorable. 
B)  The static-budget variance for operating income is $3 million unfavorable. 
C)  The flexible-budget variance for operating income is $3 million favorable. 
D)  The flexible-budget variance for operating income is $3 million unfavorable.

Question 20

Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container.
 
During June, Heavy Products produced and sold 19,000 containers using 1,200 pounds of direct materials at an average cost per pound of $63 and 17,100 direct manufacturing labor-hours at an average wage of $31.25 per hour.
The direct manufacturing labor price variance during June is ________.

Accepted Answer

A)  $21,375 unfavorable 
B)  $21,375 favorable 
C)  $3,600 unfavorable 
D)  $950,400 unfavorable 
A)  $21,375 unfavorable 
B)  $21,375 favorable 
C)  $3,600 unfavorable 
D)  $950,400 unfavorable

From the perspective of control, the direct materials price variance should be isolated at the time of sales.

The process by which a company's products or services are measured relative to the best possible levels of performance is known as ________.

A variance is ________.

For revenue items, a favorable variance means that actual revenues are less than expected.

Nonfinancial performance measures ________.

A company budgets 10,000 units of sales based on a projected selling price of $13.00. The actual units sold were 15,000 at a price of $10. What is the flexible budget for sales?

Goodard Inc. planned to use $155 of material per unit but actually used $147 of material per unit, and planned to make 1,110 units but actually made 1,000 units. The sales-volume variance for materials is ________.

A purchasing manager's performance is best evaluated using information such as

Standard material cost per kg of raw material is $6.50. Standard material allowed per unit is 5 Kg. Actual material used per unit is 6.00 Kg. Actual cost per kg is $6.00. What is the standard cost per output unit?

The flexible-budget variance for materials is $2,000 (U). The sales-volume variance is $18,000 (U). The price variance for material is $38,000 (F). The efficiency variance for direct manufacturing labor is $12,000 (F). Calculate the efficiency variance for materials.

Which of the following is true of flexible budget?

A flexible-budget variance can be subdivided into the static-budget variance and the sales-volume variance.

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 most likely explanation of the above variances for Material A is that ________.

Which of the following is the correct formula for the materials price variance?

A flexible budget ________.

Johnson Company had planned for operating income of $10 million in the master budget with a contribution margin of $3 million, but actually achieved operating income of only $7 million and a contribution margin of $2.5 million.

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

From the perspective of control, the direct materials price variance should be isolated at the time of sales.

The process by which a company's products or services are measured relative to the best possible levels of performance is known as ________.

A variance is ________.

For revenue items, a favorable variance means that actual revenues are less than expected.

Nonfinancial performance measures ________.

A company budgets 10,000 units of sales based on a projected selling price of $13.00. The actual units sold were 15,000 at a price of $10. What is the flexible budget for sales?

Goodard Inc. planned to use $155 of material per unit but actually used $147 of material per unit, and planned to make 1,110 units but actually made 1,000 units. The sales-volume variance for materials is ________.

A purchasing manager's performance is best evaluated using information such as

Standard material cost per kg of raw material is $6.50. Standard material allowed per unit is 5 Kg. Actual material used per unit is 6.00 Kg. Actual cost per kg is $6.00. What is the standard cost per output unit?

The flexible-budget variance for materials is $2,000 (U). The sales-volume variance is $18,000 (U). The price variance for material is $38,000 (F). The efficiency variance for direct manufacturing labor is $12,000 (F). Calculate the efficiency variance for materials.

Which of the following is true of flexible budget?

A flexible-budget variance can be subdivided into the static-budget variance and the sales-volume variance.

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 most likely explanation of the above variances for Material A is that ________.

Which of the following is the correct formula for the materials price variance?

A flexible budget ________.

Johnson Company had planned for operating income of $10 million in the master budget with a contribution margin of $3 million, but actually achieved operating income of only $7 million and a contribution margin of $2.5 million.

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