Question 1

The total operating-income variance for any period:

Accepted Answer

A)  Is unaffected by variances between actual and budgeted sales volume. 
B)  Can be decomposed into a total flexible-budget variance and a sales-volume variance. 
C)  Can be decomposed into a total flexible-budget variance and a sales price variance. 
D)  Is equal to the sum of selling and administrative expense variances plus the total sales-volume variance for the period. 
E)  Equals the sum of the total flexible-budget variance plus the sales-mix variance for the period. 
A)  Is unaffected by variances between actual and budgeted sales volume. 
B)  Can be decomposed into a total flexible-budget variance and a sales-volume variance. 
C)  Can be decomposed into a total flexible-budget variance and a sales price variance. 
D)  Is equal to the sum of selling and administrative expense variances plus the total sales-volume variance for the period. 
E)  Equals the sum of the total flexible-budget variance plus the sales-mix variance for the period.

Question 2

A flexible-budget variance measures the impact on short-term operating profit of:

Accepted Answer

A)  Changes in sales volume. 
B)  Changes in output during the period. 
C)  Differences in sales mix—budgeted versus actual. 
D)  Selling price and cost differences—actual versus budgeted. 
E)  Selling price, but not cost, differences—actual versus budgeted. 
A)  Changes in sales volume. 
B)  Changes in output during the period. 
C)  Differences in sales mix—budgeted versus actual. 
D)  Selling price and cost differences—actual versus budgeted. 
E)  Selling price, but not cost, differences—actual versus budgeted.

Question 3

Authoritative standards (within the context of a standard cost system) are determined primarily by:

Accepted Answer

A)  A defined subset of the board of directors of a company. 
B)  Employees. 
C)  Negotiation. 
D)  A two-way information flow. 
E)  Managers. 
A)  A defined subset of the board of directors of a company. 
B)  Employees. 
C)  Negotiation. 
D)  A two-way information flow. 
E)  Managers.

Question 4

Discuss some major differences between static and flexible budgets.

Accepted Answer

A static budget is prepared before an op

Question 5

In September, Larson Inc. sold 40,000 units of its only product for $240,000, and incurred a total cost of $225,000, of which $25,000 were fixed costs. The flexible budget for September showed total sales of $300,000. Among variances of the period were: total variable cost flexible-budget variance, $8,000U; total flexible-budget variance, $63,000U; and, sales volume variance, in terms of contribution margin, $27,000U.

The total number of budgeted units reflected in the master budget for September, to the nearest whole number, was:

Accepted Answer

A)  36,000 units. 
B)  40,000 units. 
C)  45,000 units. 
D)  48,000 units. 
E)  50,000 units. 
A)  36,000 units. 
B)  40,000 units. 
C)  45,000 units. 
D)  48,000 units. 
E)  50,000 units.

Question 6

All the following are limitations of short-term financial performance indicators except:

Accepted Answer

A)  Employees and managers can take actions that improve short-term financial performance at the expense of long-term performance. 
B)  Focusing on individual cost variances can result in optimum local but not global (i.e., firm-wide) performance. 
C)  Operating personnel may not readily understand or be able to interpret financial-performance indicators. 
D)  Senior managers typically find non-financial performance indicators more useful than summary financial-performance indicators. 
A)  Employees and managers can take actions that improve short-term financial performance at the expense of long-term performance. 
B)  Focusing on individual cost variances can result in optimum local but not global (i.e., firm-wide) performance. 
C)  Operating personnel may not readily understand or be able to interpret financial-performance indicators. 
D)  Senior managers typically find non-financial performance indicators more useful than summary financial-performance indicators.

Question 7

Prokp Co.'s records for April disclosed the following data relating to direct labor: Prokp's total standard direct labor hours allowed (SQ) for units produced in April (to nearest whole number) were:

Accepted Answer

A)  890. 
B)  900. 
C)  1,000. 
D)  1,100. 
E)  1,110. 
A)  890. 
B)  900. 
C)  1,000. 
D)  1,100. 
E)  1,110.

Question 8

Kennedy Inc. has the following data for its operation in August:  What was the direct materials usage variance in August, rounded to the nearest dollar?

Accepted Answer

A)  $180 unfavorable. 
B)  $360 unfavorable. 
C)  $540 favorable. 
D)  $540 unfavorable. 
E)  $720 unfavorable. 
A)  $180 unfavorable. 
B)  $360 unfavorable. 
C)  $540 favorable. 
D)  $540 unfavorable. 
E)  $720 unfavorable.

Question 9

Shade Company adopted a standard cost system several years ago. The standard costs for direct labor and direct materials for its single product are as follows: Materials (5 kilograms × $12.00/kilogram) = $60.00/unit; direct labor (3.5 hours/unit × $20.00/hour) = $70.00/unit. All materials are issued at the beginning of processing. The operating data shown below were taken from the records for December:  The direct materials usage variance for December, to the nearest dollar, was:

Accepted Answer

A)  $1,800 unfavorable. 
B)  $1,800 favorable. 
C)  $59,400 unfavorable. 
D)  $59,400 favorable. 
A)  $1,800 unfavorable. 
B)  $1,800 favorable. 
C)  $59,400 unfavorable. 
D)  $59,400 favorable.

Question 10

Ally Mfg. uses a standard cost system and its July production of 1,800 units involved actual direct labor costs of $242,000 for 5,500 hours worked (AQ). The budget for July called for production of 2,000 units with 6,000 direct labor hours at $40.00 per hour (SP).

Ally's direct labor rate variance for July, to the nearest dollar, was:

Accepted Answer

A)  $2,000 unfavorable. 
B)  $4,000 unfavorable. 
C)  $20,000 favorable. 
D)  $22,000 unfavorable. 
E)  $26,000 unfavorable. 
A)  $2,000 unfavorable. 
B)  $4,000 unfavorable. 
C)  $20,000 favorable. 
D)  $22,000 unfavorable. 
E)  $26,000 unfavorable.

Question 11

Within the context of the material covered in Chapter 14 for operational performance measurement, define the term "sales-volume variance." List some common causes of the sales-volume variance.

Accepted Answer

The sales volume variance reflects the e

Question 12

In September, Larson Inc. sold 40,000 units of its only product for $240,000 and incurred a total cost of $225,000, of which $25,000 was fixed costs. The flexible budget for September showed total sales of $300,000. Among variances of the period were: total variable cost flexible-budget variance, $8,000U; total flexible-budget variance, $63,000U; and, sales volume variance, in terms of contribution margin, $27,000U.

The actual amount of operating income earned in September, to the nearest dollar, was:

Accepted Answer

A)  $15,000. 
B)  $40,000. 
C)  $63,000. 
D)  $78,000. 
E)  $105,000. 
A)  $15,000. 
B)  $40,000. 
C)  $63,000. 
D)  $78,000. 
E)  $105,000.

Question 13

Europa Company manufactures only one product. Presented below is direct labor information for November. $\begin{array}{lr}
\text { Standard direct labor hours per unit of product } & 3.20 \
\text { Number of finished units produced } & 6,500 \
\text { Standard wage rate per direct labor hour (SP) } & \$ 19.20 \
\text { Total direct labor pavroll for the period } & \$ 359.424\
\text { Actual wage rate per direct labor hour worked (AP) }&\$16.00
\end{array}$The total standard direct labor hours (SQ) in November for the output produced, rounded to the nearest whole number, was:

Accepted Answer

A)  18,720. 
B)  19,200. 
C)  20,800. 
D)  22,400. 
E)  22,464. 
A)  18,720. 
B)  19,200. 
C)  20,800. 
D)  22,400. 
E)  22,464.

Question 14

Pokeman Bunch Inc., manufactures Poke Monster figures, and has the following data from its operation for the year just completed. The total operating-income variance is:

Accepted Answer

A) $500 favorable. 
B) $1,500 unfavorable. 
C) $1,500 favorable. 
D) $2,500 unfavorable. 
E) $3,000 favorable. 
A) $500 favorable. 
B) $1,500 unfavorable. 
C) $1,500 favorable. 
D) $2,500 unfavorable. 
E) $3,000 favorable.

Question 15

Another name for the total operating income variance for a period is:

Accepted Answer

A)  Flexible-budget variance. 
B)  Master (static) budget variance. 
C)  Sales volume variance. 
D)  Total income variance. 
E)  Sales mix variance. 
A)  Flexible-budget variance. 
B)  Master (static) budget variance. 
C)  Sales volume variance. 
D)  Total income variance. 
E)  Sales mix variance.

Question 16

Luanna Inc. manufactures game consoles. Some of the company's data was misplaced. Use the following information to replace the lost data. The amount C is:

Accepted Answer

A) $38,790. 
B) $59,490. 
C) $65,050. 
D) $83,140. 
E) Impossible to determine without further information. 
A) $38,790. 
B) $59,490. 
C) $65,050. 
D) $83,140. 
E) Impossible to determine without further information.

Question 17

Ventura uses a just-in-time (JIT) manufacturing system for all its materials, components, and products. The master budget of the company for June called for use of 11,000 square feet of materials, while the flexible budget for the actual output of the month had 10,000 square feet of materials at a standard cost (SP) of $9.60 per square foot. Company records show that the actual price paid (AP) for the materials used in June was $9.50 per square foot, and that the direct materials purchase-price variance for the month was $1,040.

The materials usage (quantity) variance for June, to the nearest dollar, was:

Accepted Answer

A)  $3,800 unfavorable. 
B)  $3,840 unfavorable. 
C)  $5,700 unfavorable. 
D)  $5,760 unfavorable. 
E)  $8,560 favorable. 
A)  $3,800 unfavorable. 
B)  $3,840 unfavorable. 
C)  $5,700 unfavorable. 
D)  $5,760 unfavorable. 
E)  $8,560 favorable.

Question 18

Machine Builders Inc. adopted a standard cost system several years ago that it uses in conjunction with its process cost system. The per-unit standard costs for direct materials and direct labor for its single product are as follows: The direct labor efficiency variance for July, to the nearest dollar, was:

Accepted Answer

A)  $6,600 favorable. 
B)  $7,200 unfavorable. 
C)  $8,000 unfavorable. 
D)  $14,400 favorable. 
E)  $79,200 favorable. 
A)  $6,600 favorable. 
B)  $7,200 unfavorable. 
C)  $8,000 unfavorable. 
D)  $14,400 favorable. 
E)  $79,200 favorable.

Question 19

Marv Company's direct labor costs for manufacturing its only product were as follows for October: $\begin{array}{lrr}
\text { Standard direct labor hours (DLHs) per unit of product } & 2 \
\text { Budgeted finished units for the period } & 6,000 \
\text { Actual number of finished units produced } & 5,000 \
\text { Standard wage rate per direct labor hour (SP) } & \$ 20.00 \
\text { Direct labor costs incurred } & \$ 207,000 \
\text { Actual wage rate per direct labor hour (AP) } & \$  18.00
\end{array}$The direct labor efficiency variance for October, rounded to the nearest dollar, was:

Accepted Answer

A)  $3,000 unfavorable. 
B)  $20,000 favorable. 
C)  $23,000 favorable. 
D)  $30,000 unfavorable. 
E)  $50,000 unfavorable. 
A)  $3,000 unfavorable. 
B)  $20,000 favorable. 
C)  $23,000 favorable. 
D)  $30,000 unfavorable. 
E)  $50,000 unfavorable.

Question 20

A flexible-budget variance for any fixed cost:

Accepted Answer

A)  Is defined as the difference between flexible-budget fixed cost and the level of fixed costs reflected in the master (static) budget. 
B)  Is undefined, except when actual output equals budgeted output. 
C)  Is typically zero, because the volume assumed in the flexible budget and the master budget for fixed costs is identical. 
D)  Is the difference between budgeted fixed cost and actual fixed cost. 
E)  Can be broken down into price and efficiency components. 
A)  Is defined as the difference between flexible-budget fixed cost and the level of fixed costs reflected in the master (static) budget. 
B)  Is undefined, except when actual output equals budgeted output. 
C)  Is typically zero, because the volume assumed in the flexible budget and the master budget for fixed costs is identical. 
D)  Is the difference between budgeted fixed cost and actual fixed cost. 
E)  Can be broken down into price and efficiency components.

The total operating-income variance for any period:

A flexible-budget variance measures the impact on short-term operating profit of:

Authoritative standards (within the context of a standard cost system) are determined primarily by:

Discuss some major differences between static and flexible budgets.

All the following are limitations of short-term financial performance indicators except:

Prokp Co.'s records for April disclosed the following data relating to direct labor:Prokp's total standard direct labor hours allowed (SQ) for units produced in April (to nearest whole number) were:

Kennedy Inc. has the following data for its operation in August: What was the direct materials usage variance in August, rounded to the nearest dollar?

Within the context of the material covered in Chapter 14 for operational performance measurement, define the term "sales-volume variance." List some common causes of the sales-volume variance.

Pokeman Bunch Inc., manufactures Poke Monster figures, and has the following data from its operation for the year just completed.The total operating-income variance is:

Another name for the total operating income variance for a period is:

Luanna Inc. manufactures game consoles. Some of the company's data was misplaced. Use the following information to replace the lost data.The amount C is:

A flexible-budget variance for any fixed cost:

Cost Management and Strategy

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters

Exam 14: Operational Performance Measurement: Sales, Direct-Cost Variances, and the Role of Nonfinancial Performance Measures

The total operating-income variance for any period:

A flexible-budget variance measures the impact on short-term operating profit of:

Authoritative standards (within the context of a standard cost system) are determined primarily by:

Discuss some major differences between static and flexible budgets.

All the following are limitations of short-term financial performance indicators except:

Prokp Co.'s records for April disclosed the following data relating to direct labor:Prokp's total standard direct labor hours allowed (SQ) for units produced in April (to nearest whole number) were:

Kennedy Inc. has the following data for its operation in August: What was the direct materials usage variance in August, rounded to the nearest dollar?

Within the context of the material covered in Chapter 14 for operational performance measurement, define the term "sales-volume variance." List some common causes of the sales-volume variance.

Pokeman Bunch Inc., manufactures Poke Monster figures, and has the following data from its operation for the year just completed.The total operating-income variance is:

Another name for the total operating income variance for a period is:

Luanna Inc. manufactures game consoles. Some of the company's data was misplaced. Use the following information to replace the lost data.The amount C is:

A flexible-budget variance for any fixed cost:

Cost Management and Strategy

Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map

Basic Cost Management Concepts

Job Costing

Activity-Based Costing and Customer Profitability Analysis

Process Costing

Cost Allocation: Departments, Joint Products, and By-Products

Cost Estimation

Short-Term Profit Planning: Cost-Volume-Profit CVP Analysis

Strategy and the Master Budget

Decision Making With a Strategic Emphasis

Strategy and the Analysis of Capital Investments

Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing

Operational Performance Measurement: Indirect-Cost Variances and Resource-Capacity Management

Operational Performance Measurement: Further Analysis of Productivity and Sales

The Management and Control of Quality

Strategic Performance Measurement: Cost Centers, Profit Centers, and the Balanced Scorecard

Strategic Performance Measurement: Investment Centers and Transfer Pricing

Management Compensation, Business Analysis, and Business Valuation

Filters