Question 1

The standard cost per pound of PPS is:

Accepted Answer

A) $5.20. 
B) $5.76. 
C) $6.24. 
D) $6.84. 
E) $7.20. 
A) $5.20. 
B) $5.76. 
C) $6.24. 
D) $6.84. 
E) $7.20.

Question 2

The standard direct labor rate per hour is:

Accepted Answer

A) $12.00. 
B) $12.30. 
C) $12.60. 
D) $13.20. 
E) $13.50. 
A) $12.00. 
B) $12.30. 
C) $12.60. 
D) $13.20. 
E) $13.50.

Question 3

Patterson, Inc. wishes to evaluate, in summary fashion, its financial performance for the most recent period. Budgeted and actual operating results for this period are presented below.   Required:
1. What was the actual operating income for the period?
2. What is the firm's master budget operating income?
3. What was the flexible-budget operating income for the period?
4. What is the total operating-income variance of the period?
5. What was the sales-volume variance, in terms of operating income, for the period?
6. What are the key elements of the traditional financial control model?
7. What are the primary limitations of the traditional financial control model?

Accepted Answer

Answer may vary
Feedback: @#IMG-DLM& 1. Actual ope

Question 4

For control purposes, it is usually preferable to calculate the materials price variance:

Accepted Answer

A) At point of purchase (i.e., when the materials are purchased). 
B) At point of production (i.e., when the materials are issued to production). 
C) At the end of the accounting period. 
D) Only if the materials quantity variance is significant in amount. 
E) Only if it is controllable by operating managers. 
A) At point of purchase (i.e., when the materials are purchased). 
B) At point of production (i.e., when the materials are issued to production). 
C) At the end of the accounting period. 
D) Only if the materials quantity variance is significant in amount. 
E) Only if it is controllable by operating managers.

Question 5

A "currently attainable standard" emphasizes:

Accepted Answer

A) Ideal or theoretical performance. 
B) Past performance of the organization. 
C) Future performance of the organization's primary competitors. 
D) Maximum performance. 
E) Relatively efficient operating performance. 
A) Ideal or theoretical performance. 
B) Past performance of the organization. 
C) Future performance of the organization's primary competitors. 
D) Maximum performance. 
E) Relatively efficient operating performance.

Question 6

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 7

During the most recent period Appliance, Inc. manufactured 10,000 units. The standard cost sheet indicates that the standard direct labor cost per unit is $3.00. The performance report for the period includes a favorable direct labor rate variance of $2,000, and a favorable direct labor efficiency variance of $500.
Required:
What was the total actual cost of direct labor incurred during the period?

Accepted Answer

Answer may

Question 8

An organization planned to use $82 of direct material per unit of output, but it actually used $80 per unit. During this period, the company planned to make 1,200 units, but actually produced only 1,000 units. The flexible budget amount for direct materials cost is:

Accepted Answer

A) $80,000. 
B) $82,000. 
C) $96,000. 
D) $98,400. 
A) $80,000. 
B) $82,000. 
C) $96,000. 
D) $98,400.

Question 9

The total variable cost flexible-budget variance includes all of the following except:

Accepted Answer

A) Direct materials variances. 
B) Sales price variance. 
C) Variable selling and administrative expenses variances. 
D) Direct labor variances. 
E) Variable overhead variances. 
A) Direct materials variances. 
B) Sales price variance. 
C) Variable selling and administrative expenses variances. 
D) Direct labor variances. 
E) Variable overhead variances.

Question 10

The sales volume variance, in terms of operating income, for October is:

Accepted Answer

A) $3,600 favorable. 
B) $6,000 favorable. 
C) $15,400 favorable. 
D) $21,000 favorable. 
A) $3,600 favorable. 
B) $6,000 favorable. 
C) $15,400 favorable. 
D) $21,000 favorable.

Question 11

All of 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 12

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.

Question 13

Chemical, Inc., has set the following standards for direct materials and direct labor for each 20-pound bag of Weed-Be-Doom:   The company manufactured 100,000 bags of Weed-Be-Doom in December and used 2,700,000 pounds of XF-2000 and 5,200 direct labor-hours. During the month the company purchased 3,000,000 lbs. of XF-2000 at $0.075 per pound and incurred a total payroll of $182,000 for direct labor. The company records purchases at standard cost and therefore recognizes material price variances at point of purchase.
Required
1. Compute the price and usage variances for direct materials, and the rate and efficiency variances for direct labor.
2. Prepare journal entries to record the preceding events.

Accepted Answer

Answer may vary
Feedback: 1. Direct mate

Question 14

The difference between the actual operating income of the period and master budgeted operating income for the period is the:

Accepted Answer

A) Total flexible-budget variance. 
B) Sales volume variance. 
C) Sales price variance 
D) Operating income flexible-budget variance. 
E) Total operating income variance. 
A) Total flexible-budget variance. 
B) Sales volume variance. 
C) Sales price variance 
D) Operating income flexible-budget variance. 
E) Total operating income variance.

Question 15

The sales volume variance, in terms of operating income, is:

Accepted Answer

A) $20,000 unfavorable. 
B) $27,000 unfavorable. 
C) $36,000 unfavorable. 
D) $75,000 unfavorable. 
E) $90,000 unfavorablE.As long as actual operating activity (here, 40,000 units) is within the relevant range, then the sales volume variance in terms of operating income = sales volume variance in terms of contribution margin. The sales volume variance in terms of contribution margin is $27,000U (given). Therefore, the sales volume variance in terms of operating income is also $27,000U. 
A) $20,000 unfavorable. 
B) $27,000 unfavorable. 
C) $36,000 unfavorable. 
D) $75,000 unfavorable. 
E) $90,000 unfavorablE.As long as actual operating activity (here, 40,000 units) is within the relevant range, then the sales volume variance in terms of operating income = sales volume variance in terms of contribution margin. The sales volume variance in terms of contribution margin is $27,000U (given). Therefore, the sales volume variance in terms of operating income is also $27,000U.

Question 16

The difference between actual and standard cost caused by the difference between the actual number of resource-units used and the standard number of resource-units that should have been used for the output of the period is called the:

Accepted Answer

A) Controllable variance. 
B) Master budget variance. 
C) Flexible-budget variance. 
D) Quantity (or efficiency) variance. 
E) Price variance. 
A) Controllable variance. 
B) Master budget variance. 
C) Flexible-budget variance. 
D) Quantity (or efficiency) variance. 
E) Price variance.

Question 17

The total direct labor flexible-budget variance in February is:

Accepted Answer

A) $7,350 favorable. 
B) $7,840 favorable. 
C) $30,870 favorable. 
D) $30,870 unfavorable. 
E) $31,360 favorable. 
A) $7,350 favorable. 
B) $7,840 favorable. 
C) $30,870 favorable. 
D) $30,870 unfavorable. 
E) $31,360 favorable.

Question 18

The total amount of variable costs in the flexible budget for September was:

Accepted Answer

A) $129,000. 
B) $192,000. 
C) $200,000. 
D) $208,000. 
E) $255,000. 
A) $129,000. 
B) $192,000. 
C) $200,000. 
D) $208,000. 
E) $255,000.

Question 19

The difference between the flexible-budget operating income and the actual operating income in a period is the:

Accepted Answer

A) Sales mix variance. 
B) Sales volume variance. 
C) Sales price variance. 
D) Operating income flexible-budget variance. 
E) Total operating income variance. 
A) Sales mix variance. 
B) Sales volume variance. 
C) Sales price variance. 
D) Operating income flexible-budget variance. 
E) Total operating income variance.

Question 20

The "flexible budget" can best be described as a budget that adjusts:

Accepted Answer

A) Revenues for sales-dollar changes. 
B) Revenues and expenses for changes in output (such as sales volume). 
C) Expenses for changes in budgeted output between two periods. 
D) For efficiency, but not selling price and cost variances. 
E) For selling price and cost variances, but not efficiency variances. 
A) Revenues for sales-dollar changes. 
B) Revenues and expenses for changes in output (such as sales volume). 
C) Expenses for changes in budgeted output between two periods. 
D) For efficiency, but not selling price and cost variances. 
E) For selling price and cost variances, but not efficiency variances.

The standard cost per pound of PPS is:

The standard direct labor rate per hour is:

For control purposes, it is usually preferable to calculate the materials price variance:

A "currently attainable standard" emphasizes:

The total operating-income variance for any period:

An organization planned to use $82 of direct material per unit of output, but it actually used $80 per unit. During this period, the company planned to make 1,200 units, but actually produced only 1,000 units. The flexible budget amount for direct materials cost is:

The total variable cost flexible-budget variance includes all of the following except:

The sales volume variance, in terms of operating income, for October is:

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

A flexible-budget variance for any fixed cost:

The difference between the actual operating income of the period and master budgeted operating income for the period is the:

The sales volume variance, in terms of operating income, is:

The difference between actual and standard cost caused by the difference between the actual number of resource-units used and the standard number of resource-units that should have been used for the output of the period is called the:

The total direct labor flexible-budget variance in February is:

The total amount of variable costs in the flexible budget for September was:

The difference between the flexible-budget operating income and the actual operating income in a period is the:

The "flexible budget" can best be described as a budget that adjusts:

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

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

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

The standard cost per pound of PPS is:

The standard direct labor rate per hour is:

For control purposes, it is usually preferable to calculate the materials price variance:

A "currently attainable standard" emphasizes:

The total operating-income variance for any period:

An organization planned to use $82 of direct material per unit of output, but it actually used $80 per unit. During this period, the company planned to make 1,200 units, but actually produced only 1,000 units. The flexible budget amount for direct materials cost is:

The total variable cost flexible-budget variance includes all of the following except:

The sales volume variance, in terms of operating income, for October is:

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

A flexible-budget variance for any fixed cost:

The difference between the actual operating income of the period and master budgeted operating income for the period is the:

The sales volume variance, in terms of operating income, is:

The difference between actual and standard cost caused by the difference between the actual number of resource-units used and the standard number of resource-units that should have been used for the output of the period is called the:

The total direct labor flexible-budget variance in February is:

The total amount of variable costs in the flexible budget for September was:

The difference between the flexible-budget operating income and the actual operating income in a period is the:

The "flexible budget" can best be described as a budget that adjusts:

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

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