Question 1

The master budget operating income for September was:

Accepted Answer

A) $78,000. 
B) $105,000. 
C) $108,000. 
D) $110,000. 
E) $135,000. 
A) $78,000. 
B) $105,000. 
C) $108,000. 
D) $110,000. 
E) $135,000.

Question 2

One important short-term financial goal for a company is to earn the projected operating income for the period. Attainment of this goal is measured by comparing the actual operating income for the period to the:

Accepted Answer

A) Flexible-budget operating income for the period. 
B) Prior period's operating income. 
C) Income reflected in the company's balanced scorecard. 
D) Master budget operating income. 
E) Industry average operating income. 
A) Flexible-budget operating income for the period. 
B) Prior period's operating income. 
C) Income reflected in the company's balanced scorecard. 
D) Master budget operating income. 
E) Industry average operating income.

Question 3

Let "AQ" = actual quantity of direct materials issued to production, AP = actual price paid per unit of direct material purchased, SP = standard price per unit of direct material, and SP = standard quantity of direct materials allowed based on actual output for the period.
Required:
Use the above notation to develop a formula (i.e., an equation) for each of the following standard cost variances:
1. Direct materials price variance (calculated at point of production, not point of purchase).
2. Direct materials usage variance.
3. Flexible-budget (FB) variance for direct materials.
4. Joint price-quantity variance for direct materials.

Accepted Answer

Answer may vary
Feedback: 1. Direct mate

Question 4

The way managers and employees who are affected by a standard cost system perceive the system will:

Accepted Answer

A) Be of little consequence on the success of the system if correctly implemented. 
B) Generally be minimal in impact on the implementation of the system. 
C) Affect its success or failure in implementing the system. 
D) Be difficult to assess. 
E) Not matter in the long run. 
A) Be of little consequence on the success of the system if correctly implemented. 
B) Generally be minimal in impact on the implementation of the system. 
C) Affect its success or failure in implementing the system. 
D) Be difficult to assess. 
E) Not matter in the long run.

Question 5

The flexible-budget operating income in October is:

Accepted Answer

A) $27,000. 
B) $70,400. 
C) $72,000. 
D) $83,520. 
E) $86,400. 
A) $27,000. 
B) $70,400. 
C) $72,000. 
D) $83,520. 
E) $86,400.

Question 6

A favorable price variance for direct materials indicates that:

Accepted Answer

A) Lower-quality materials were purchased. 
B) The materials standard is likely out of date. 
C) A lower price than expected was paid for the materials. 
D) Less material was used in production this period than was allowed. 
E) There will most likely be an unfavorable materials efficiency (quantity) variance. 
A) Lower-quality materials were purchased. 
B) The materials standard is likely out of date. 
C) A lower price than expected was paid for the materials. 
D) Less material was used in production this period than was allowed. 
E) There will most likely be an unfavorable materials efficiency (quantity) variance.

Question 7

The materials usage (quantity) variance for June was:

Accepted Answer

A) $3,800 unfavorable. 
B) $3,840 unfavorable. 
C) $5,700 unfavorable. 
D) $5,760 unfavorable. 
E) $8,560 favorablE.Materials usage variance = (AQ - SQ) × SP = (10,400 - 10,000) square feet × $9.60/square foot = $3,840 U (unfavorable because AQ > SQ). 
A) $3,800 unfavorable. 
B) $3,840 unfavorable. 
C) $5,700 unfavorable. 
D) $5,760 unfavorable. 
E) $8,560 favorablE.Materials usage variance = (AQ - SQ) × SP = (10,400 - 10,000) square feet × $9.60/square foot = $3,840 U (unfavorable because AQ > SQ).

Question 8

Ann Jacobson's supervisor has asked her to list any concerns she might have about the proposed development of standards to measure performance and to reward superior performance in her department. Ann's department handles customer calls, directing customer questions and complaints to the appropriate persons within the firm. The company has never before used any performance measure nor paid any performance-related bonuses. It hopes to install a simple but effective system to achieve its twin goals of cost control and performance measurement. Develop the list for Ann based on the information above.

Accepted Answer

Answer may vary
Feedback: (Note: The for

Question 9

Which of the following is not a plausible cause of a direct labor efficiency variance?

Accepted Answer

A) Poor scheduling of work. 
B) Inadequate supervision of workers. 
C) Materials used are different from those specified. 
D) Failure to update the standard cost to conform to wage provisions in the union contract. 
E) Batch sizes during the period were different from standard. 
A) Poor scheduling of work. 
B) Inadequate supervision of workers. 
C) Materials used are different from those specified. 
D) Failure to update the standard cost to conform to wage provisions in the union contract. 
E) Batch sizes during the period were different from standard.

Question 10

The direct materials purchase-price variance in July is:

Accepted Answer

A) $10,000 unfavorable. 
B) $50,000 unfavorable. 
C) $80,000 unfavorable. 
D) $86,000 unfavorable. 
E) $90,000 unfavorable. 
A) $10,000 unfavorable. 
B) $50,000 unfavorable. 
C) $80,000 unfavorable. 
D) $86,000 unfavorable. 
E) $90,000 unfavorable.

Question 11

The total operating income variance for a period reveals whether a company has achieved:

Accepted Answer

A) The sales level budgeted for the period. 
B) An adequate return on investment (assets) during the period. 
C) Control of basic business processes. 
D) Control of total expenses for the period. 
E) The master budgeted operating income for the period. 
A) The sales level budgeted for the period. 
B) An adequate return on investment (assets) during the period. 
C) Control of basic business processes. 
D) Control of total expenses for the period. 
E) The master budgeted operating income for the period.

Question 12

Define what is meant by the term "just in time production" (JIT). As indicated in your text, management accountants can supply relevant information to management as it considers a move to JIT. In this regard, describe some of the principal advantages of using a JIT system, and then describe some of the incremental costs that would likely be associated with a move to such a system.

Accepted Answer

Answer may vary
Feedback: 1. Definition:

Question 13

The direct materials purchase-price variance is for June was:

Accepted Answer

A) $63,700 unfavorable. 
B) $65,520 unfavorable. 
C) $69,160 unfavorable. 
D) $95,760 unfavorable. 
A) $63,700 unfavorable. 
B) $65,520 unfavorable. 
C) $69,160 unfavorable. 
D) $95,760 unfavorable.

Question 14

A flexible budget contains:

Accepted Answer

A) Cost targets based on actual output (e.g., sales volume) for the period. 
B) Cost targets based on planned output (e.g., sales volume) for the period. 
C) Actual costs incurred for the actual output of the period. 
D) Costs and revenues for the difference between planned and actual output. 
E) Costs based on actual output of the period, and revenue based on master budgeted output. 
A) Cost targets based on actual output (e.g., sales volume) for the period. 
B) Cost targets based on planned output (e.g., sales volume) for the period. 
C) Actual costs incurred for the actual output of the period. 
D) Costs and revenues for the difference between planned and actual output. 
E) Costs based on actual output of the period, and revenue based on master budgeted output.

Question 15

The difference between the total actual sales revenue of a period and the total flexible-budget sales revenue for the units sold during the period is the:

Accepted Answer

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

Question 16

The direct labor efficiency variance in February is:

Accepted Answer

A) $13,440 favorable. 
B) $13,650 favorable. 
C) $13,776 favorable. 
D) $14,000 favorable. 
E) $19,110 favorable. 
A) $13,440 favorable. 
B) $13,650 favorable. 
C) $13,776 favorable. 
D) $14,000 favorable. 
E) $19,110 favorable.

Question 17

The direct labor efficiency variance for October 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 18

The total variable cost flexible-budget variance for any given period:

Accepted Answer

A) Is the difference between actual total variable cost incurred and master budgeted total variable cost. 
B) Is decomposable into sales-volume and sales-mix components. 
C) Is decomposable into production-volume and production-mix components. 
D) Can be broken down into flexible-budget variances for major costs such as materials, labor, variable overhead, and variable selling expenses. 
E) Is directly affected by the difference between actual sales volume and the sales volume embodied in the flexible budget. 
A) Is the difference between actual total variable cost incurred and master budgeted total variable cost. 
B) Is decomposable into sales-volume and sales-mix components. 
C) Is decomposable into production-volume and production-mix components. 
D) Can be broken down into flexible-budget variances for major costs such as materials, labor, variable overhead, and variable selling expenses. 
E) Is directly affected by the difference between actual sales volume and the sales volume embodied in the flexible budget.

Question 19

Precilla's standard price per pound of direct materials is:

Accepted Answer

A) $4.00. 
B) $5.00. 
C) $6.00. 
D) $10.00. 
E) $12.00. 
A) $4.00. 
B) $5.00. 
C) $6.00. 
D) $10.00. 
E) $12.00.

Question 20

The total number of budgeted units reflected in the master budget for September 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.

The master budget operating income for September was:

One important short-term financial goal for a company is to earn the projected operating income for the period. Attainment of this goal is measured by comparing the actual operating income for the period to the:

The way managers and employees who are affected by a standard cost system perceive the system will:

The flexible-budget operating income in October is:

A favorable price variance for direct materials indicates that:

The materials usage (quantity) variance for June was:

Which of the following is not a plausible cause of a direct labor efficiency variance?

The direct materials purchase-price variance in July is:

The total operating income variance for a period reveals whether a company has achieved:

The direct materials purchase-price variance is for June was:

A flexible budget contains:

The difference between the total actual sales revenue of a period and the total flexible-budget sales revenue for the units sold during the period is the:

The direct labor efficiency variance in February is:

The direct labor efficiency variance for October was:

The total variable cost flexible-budget variance for any given period:

Precilla's standard price per pound of direct materials is:

The total number of budgeted units reflected in the master budget for September was:

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

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

The master budget operating income for September was:

One important short-term financial goal for a company is to earn the projected operating income for the period. Attainment of this goal is measured by comparing the actual operating income for the period to the:

The way managers and employees who are affected by a standard cost system perceive the system will:

The flexible-budget operating income in October is:

A favorable price variance for direct materials indicates that:

The materials usage (quantity) variance for June was:

Which of the following is not a plausible cause of a direct labor efficiency variance?

The direct materials purchase-price variance in July is:

The total operating income variance for a period reveals whether a company has achieved:

The direct materials purchase-price variance is for June was:

A flexible budget contains:

The difference between the total actual sales revenue of a period and the total flexible-budget sales revenue for the units sold during the period is the:

The direct labor efficiency variance in February is:

The direct labor efficiency variance for October was:

The total variable cost flexible-budget variance for any given period:

Precilla's standard price per pound of direct materials is:

The total number of budgeted units reflected in the master budget for September was:

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