Question 1

Indicate whether each of the following statements is

Accepted Answer

A company's standard costs may need to b

Question 2

The Russell Company provides the following standard cost data per unit of product: $\begin{array}{llcc}
  \text {  Direct material ( 3 gallons @ \$ 6 per gallon)  } & \$ 18.00 \
 \text {Direct labor ( 2 hours @  \$ 10 per hour) } & \$ 20.00
\end{array}$
 During the period,the company produced and sold 22,000 units incurring the following costs: $\begin{array}{llcc}
  \text {Direct material } & \text { 68,000 gallons @  \$ 5.90  per gallon  }  \
 \text { Direct labor  } &\text {  45,500  hours @ \$ 9.75 per hour } 
\end{array}$
 The direct labor price variance was:

Accepted Answer

A)  $11,000 unfavorable. 
B)  $11,000 favorable. 
C)  $11,375 unfavorable. 
D)  $11,375 favorable. 
A)  $11,000 unfavorable. 
B)  $11,000 favorable. 
C)  $11,375 unfavorable. 
D)  $11,375 favorable.

Question 3

Which of the following can reduce the amount of employees' budget gamesmanship?

Accepted Answer

A)  Have superiors and subordinates participate in the standard-setting process. 
B)  Incorporate standards into the firm's evaluation system. 
C)  Avoid using standards for punitive purposes. 
D)  All of these answers are correct. 
A)  Have superiors and subordinates participate in the standard-setting process. 
B)  Incorporate standards into the firm's evaluation system. 
C)  Avoid using standards for punitive purposes. 
D)  All of these answers are correct.

Question 4

Sales volume variances are attributable to differences between planned and actual activity volumes,as well as differences in selling price.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is an incorrect statement regarding variances?

Accepted Answer

A)  A variance is favorable when expected sales are more than actual sales. 
B)  A variance is a difference between budgeted and actual amounts. 
C)  A variance can be calculated for both revenues and expenses. 
D)  A variance can be both favorable and unfavorable. 
A)  A variance is favorable when expected sales are more than actual sales. 
B)  A variance is a difference between budgeted and actual amounts. 
C)  A variance can be calculated for both revenues and expenses. 
D)  A variance can be both favorable and unfavorable.

Question 6

Newton Company's management accountant prepared the following variance report for management:   Required:
1)Identify which manager (if any)would likely be held responsible (at least prior to further investigation)for each of the following variances:
(a)Direct material price variance
(b)Direct materials usage variance
(c)Direct labor price variance
(d)Direct labor usage variance
(e)Fixed cost spending variance
(f)Fixed cost volume variance
2)Provide at least two possible explanations for each of the following variances: the direct materials price variance and the direct labor usage variance.

Accepted Answer

1)Responsibility for

Question 7

Which of the following income statement formats is most commonly used with flexible budgeting?

Accepted Answer

A)  Sales - Variable costs = Contribution margin;Contribution margin - Fixed costs = Net income 
B)  Sales - Cost of goods sold = Gross margin;Gross margin - Operating expenses = Net income 
C)  Sales - Manufacturing costs - Selling and administrative costs = Net income 
D)  None of these answers is correct. 
A)  Sales - Variable costs = Contribution margin;Contribution margin - Fixed costs = Net income 
B)  Sales - Cost of goods sold = Gross margin;Gross margin - Operating expenses = Net income 
C)  Sales - Manufacturing costs - Selling and administrative costs = Net income 
D)  None of these answers is correct.

Question 8

What are examples of budget gamesmanship that may occur in a company,and how can the gamesmanship be reduced?

Accepted Answer

Answers will vary
Budget gamesmanship in

Question 9

A benefit of using a standard cost system is that it can boost morale and motivate employees,if properly maintained.

Accepted Answer

A) True 
 B)False

Question 10

Two budgeting games sometimes played by employees are building in budget slack and making the numbers.

Accepted Answer

A) True 
 B)False

Question 11

Grenada Company estimates sales of 15,000 units for the upcoming period.At this sales volume its budgeted income is as follows: $\begin{array}{l}
\begin{array}{|l|}
\hline \
\hline \text {Sales}\
\hline \text {Less variable costs:}\
\hline \text {Manufacturing costs}\
\hline \text {Selling and administrative costs}\
\hline \text {Contribution margin}\
\hline \text {Less fixed costs:}\
\hline \text {Manufacturing costs}\
\hline \text {Selling and administrative costs}\
\hline \text { Net income}\
\hline 
\end{array}
\begin{array}{ll|}
\hline\text { Per Unit }\
\hline \$ & 60 \
\hline & \
\hline \$ & 30 \
\hline \$ & 10 \
\hline \$ & 20 \
\hline & \
\hline & \
\hline & \
\hline & \
\hline
\end{array}
\begin{array}{ll|}
\hline {\text { Total }} \
\hline \$ & 900,000 \
\hline & \
\hline & 450,000 \
\hline & \underline {150,000} \
\hline \$ & 300,000 \
\hline & \
\hline & 125,000 \
\hline & \underline {155,000} \
\hline \$ & 20,000\
\hline
\end{array}
\end{array}$ During the period the company actually produced and sold 18,000 units.
Required:
Prepare a flexible budget based on 18,000 units.

Accepted Answer

None

Question 12

Cruz Company established a direct labor standard of 0.5 hour per unit at $12 per hour for one of its products.In April,Cruz produced 16,000 units and used 8,100 direct labor hours.
Required:
Based on this information,
(a)Which variance can you calculate?
(b)What is the dollar amount of the variance?
(c)Is the variance favorable or unfavorable?
(d)Do you consider the variance to be sufficiently material that managers should investigate to discover the cause of the variance?

Accepted Answer

(a)Labor usage variance
(b)Labor usage v

Question 13

The Russell Company provides the following standard cost data per unit of product: $\begin{array}{llcc}
  \text { Direct material ( 3 gallons @ \$ 6  per gallon) } & \$ 18.00 \
 \text {Direct labor ( 2 hours @ \$ 10  per hour) } &\$ 20.00
\end{array}$
 During the period,the company produced and sold 22,000 units incurring the following costs: $\begin{array}{llcc}
  \text {Direct material } &  \text {68,000 gallons @ \$ 5.90  per gallon}  \
 \text {Direct labor } & \text {45,500  hours @ \$ 9.75 per hour}
\end{array}$
 The direct labor usage variance was:

Accepted Answer

A)  $15,000 unfavorable. 
B)  $15,000 favorable. 
C)  $14,625 unfavorable. 
D)  $14,625 favorable. 
A)  $15,000 unfavorable. 
B)  $15,000 favorable. 
C)  $14,625 unfavorable. 
D)  $14,625 favorable.

Question 14

The standard amount of materials required to make one unit of Product Q is 4 pounds.Tusa's static budget showed a planned production of 3,800 units.During the period the company actually produced 4,100 units of product.The actual amount of materials used averaged 3.9 pounds per unit.The standard price of material is $1 per pound.Based on this information,the materials usage variance was:

Accepted Answer

A)  $410 favorable. 
B)  $380 unfavorable. 
C)  $410 unfavorable. 
D)  $380 favorable. 
A)  $410 favorable. 
B)  $380 unfavorable. 
C)  $410 unfavorable. 
D)  $380 favorable.

Question 15

Flexible budget amounts for variable costs and revenues come from multiplying standard per unit amounts by the planned volume of production.

Accepted Answer

A) True 
 B)False

Question 16

Select the incorrect statement regarding flexible budgets.

Accepted Answer

A)  Flexible budgets often show the estimated revenues and costs at multiple volume levels. 
B)  A flexible budget is used to compare actual to budgeted amounts. 
C)  A flexible budget is also known as a master budget. 
D)  Standard prices and costs are used in preparing a flexible budget. 
A)  Flexible budgets often show the estimated revenues and costs at multiple volume levels. 
B)  A flexible budget is used to compare actual to budgeted amounts. 
C)  A flexible budget is also known as a master budget. 
D)  Standard prices and costs are used in preparing a flexible budget.

Question 17

Standard cost systems facilitate the management practice known as:

Accepted Answer

A)  Management by the numbers. 
B)  Management development. 
C)  Managing by exception. 
D)  Just-in-time management. 
A)  Management by the numbers. 
B)  Management development. 
C)  Managing by exception. 
D)  Just-in-time management.

Question 18

Indicate whether each of the following statements is

Accepted Answer

In deciding whether to investigate a var

Question 19

A cost variance is unfavorable if actual cost exceeds standard cost.

Accepted Answer

A) True 
 B)False

Question 20

How are managers likely to respond if variances are used to punish managers?

Accepted Answer

Answers will vary
The use of variances t

Indicate whether each of the following statements is

Which of the following can reduce the amount of employees' budget gamesmanship?

Sales volume variances are attributable to differences between planned and actual activity volumes,as well as differences in selling price.

Which of the following is an incorrect statement regarding variances?

Which of the following income statement formats is most commonly used with flexible budgeting?

What are examples of budget gamesmanship that may occur in a company,and how can the gamesmanship be reduced?

A benefit of using a standard cost system is that it can boost morale and motivate employees,if properly maintained.

Two budgeting games sometimes played by employees are building in budget slack and making the numbers.

Flexible budget amounts for variable costs and revenues come from multiplying standard per unit amounts by the planned volume of production.

Select the incorrect statement regarding flexible budgets.

Standard cost systems facilitate the management practice known as:

Indicate whether each of the following statements is

A cost variance is unfavorable if actual cost exceeds standard cost.

How are managers likely to respond if variances are used to punish managers?

Management Accounting and Corporate Governance

Cost Behavior, Operating Leverage, and Profitability Analysis

Analysis of Cost,Volume,and Pricing to Increase Profitability

Cost Accumulation,Tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters

Exam 8: Performance Evaluation

Indicate whether each of the following statements is

Which of the following can reduce the amount of employees' budget gamesmanship?

Sales volume variances are attributable to differences between planned and actual activity volumes,as well as differences in selling price.

Which of the following is an incorrect statement regarding variances?

Which of the following income statement formats is most commonly used with flexible budgeting?

What are examples of budget gamesmanship that may occur in a company,and how can the gamesmanship be reduced?

A benefit of using a standard cost system is that it can boost morale and motivate employees,if properly maintained.

Two budgeting games sometimes played by employees are building in budget slack and making the numbers.

Flexible budget amounts for variable costs and revenues come from multiplying standard per unit amounts by the planned volume of production.

Select the incorrect statement regarding flexible budgets.

Standard cost systems facilitate the management practice known as:

Indicate whether each of the following statements is

A cost variance is unfavorable if actual cost exceeds standard cost.

How are managers likely to respond if variances are used to punish managers?

Management Accounting and Corporate Governance

Cost Behavior, Operating Leverage, and Profitability Analysis

Analysis of Cost,Volume,and Pricing to Increase Profitability

Cost Accumulation,Tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters