Question 1

Fixed overhead costs do not vary with cost driver activity.

Accepted Answer

A) True 
 B)False

Question 2

Borabora Company produces 2,500 units.Each unit was expected to require 2 labor hours at a cost of $10 per hour.Total labor cost was $52,250 for 4,750 hours worked.Direct labor is measured in labor hours.What is the direct labor quantity variance?

Accepted Answer

A) $2,500 Favorable 
B) $2,500 Unfavorable 
C) $2,750 Favorable 
D) $2,750 Unfavorable 
A) $2,500 Favorable 
B) $2,500 Unfavorable 
C) $2,750 Favorable 
D) $2,750 Unfavorable

Question 3

Ideal standards have an adverse effect on employee motivation.

Accepted Answer

A) True 
 B)False

Question 4

The following data for the Hermit Company pertain to the production of 2,000 clay bottles during July:   What is the variable overhead flexible budget variance?

Accepted Answer

A) $240 Unfavorable 
B) $1,000 Favorable 
C) $1,000 Unfavorable 
D) $1,280 Favorable 
A) $240 Unfavorable 
B) $1,000 Favorable 
C) $1,000 Unfavorable 
D) $1,280 Favorable

Question 5

A budget prepared for one expected level of activity is called a ________.

Accepted Answer

A) flexible budget 
B) static budget 
C) variable budget 
D) rolling budget 
A) flexible budget 
B) static budget 
C) variable budget 
D) rolling budget

Question 6

The Footy Company currently produces sandals in an automated process.Expected production per month is 20,000 units.The required direct materials cost is $1.50 per unit.Fixed overhead costs are $30,000 per month.The cost driver is units of production.What is the expected manufacturing cost of 15,000 units for one month?

Accepted Answer

A) $22,500 
B) $45,000 
C) $52,500 
D) $88,000 
A) $22,500 
B) $45,000 
C) $52,500 
D) $88,000

Question 7

Differences between the actual results and the flexible budget at the actual level of output achieved are ________ variances.

Accepted Answer

A) static budget 
B) activity budget 
C) flexible budget 
D) operating budget 
A) static budget 
B) activity budget 
C) flexible budget 
D) operating budget

Question 8

The variable overhead efficiency variance indicates to management how much variable overhead cost it may waste by not controlling the use of cost-driver activity.

Accepted Answer

A) True 
 B)False

Question 9

The Patriot Company makes chairs for which the following standards have been developed:   Production of 250 chairs was expected in March,but 300 chairs were actually completed.Direct materials purchased and used were 2,700 pounds at an actual price of $4.40 per pound.Direct labor cost for the month was $10,620,and the actual pay per hour was $19.00.What is the standard direct material cost for each chair produced?

Accepted Answer

A) $19.00 
B) $39.00 
C) $44.00 
D) $46.00 
A) $19.00 
B) $39.00 
C) $44.00 
D) $46.00

Question 10

The following data are for Pepperdine Corporation:   The sales activity variance for operating income is ________.

Accepted Answer

A) $14,000 Favorable 
B) $14,000 Unfavorable 
C) $16,000 Favorable 
D) $16,000 Unfavorable 
A) $14,000 Favorable 
B) $14,000 Unfavorable 
C) $16,000 Favorable 
D) $16,000 Unfavorable

Question 11

Differences between actual results and the static budget at the original planned level of output are ________ variances.

Accepted Answer

A) flexible budget 
B) financial budget 
C) operating budget 
D) static budget 
A) flexible budget 
B) financial budget 
C) operating budget 
D) static budget

Question 12

ZZ Company reports the following information for the last year of operations:   What is the fixed overhead spending variance?

Accepted Answer

A) $3,000 Favorable 
B) $21,000 Unfavorable 
C) $24,000 Unfavorable 
D) $30,000 Favorable 
A) $3,000 Favorable 
B) $21,000 Unfavorable 
C) $24,000 Unfavorable 
D) $30,000 Favorable

Question 13

Priestly Company uses activity-based costing.The company is trying to estimate the costs of the processing activity in the factory.The company has developed the following flexible budget formula: Y = $10.50X + $13,000
Where: Y = Total processing cost per quarter and X = Number of machine hours
If 10,000 machine hours are used next quarter,total variable costs are ________ and total fixed costs are ________.

Accepted Answer

A) $105,000; $13,000 
B) $105,000; $130,000,000 
C) $113,000; $130,000,000 
D) $10.50; $13,000 
A) $105,000; $13,000 
B) $105,000; $130,000,000 
C) $113,000; $130,000,000 
D) $10.50; $13,000

Question 14

Standard cost systems value products according to actual costs.

Accepted Answer

A) True 
 B)False

Question 15

A budget prepared for different levels of activity is called a ________.

Accepted Answer

A) rolling budget 
B) operating budget 
C) flexible budget 
D) static budget 
A) rolling budget 
B) operating budget 
C) flexible budget 
D) static budget

Question 16

Variances are signals that actual operations are different from what was expected.

Accepted Answer

A) True 
 B)False

Question 17

Yesterday Company has the following information:   Assume units of output is the cost driver for product costs.What is the static budget variance for operating income?

Accepted Answer

A) $11,000 Unfavorable 
B) $12,000 Unfavorable 
C) $23,000 Unfavorable 
D) $23,000 Favorable 
A) $11,000 Unfavorable 
B) $12,000 Unfavorable 
C) $23,000 Unfavorable 
D) $23,000 Favorable

Question 18

Efficiency is the degree to which a goal or objective is met.

Accepted Answer

A) True 
 B)False

Question 19

The quantity variance for direct materials can be computed by multiplying the standard price by the difference between the ________.

Accepted Answer

A) standard inputs allowed and expected inputs allowed at actual output 
B) quantity of inputs actually used and the quantity of inputs that should have been used for the expected output 
C) standard inputs allowed and expected inputs allowed for expected output 
D) quantity of inputs actually used and the quantity of inputs that should have been used for actual output 
A) standard inputs allowed and expected inputs allowed at actual output 
B) quantity of inputs actually used and the quantity of inputs that should have been used for the expected output 
C) standard inputs allowed and expected inputs allowed for expected output 
D) quantity of inputs actually used and the quantity of inputs that should have been used for actual output

Question 20

To calculate the numbers in a flexible budget,managers use ________.

Accepted Answer

A) cost functions developed from regression analysis 
B) flexible budget formulas 
C) cost functions obtained from the high-low method 
D) all of the above 
A) cost functions developed from regression analysis 
B) flexible budget formulas 
C) cost functions obtained from the high-low method 
D) all of the above

Fixed overhead costs do not vary with cost driver activity.

Borabora Company produces 2,500 units.Each unit was expected to require 2 labor hours at a cost of $10 per hour.Total labor cost was $52,250 for 4,750 hours worked.Direct labor is measured in labor hours.What is the direct labor quantity variance?

Ideal standards have an adverse effect on employee motivation.

The following data for the Hermit Company pertain to the production of 2,000 clay bottles during July: What is the variable overhead flexible budget variance?

A budget prepared for one expected level of activity is called a ________.

Differences between the actual results and the flexible budget at the actual level of output achieved are ________ variances.

The variable overhead efficiency variance indicates to management how much variable overhead cost it may waste by not controlling the use of cost-driver activity.

The following data are for Pepperdine Corporation: The sales activity variance for operating income is ________.

Differences between actual results and the static budget at the original planned level of output are ________ variances.

ZZ Company reports the following information for the last year of operations: What is the fixed overhead spending variance?

Standard cost systems value products according to actual costs.

A budget prepared for different levels of activity is called a ________.

Variances are signals that actual operations are different from what was expected.

Yesterday Company has the following information: Assume units of output is the cost driver for product costs.What is the static budget variance for operating income?

Efficiency is the degree to which a goal or objective is met.

The quantity variance for direct materials can be computed by multiplying the standard price by the difference between the ________.

To calculate the numbers in a flexible budget,managers use ________.

Managerial Accounting, the Business Organization

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus

Relevant Information for Decision Making With a Focus

Introduction to Budgets and Preparing the Master Budget

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 8: Flexible Budgets and Variance Analysis

Fixed overhead costs do not vary with cost driver activity.

Borabora Company produces 2,500 units.Each unit was expected to require 2 labor hours at a cost of $10 per hour.Total labor cost was $52,250 for 4,750 hours worked.Direct labor is measured in labor hours.What is the direct labor quantity variance?

Ideal standards have an adverse effect on employee motivation.

The following data for the Hermit Company pertain to the production of 2,000 clay bottles during July: What is the variable overhead flexible budget variance?

A budget prepared for one expected level of activity is called a ________.

Differences between the actual results and the flexible budget at the actual level of output achieved are ________ variances.

The variable overhead efficiency variance indicates to management how much variable overhead cost it may waste by not controlling the use of cost-driver activity.

The following data are for Pepperdine Corporation: The sales activity variance for operating income is ________.

Differences between actual results and the static budget at the original planned level of output are ________ variances.

ZZ Company reports the following information for the last year of operations: What is the fixed overhead spending variance?

Standard cost systems value products according to actual costs.

A budget prepared for different levels of activity is called a ________.

Variances are signals that actual operations are different from what was expected.

Yesterday Company has the following information: Assume units of output is the cost driver for product costs.What is the static budget variance for operating income?

Efficiency is the degree to which a goal or objective is met.

The quantity variance for direct materials can be computed by multiplying the standard price by the difference between the ________.

To calculate the numbers in a flexible budget,managers use ________.

Managerial Accounting, the Business Organization

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus

Relevant Information for Decision Making With a Focus

Introduction to Budgets and Preparing the Master Budget

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters