Question 1

One problem with benchmarking is ensuring that numbers are comparable.

Accepted Answer

A) True 
 B)False  True

Question 2

When continuous improvement budgeted costing is implemented, cost reductions can result from:

Accepted Answer

A) price reductions 
B) reducing materials waste 
C) producing products faster and more efficiently 
D) All of these answers are correct. 
A) price reductions 
B) reducing materials waste 
C) producing products faster and more efficiently 
D) All of these answers are correct. D

Question 3

Answer the following questions using the information below:
These questions refer to flexible-budget variance formulas with the following descriptions for the variables: A = Actual; B = Budgeted; P = Price; Q = Quantity.
-The best label for the formula (AQ - BQ)BP is the:

Accepted Answer

A) efficiency variance 
B) price variance 
C) total flexible-budget variance 
D) spending variance 
A) efficiency variance 
B) price variance 
C) total flexible-budget variance 
D) spending variance A

Question 4

Typically, managers have the LEAST control over:

Accepted Answer

A) the direct material price variance 
B) the direct material efficiency variance 
C) machine maintenance 
D) the scheduling of production 
A) the direct material price variance 
B) the direct material efficiency variance 
C) machine maintenance 
D) the scheduling of production

Question 5

Answer the following questions using the information below:
Berman's Camera Shop has prepared the following flexible budget for September and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance.
  
-The actual amount spent for Material B was:

Accepted Answer

A) $58,000 
B) $59,000 
C) $60,000 
D) $61,000 
A) $58,000 
B) $59,000 
C) $60,000 
D) $61,000

Question 6

All of the following are needed to prepare a flexible budget EXCEPT determining the:

Accepted Answer

A) budgeted variable cost per output unit 
B) budgeted fixed costs 
C) actual selling price per unit 
D) actual quantity of output units 
A) budgeted variable cost per output unit 
B) budgeted fixed costs 
C) actual selling price per unit 
D) actual quantity of output units

Question 7

Effectiveness is the relative amount of inputs used to achieve a given output level.

Accepted Answer

A) True 
 B)False

Question 8

Standard costing systems are a useful tool when using:

Accepted Answer

A) just-in-time systems 
B) total quality management 
C) computer-integrated manufacturing systems 
D) All of these answers are correct. 
A) just-in-time systems 
B) total quality management 
C) computer-integrated manufacturing systems 
D) All of these answers are correct.

Question 9

A purchasing manager's performance is best evaluated using the:

Accepted Answer

A) direct materials price variance 
B) direct materials flexible-budget variance 
C) direct manufacturing labor flexible-budget variance 
D) affect the manager's action has on total costs for the entire company 
A) direct materials price variance 
B) direct materials flexible-budget variance 
C) direct manufacturing labor flexible-budget variance 
D) affect the manager's action has on total costs for the entire company

Question 10

Coffey Company maintains a very large direct materials inventory because of critical demands placed upon it for rush orders from large hospitals. Item A contains hard-to-get material Y. Currently, the standard cost of material Y is $4.00 per gram. During February, 22,000 grams were purchased for $4.10 per gram, while only 20,000 grams were used in production. There was no beginning inventory of material Y.
Required:
a. Determine the direct materials price variance, assuming that all materials costs are the responsibility of the materials purchasing manager.
b. Determine the direct materials price variance, assuming that all materials costs are the responsibility of the production manager.
c. Discuss the issues involved in determining the price variance at the point of purchase versus the point of consumption.

Accepted Answer

@#IMG-DLM& @#IMG-DLM& c. Measuring the price variance at the

Question 11

Answer the following questions using the information below:
The actual information pertains to the third quarter. As part of the budgeting process, the Duck Decoy Department of Wooden Figurines Incorporated had developed the following static budget for the third quarter. Duck Decoy is in the process of preparing the flexible budget and understanding the results.
        
-The flexible budget will report ________ for variable costs.

Accepted Answer

A) $154,000 
B) $189,583 
C) $175,000 
D) $13,583 
A) $154,000 
B) $189,583 
C) $175,000 
D) $13,583

Question 12

An unfavorable sales-volume variance could result from:

Accepted Answer

A) decreased demand for the product 
B) competitors taking market share 
C) customer dissatisfaction with the product 
D) All of these answers are correct. 
A) decreased demand for the product 
B) competitors taking market share 
C) customer dissatisfaction with the product 
D) All of these answers are correct.

Question 13

Answer the following questions using the information below:
Melville Incorporated planned to use $37.50 of material per unit but actually used $36.75 of material per unit, and planned to make 1,800 units but actually made 1,600 units.
-The flexible-budget variance is:

Accepted Answer

A) $7,500 favorable 
B) $7,500 unfavorable 
C) $1,200 unfavorable 
D) $1,200 favorable 
A) $7,500 favorable 
B) $7,500 unfavorable 
C) $1,200 unfavorable 
D) $1,200 favorable

Question 14

An unfavorable variance may be due to poor planning rather than due to inefficiency.

Accepted Answer

A) True 
 B)False

Question 15

The term budget indicates:

Accepted Answer

A) that standards have been used to develop the budget 
B) that actual input data from past periods have been used to develop the budget 
C) that engineering studies have been used to develop the budget 
D) planned amounts for a future accounting period 
A) that standards have been used to develop the budget 
B) that actual input data from past periods have been used to develop the budget 
C) that engineering studies have been used to develop the budget 
D) planned amounts for a future accounting period

Question 16

A favorable variance can be automatically interpreted as "good news."

Accepted Answer

A) True 
 B)False

Question 17

Answer the following questions using the information below:
Diana Industries, Inc. (DII), developed standard costs for direct material and direct labor. In 2010, DII estimated the following standard costs for one of their major products, the 10-gallon plastic container.
   During June, DII produced and sold 10,000 containers using 980 pounds of direct materials at an average cost per pound of $32 and 500 direct manufacturing labor-hours at an average wage of $15.25 per hour.
-June's direct material efficiency variance is:

Accepted Answer

A) $1,860 unfavorable 
B) $600 favorable 
C) $1,360 favorable 
D) None of these answers are correct. 
A) $1,860 unfavorable 
B) $600 favorable 
C) $1,360 favorable 
D) None of these answers are correct.

Question 18

Answer the following questions using the information below:
JJ Abrams planned to use $164 of material per unit but actually used $160 of material per unit, and planned to make 1,200 units but actually made 1,000 units.
-Bebee Corporation currently produces cardboard boxes in an automated process. Expected production per month is 40,000 units, direct-material costs are $0.60 per unit, and manufacturing overhead costs are $18,000 per month. Manufacturing overhead is all fixed costs. What is the flexible budget for 20,000 and 40,000 units, respectively?

Accepted Answer

A) $21,000; $33,000 
B) $21,000; $42,000 
C) $30,000; $42,000 
D) None of these answers are correct. 
A) $21,000; $33,000 
B) $21,000; $42,000 
C) $30,000; $42,000 
D) None of these answers are correct.

Question 19

A flexible-budget variance is $600 favorable for unit-related costs. This indicates that costs were:

Accepted Answer

A) $600 more than the master budget 
B) $600 less than for the planned level of activity 
C) $600 more than standard for the achieved level of activity 
D) $600 less than standard for the achieved level of activity 
A) $600 more than the master budget 
B) $600 less than for the planned level of activity 
C) $600 more than standard for the achieved level of activity 
D) $600 less than standard for the achieved level of activity

Question 20

Answer the following questions using the information below:
Diana Industries, Inc. (DII), developed standard costs for direct material and direct labor. In 2010, DII estimated the following standard costs for one of their major products, the 10-gallon plastic container.
   During June, DII produced and sold 10,000 containers using 980 pounds of direct materials at an average cost per pound of $32 and 500 direct manufacturing labor-hours at an average wage of $15.25 per hour.
-June's direct manufacturing labor price variance is:

Accepted Answer

A) $125 unfavorable 
B) $125 favorable 
C) $7,623.50 unfavorable 
D) None of these answers are correct. 
A) $125 unfavorable 
B) $125 favorable 
C) $7,623.50 unfavorable 
D) None of these answers are correct.

One problem with benchmarking is ensuring that numbers are comparable.

When continuous improvement budgeted costing is implemented, cost reductions can result from:

Answer the following questions using the information below: These questions refer to flexible-budget variance formulas with the following descriptions for the variables: A = Actual; B = Budgeted; P = Price; Q = Quantity. -The best label for the formula (AQ - BQ)BP is the:

Typically, managers have the LEAST control over:

All of the following are needed to prepare a flexible budget EXCEPT determining the:

Effectiveness is the relative amount of inputs used to achieve a given output level.

Standard costing systems are a useful tool when using:

A purchasing manager's performance is best evaluated using the:

An unfavorable sales-volume variance could result from:

Answer the following questions using the information below: Melville Incorporated planned to use $37.50 of material per unit but actually used $36.75 of material per unit, and planned to make 1,800 units but actually made 1,600 units. -The flexible-budget variance is:

An unfavorable variance may be due to poor planning rather than due to inefficiency.

The term budget indicates:

A favorable variance can be automatically interpreted as "good news."

A flexible-budget variance is $600 favorable for unit-related costs. This indicates that costs were:

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

Exam 7: Flexible Budgets, Direct-Cost Variances, and Management Control

One problem with benchmarking is ensuring that numbers are comparable.

When continuous improvement budgeted costing is implemented, cost reductions can result from:

Answer the following questions using the information below: These questions refer to flexible-budget variance formulas with the following descriptions for the variables: A = Actual; B = Budgeted; P = Price; Q = Quantity. -The best label for the formula (AQ - BQ)BP is the:

Typically, managers have the LEAST control over:

All of the following are needed to prepare a flexible budget EXCEPT determining the:

Effectiveness is the relative amount of inputs used to achieve a given output level.

Standard costing systems are a useful tool when using:

A purchasing manager's performance is best evaluated using the:

An unfavorable sales-volume variance could result from:

Answer the following questions using the information below: Melville Incorporated planned to use $37.50 of material per unit but actually used $36.75 of material per unit, and planned to make 1,800 units but actually made 1,600 units. -The flexible-budget variance is:

An unfavorable variance may be due to poor planning rather than due to inefficiency.

The term budget indicates:

A favorable variance can be automatically interpreted as "good news."

A flexible-budget variance is $600 favorable for unit-related costs. This indicates that costs were:

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters