Question 1

Give at least three good reasons why an unfavorable efficiency variance for direct manufacturing labor might be reported.

Accepted Answer

Any three of the following:
a. More lowe

Question 2

During February the Lungren Manufacturing Company's costing system reported several variances that the production manager was surprised to see. Most of the company's monthly variances are under $125, even though they may be either favorable or unfavorable. The following information is for the manufacture of garden gates, its only product:
   Required:
a. Provide the manager with some ideas as to what may have caused the price variances.
b. What may have caused the efficiency variances?

Accepted Answer

a. Direct materials' unfavorable price v

Question 3

Managers generally have more control over price variances than efficiency variances.

Accepted Answer

A) True 
 B)False

Question 4

The static-budget variance can be subdivided into the flexible-budget variance and the sales-volume variance.

Accepted Answer

A) True 
 B)False

Question 5

Cost control is the focus of the sales-volume variance.

Accepted Answer

A) True 
 B)False

Question 6

A favorable cost variance of significant magnitude:

Accepted Answer

A) is the result of good planning 
B) if investigated, may lead to improved production methods 
C) indicates management does not need to be concerned about lax standards 
D) does not need to be investigated 
A) is the result of good planning 
B) if investigated, may lead to improved production methods 
C) indicates management does not need to be concerned about lax standards 
D) does not need to be investigated

Question 7

Repeatedly identifying causes of variances, initiating corrective actions, and evaluating results of actions is an example of

Accepted Answer

A) efficiency. 
B) effectiveness. 
C) continuous improvement. 
D) All of these answers are correct. 
A) efficiency. 
B) effectiveness. 
C) continuous improvement. 
D) All of these answers are correct.

Question 8

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 the fixed costs.

Accepted Answer

A) $50,500 
B) $49,500 Favorable 
C) $49,500 
D) $1,000 Unfavorable 
A) $50,500 
B) $49,500 Favorable 
C) $49,500 
D) $1,000 Unfavorable

Question 9

Answer the following questions using the information below:
Hector'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 A was:

Accepted Answer

A) $18,800 
B) $20,200 
C) $19,800 
D) $21,000 
A) $18,800 
B) $20,200 
C) $19,800 
D) $21,000

Question 10

The variance that is best for measuring operating performance is the:

Accepted Answer

A) static-budget variance 
B) flexible-budget variance 
C) sales-volume variance 
D) selling-price variance 
A) static-budget variance 
B) flexible-budget variance 
C) sales-volume variance 
D) selling-price variance

Question 11

Answer the following questions using the information below:
Brennen Incorporated planned to use $24 of material per unit but actually used $25 of material per unit, and planned to make 2,000 units but actually made 2,400 units.
-The sales-volume variance is:

Accepted Answer

A) $9,600 favorable 
B) $2,400 unfavorable 
C) $10,000 unfavorable 
D) $12,000 favorable 
A) $9,600 favorable 
B) $2,400 unfavorable 
C) $10,000 unfavorable 
D) $12,000 favorable

Question 12

Answer the following questions using the information below:
Manash Company manufactures tires. Some of the company's data was misplaced. Use the following information to replace the lost data:
  
-What is the total flexible-budget variance (D)?

Accepted Answer

A) $240 unfavorable 
B) $0 
C) $1,360 favorable 
D) $6,640 favorable 
A) $240 unfavorable 
B) $0 
C) $1,360 favorable 
D) $6,640 favorable

Question 13

From the perspective of control, the direct materials price variance should be isolated at the time of purchase.

Accepted Answer

A) True 
 B)False

Question 14

If a sales-volume variance was caused by poor-quality products, then the ________ would be in the best position to explain the variance.

Accepted Answer

A) production manager 
B) sales manager 
C) purchasing manager 
D) management accountant 
A) production manager 
B) sales manager 
C) purchasing manager 
D) management accountant

Question 15

Answer the following questions using the information below:
Apple Valley Orchards, Inc. (AVO), developed standard costs for direct material and direct labor. In 2011, AVO estimated the following standard costs for one of their most well loved products, the AVO classic Grandma's large apple pie which had a brown sugar coating on the top of the crust as well as including cranberry and mince ingredients in addition to the apples.
   During September, AVO produced and sold 1,200 pies using 1,875 pounds of direct materials at an average cost per pound of $7.00 and 280 direct labor hours at an average wage of $14.25 per hour.
-September's direct labor efficiency variance is:

Accepted Answer

A) $280.00 favorable 
B) $280.00 unfavorable 
C) $210.00 favorable 
D) $210.00 unfavorable 
A) $280.00 favorable 
B) $280.00 unfavorable 
C) $210.00 favorable 
D) $210.00 unfavorable

Question 16

The master budget is:

Accepted Answer

A) a flexible budget 
B) a static budget 
C) developed at the end of the period 
D) based on the actual level of output 
A) a flexible budget 
B) a static budget 
C) developed at the end of the period 
D) based on the actual level of output

Question 17

Although computed separately, price variances and efficiency variances should NOT be analyzed separately from each other.

Accepted Answer

A) True 
 B)False

Question 18

Answer the following questions using the information below:
Manash Company manufactures tires. Some of the company's data was misplaced. Use the following information to replace the lost data:
  
-What are the actual variable costs (C)?

Accepted Answer

A) $72,800 
B) $64,240 
C) $62,640 
D) $54,080 
A) $72,800 
B) $64,240 
C) $62,640 
D) $54,080

Question 19

Variances should be investigated:

Accepted Answer

A) when they are kept below a certain amount 
B) when there is a small variance for critical items such as product defects 
C) even though the cost of investigation exceeds the benefit 
D) when there is an in-control occurrence 
A) when they are kept below a certain amount 
B) when there is a small variance for critical items such as product defects 
C) even though the cost of investigation exceeds the benefit 
D) when there is an in-control occurrence

Question 20

If variance analysis is used for performance evaluation, managers are encouraged to meet targets using creativity and resourcefulness.

Accepted Answer

A) True 
 B)False

Give at least three good reasons why an unfavorable efficiency variance for direct manufacturing labor might be reported.

Managers generally have more control over price variances than efficiency variances.

The static-budget variance can be subdivided into the flexible-budget variance and the sales-volume variance.

Cost control is the focus of the sales-volume variance.

A favorable cost variance of significant magnitude:

Repeatedly identifying causes of variances, initiating corrective actions, and evaluating results of actions is an example of

The variance that is best for measuring operating performance is the:

Answer the following questions using the information below: Brennen Incorporated planned to use $24 of material per unit but actually used $25 of material per unit, and planned to make 2,000 units but actually made 2,400 units. -The sales-volume variance is:

Answer the following questions using the information below: Manash Company manufactures tires. Some of the company's data was misplaced. Use the following information to replace the lost data: -What is the total flexible-budget variance (D)?

From the perspective of control, the direct materials price variance should be isolated at the time of purchase.

If a sales-volume variance was caused by poor-quality products, then the ________ would be in the best position to explain the variance.

The master budget is:

Although computed separately, price variances and efficiency variances should NOT be analyzed separately from each other.

Answer the following questions using the information below: Manash Company manufactures tires. Some of the company's data was misplaced. Use the following information to replace the lost data: -What are the actual variable costs (C)?

Variances should be investigated:

If variance analysis is used for performance evaluation, managers are encouraged to meet targets using creativity and resourcefulness.

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

Give at least three good reasons why an unfavorable efficiency variance for direct manufacturing labor might be reported.

Managers generally have more control over price variances than efficiency variances.

The static-budget variance can be subdivided into the flexible-budget variance and the sales-volume variance.

Cost control is the focus of the sales-volume variance.

A favorable cost variance of significant magnitude:

Repeatedly identifying causes of variances, initiating corrective actions, and evaluating results of actions is an example of

The variance that is best for measuring operating performance is the:

Answer the following questions using the information below: Brennen Incorporated planned to use $24 of material per unit but actually used $25 of material per unit, and planned to make 2,000 units but actually made 2,400 units. -The sales-volume variance is:

Answer the following questions using the information below: Manash Company manufactures tires. Some of the company's data was misplaced. Use the following information to replace the lost data: -What is the total flexible-budget variance (D)?

From the perspective of control, the direct materials price variance should be isolated at the time of purchase.

If a sales-volume variance was caused by poor-quality products, then the ________ would be in the best position to explain the variance.

The master budget is:

Although computed separately, price variances and efficiency variances should NOT be analyzed separately from each other.

Answer the following questions using the information below: Manash Company manufactures tires. Some of the company's data was misplaced. Use the following information to replace the lost data: -What are the actual variable costs (C)?

Variances should be investigated:

If variance analysis is used for performance evaluation, managers are encouraged to meet targets using creativity and resourcefulness.

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