Question 1

A favorable efficiency variance for direct materials might indicate:

Accepted Answer

A) that lower-quality materials were purchased 
B) an overskilled workforce 
C) poor design of products or processes 
D) a lower-priced supplier was used 
A) that lower-quality materials were purchased 
B) an overskilled workforce 
C) poor design of products or processes 
D) a lower-priced supplier was used

Question 2

The essence of variance analysis is to capture a departure from what was expected.

Accepted Answer

A) True 
 B)False

Question 3

Continuous improvement budgeted costs target price reductions and efficiency improvements.

Accepted Answer

A) True 
 B)False

Question 4

It is best to rely totally on financial performance measures rather than using a combination of financial and nonfinancial performance measures.

Accepted Answer

A) True 
 B)False

Question 5

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.
-The flexible-budget variance is:

Accepted Answer

A) $4,000 favorable 
B) $28,000 unfavorable 
C) $32,800 unfavorable 
D) $4,800 favorable 
A) $4,000 favorable 
B) $28,000 unfavorable 
C) $32,800 unfavorable 
D) $4,800 favorable

Question 6

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 static-budget variance?

Accepted Answer

A) $10,400 favorable 
B) $6,640 favorable 
C) $3,760 unfavorable 
D) $3,760 favorable 
A) $10,400 favorable 
B) $6,640 favorable 
C) $3,760 unfavorable 
D) $3,760 favorable

Question 7

Favorable direct manufacturing labor efficiency variances are:

Accepted Answer

A) always credits 
B) always debits 
C) debited to the Work-in-Process Control account 
D) debited to the Wages Payable Control account 
A) always credits 
B) always debits 
C) debited to the Work-in-Process Control account 
D) debited to the Wages Payable Control account

Question 8

A standard is attainable through efficient operations but allows for normal disruptions such as machine breakdowns and defective production.

Accepted Answer

A) True 
 B)False

Question 9

Answer the following questions using the information below:
Everclean Filter Corporation used the following data to evaluate their current operating system. The company sells items for $10 each and had used a budgeted selling price of $11 per unit.
  
-What is the static-budget variance of operating income?

Accepted Answer

A) $12,000 unfavorable 
B) $12,000 favorable 
C) $15,000 favorable 
D) $15,000 unfavorable 
A) $12,000 unfavorable 
B) $12,000 favorable 
C) $15,000 favorable 
D) $15,000 unfavorable

Question 10

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 efficiency 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.

Question 11

Budgeted input quantity information may be obtained from:

Accepted Answer

A) actual input quantities used last period 
B) standards developed by your company 
C) data from other companies that have similar processes 
D) All of these answers are correct. 
A) actual input quantities used last period 
B) standards developed by your company 
C) data from other companies that have similar processes 
D) All of these answers are correct.

Question 12

Answer the following questions using the information below:
Caan Corporation used the following data to evaluate their current operating system. The company sells items for $20 each and used a budgeted selling price of $20 per unit.
  
-What is the static-budget variance of operating income?

Accepted Answer

A) $165,000 favorable 
B) $190,000 unfavorable 
C) $60,000 favorable 
D) $60,000 unfavorable 
A) $165,000 favorable 
B) $190,000 unfavorable 
C) $60,000 favorable 
D) $60,000 unfavorable

Question 13

When benchmarking:

Accepted Answer

A) the best levels of performance are usually found in companies that are within different industries 
B) finding appropriate benchmarks is a minor issue 
C) comparisons can highlight areas for better future cost management 
D) Both A and C are correct. 
A) the best levels of performance are usually found in companies that are within different industries 
B) finding appropriate benchmarks is a minor issue 
C) comparisons can highlight areas for better future cost management 
D) Both A and C are correct.

Question 14

Answer the following questions using the information below:
Bowden Corporation used the following data to evaluate their current operating system. The company sells items for $20 each and used a budgeted selling price of $20 per unit.
  
-What is the static-budget variance of variable costs?

Accepted Answer

A) $1,200 favorable 
B) $9,400 unfavorable 
C) $20,000 favorable 
D) $1,200 unfavorable 
A) $1,200 favorable 
B) $9,400 unfavorable 
C) $20,000 favorable 
D) $1,200 unfavorable

Question 15

Nonfinancial performance measures:

Accepted Answer

A) are usually used in combination with financial measures for control purposes 
B) are used to evaluate overall cost efficiency 
C) allow managers to make informed tradeoffs 
D) are often the sole basis of a manager's performance evaluations 
A) are usually used in combination with financial measures for control purposes 
B) are used to evaluate overall cost efficiency 
C) allow managers to make informed tradeoffs 
D) are often the sole basis of a manager's performance evaluations

Question 16

The flexible budget contains:

Accepted Answer

A) budgeted amounts for actual output 
B) budgeted amounts for planned output 
C) actual costs for actual output 
D) actual costs for planned output 
A) budgeted amounts for actual output 
B) budgeted amounts for planned output 
C) actual costs for actual output 
D) actual costs for planned output

Question 17

A variance is:

Accepted Answer

A) the gap between an actual result and a benchmark amount 
B) the required number of inputs for one standard output 
C) the difference between an actual result and a budgeted amount 
D) the difference between a budgeted amount and a standard amount 
A) the gap between an actual result and a benchmark amount 
B) the required number of inputs for one standard output 
C) the difference between an actual result and a budgeted amount 
D) the difference between a budgeted amount and a standard amount

Question 18

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 most likely explanation of the above variances for Material A is that:

Accepted Answer

A) a lower price than expected was paid for Material A 
B) higher-quality raw materials were used than were planned 
C) the company used a higher-priced supplier 
D) Material A used during September was $2,000 less than expected 
A) a lower price than expected was paid for Material A 
B) higher-quality raw materials were used than were planned 
C) the company used a higher-priced supplier 
D) Material A used during September was $2,000 less than expected

Question 19

An unfavorable price variance for direct materials might indicate:

Accepted Answer

A) that the purchasing manager purchased in smaller quantities due to a change to just-in-time inventory methods 
B) congestion due to scheduling problems 
C) that the purchasing manager skillfully negotiated a better purchase price 
D) that the market had an unexpected oversupply of those materials 
A) that the purchasing manager purchased in smaller quantities due to a change to just-in-time inventory methods 
B) congestion due to scheduling problems 
C) that the purchasing manager skillfully negotiated a better purchase price 
D) that the market had an unexpected oversupply of those materials

Question 20

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.
-Hemberger Corporation currently produces baseball caps in an automated process. Expected production per month is 20,000 units, direct material costs are $3.00 per unit, and manufacturing overhead costs are $46,000 per month. Manufacturing overhead is entirely fixed costs. What is the flexible budget for 10,000 and 20,000 units, respectively?

Accepted Answer

A) $53,000; $83,000 
B) $53,000; $106,000 
C) $76,000; $106,000 
D) None of these answers are correct. 
A) $53,000; $83,000 
B) $53,000; $106,000 
C) $76,000; $106,000 
D) None of these answers are correct.

A favorable efficiency variance for direct materials might indicate:

The essence of variance analysis is to capture a departure from what was expected.

Continuous improvement budgeted costs target price reductions and efficiency improvements.

It is best to rely totally on financial performance measures rather than using a combination of financial and nonfinancial performance measures.

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. -The flexible-budget 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 static-budget variance?

Favorable direct manufacturing labor efficiency variances are:

A standard is attainable through efficient operations but allows for normal disruptions such as machine breakdowns and defective production.

Budgeted input quantity information may be obtained from:

Answer the following questions using the information below: Caan Corporation used the following data to evaluate their current operating system. The company sells items for $20 each and used a budgeted selling price of $20 per unit. -What is the static-budget variance of operating income?

When benchmarking:

Answer the following questions using the information below: Bowden Corporation used the following data to evaluate their current operating system. The company sells items for $20 each and used a budgeted selling price of $20 per unit. -What is the static-budget variance of variable costs?

Nonfinancial performance measures:

The flexible budget contains:

A variance is:

An unfavorable price variance for direct materials might indicate:

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

A favorable efficiency variance for direct materials might indicate:

The essence of variance analysis is to capture a departure from what was expected.

Continuous improvement budgeted costs target price reductions and efficiency improvements.

It is best to rely totally on financial performance measures rather than using a combination of financial and nonfinancial performance measures.

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. -The flexible-budget 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 static-budget variance?

Favorable direct manufacturing labor efficiency variances are:

A standard is attainable through efficient operations but allows for normal disruptions such as machine breakdowns and defective production.

Budgeted input quantity information may be obtained from:

Answer the following questions using the information below: Caan Corporation used the following data to evaluate their current operating system. The company sells items for $20 each and used a budgeted selling price of $20 per unit. -What is the static-budget variance of operating income?

When benchmarking:

Answer the following questions using the information below: Bowden Corporation used the following data to evaluate their current operating system. The company sells items for $20 each and used a budgeted selling price of $20 per unit. -What is the static-budget variance of variable costs?

Nonfinancial performance measures:

The flexible budget contains:

A variance is:

An unfavorable price variance for direct materials might indicate:

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