Answer the following questions using the information below: Bundaberg Bicycles has prepared the following flexible budget for September and is in the process of interpreting the variances.F denotes a favourable variance and U denotes an unfavourable variance. \[\begin{array} { l r r r } & \text { Flexible } & { \text { Variances } } \\ & \underline { \text { Budget } } & \underline {\text { Price }} & \underline { \text { Efficiency }} \\ \text { Material A } & \$ 20000 & \$ 1000 \mathrm { U } & \$ 1200 \mathrm {~F} \\ \text { Material B } & 30000 & 500 \mathrm {~F} & 800 \mathrm { U } \\ \text { Material C } & 40000 & 1400 \mathrm { U } & 1000 \mathrm {~F} \end{array}\] -The actual amount spent for Material A was:

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

Answer the following questions using the information below: Robert Jones Industries (RJ),developed standard costs for direct material and direct labour.In 2018,RJ estimated the following standard costs for one of their major products,the 10-litre wine barrel. \[\begin{array} { l l l } & \text { Budgeted quantity } & \text { Budgeted price } \\ \text { Direct materials } & 0.10 \mathrm {~kg} & \$ 30 \text { per } \mathrm { kg } \\ \text { Direct labour } & 0.05 \text { hours } & \$ 15 \text { per hour } \end{array}\] During June,RJ produced and sold 5000 containers using 490 kg of direct materials at an average cost per kg of $32 and 250 direct manufacturing labour-hours at an average wage of $15.25 per hour. -June's direct material price variance is:

A) $980 unfavourable. B) $680 favourable. C) $300 favourable. D) None of these answers are correct. A) $980 unfavourable. B) $680 favourable. C) $300 favourable. D) None of these answers are correct.

Answer the following questions using the information below: Hunter Valley Orchards (HVO),developed standard costs for direct material and direct labour.In 2018,HVO estimated the following standard costs for one of their most well-loved products,the HVO 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. \[\begin{array} { l l l } & \text { Budgeted quantity } & \text { Budgeted price } \\ \text { Direct materials } & 1.5 \mathrm {~kg} & \$ 7.25 \text { per } \mathrm { kg } \\ \text { Direct labour } & 0.25 \text { hours } & \$ 14.00 \text { per hour } \end{array}\] During September,HVO produced and sold 1200 pies using 1875 kg of direct materials at an average cost per kg of $7.00 and 280 direct labour hours at an average wage of $14.25 per hour. -September's direct labour price variance is:

A) $70.00 favourable. B) $210.00 favourable. C) $70.00 unfavourable. D) $210.00 unfavourable. A) $70.00 favourable. B) $210.00 favourable. C) $70.00 unfavourable. D) $210.00 unfavourable.

Answer the following questions using the information below: As part of the budgeting process,Garden Gnomes Incorporated had developed the following static budget for the third quarter.Garden Gnomes is in the process of preparing the flexible budget and understanding the results.The actual information relates to the third quarter. $\begin{array}{lrlr} &\text { Actual } & \text { Flexible } & \text { Static } \\ &\text { Results } & \text { Budget } & \text { Budget }\\ \text { Sales volume (in units) } & 13000 & \underline{\quad\quad} & 12000 \\ & & & \\ \text { Sales revenues } & \$ 257500 & \$ &\$ 250000 \\ \text { Variable costs } & 154000 & \$\underline{\quad\quad} &\underline{180000} \\ & & & \\ \text { Contribution margin } & 103500 & \$ & 70000 \\ & & & \\ \text { Fixed costs } & 50500 & \$\underline{\quad\quad} & 49500 \\ \text { Operating profit } & \$ 53000 & \$\underline{\quad\quad} & \$ 20500 \end{array}$ -More insight into the static-budget variance can be gained by subdividing it into:

A) a cost hierarchy. B) the flexible-budget variance and the sales-volume variance. C) the sales-mix variance and the sales-quantity variance. D) the market-share variance and the market-size variance. A) a cost hierarchy. B) the flexible-budget variance and the sales-volume variance. C) the sales-mix variance and the sales-quantity variance. D) the market-share variance and the market-size variance.

Answer the following questions using the information below: The Broken Hill Dustbusters Corporation manufactures two types of vacuum cleaners,the Terminator for commercial building use and the Dustmaid for residences.Budgeted and actual operating data for the year 2018 were as follows: \[\begin{array} { l r r r } \text { Static Budget } & \text { Terminator } & \text { Dustmaid } & \text { Total } \\ \text { Number sold } & 5000 & 20000 & 25000 \\ \text { Contribution margin } & \$ 1500000 & \$ 3000000 & \$ 4500000 \\ & & & \\ \text { Actual Results } & \text { Terminator } & \text { Dustmaid } & \text { Total } \\ \hline \text { Number sold } & 4000 & 28000 & 32000 \\ \text { Contribution margin } & \$ 1280000 & \$ 3920000 & \$ 5200000 \end{array}\] Prior to the beginning of the year,a consulting firm estimated the total volume for vacuum cleaners of the Terminator and Dustmaid category to be 250 000 units,but actual industry volume was 256 000 units. -What is the budgeted contribution margin per composite unit of the budgeted mix?

A) $162.500 B) $180.000 C) $140.625 D) $208.000 A) $162.500 B) $180.000 C) $140.625 D) $208.000

Answer the following questions using the information below: The Tornado Dust Removers Corporation manufactures two vacuum cleaners,the Standard and the Supreme.The following information was gathered about the two products: \[\begin{array} { l r r } & \text { Standard } & \text { Supreme } \\ \text { Bud geted sales in urits } & 4000 & 1000 \\ \text { Bud geted selling price } & \$ 300 & \$ 850 \\ \text { Bud geted contribution margin per unit } & \$ 210 & \$ 550 \\ \text { Actual sales in units } & 3500 & 1500 \\ \text { Actual selling price } & \$ 325 & \$ 840 \end{array}\] -What is the total sales-volume variance in terms of the contribution margin?

A) $275 000 favourable B) $105 000 unfavourable C) $380 000 favourable D) $170 000 favourable A) $275 000 favourable B) $105 000 unfavourable C) $380 000 favourable D) $170 000 favourable

Exam 12: Flexible Budgets, Direct Cost Variances and Management Control

Answer the following questions using the information below: Bundaberg Bicycles has prepared the following flexible budget for September and is in the process of interpreting the variances.F denotes a favourable variance and U denotes an unfavourable variance. Flexible Variances Material A \ 20000 \ 1000 \ 1200 Material B 30000 500 800 Material C 40000 1400 1000 -The actual amount spent for Material A was:

(Multiple Choice)

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Question 181

Variance analysis is subject to the same ________________ test as all other phases of a management control system.

(Multiple Choice)

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Question 182

Answer the following questions using the information below: Robert Jones Industries (RJ),developed standard costs for direct material and direct labour.In 2018,RJ estimated the following standard costs for one of their major products,the 10-litre wine barrel. Budgeted quantity Budgeted price Direct materials 0.10 \ 30 per Direct labour 0.05 hours \ 15 per hour During June,RJ produced and sold 5000 containers using 490 kg of direct materials at an average cost per kg of $32 and 250 direct manufacturing labour-hours at an average wage of $15.25 per hour. -June's direct material price variance is:

(Multiple Choice)

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Question 183

Efficiency refers to the relative amount of inputs used to achieve a given output level.

(True/False)

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Question 184

Answer the following questions using the information below: Hunter Valley Orchards (HVO),developed standard costs for direct material and direct labour.In 2018,HVO estimated the following standard costs for one of their most well-loved products,the HVO 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. Budgeted quantity Budgeted price Direct materials 1.5 \ 7.25 per Direct labour 0.25 hours \ 14.00 per hour During September,HVO produced and sold 1200 pies using 1875 kg of direct materials at an average cost per kg of $7.00 and 280 direct labour hours at an average wage of $14.25 per hour. -September's direct labour price variance is:

(Multiple Choice)

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Question 185

Managers benefit from variance analysis because it highlights individual aspects of performance.

(True/False)

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Question 186

Answer the following questions using the information below: As part of the budgeting process,Garden Gnomes Incorporated had developed the following static budget for the third quarter.Garden Gnomes is in the process of preparing the flexible budget and understanding the results.The actual information relates to the third quarter. Actual Flexible Static Results Budget Budget Sales volume (in units) 13000 12000 Sales revenues \ 257500 \ \ 250000 Variable costs 154000 underline Contribution margin 103500 \ 70000 Fixed costs 50500 underline 49500 Operating profit \ 53000 underline \ 20500 -More insight into the static-budget variance can be gained by subdividing it into:

(Multiple Choice)

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Question 187

The CEO of Gold Coast Sun Umbrellas Company has come to you for help.Use the following data to prepare a flexible budget for possible sales/production levels of 10 000,11 000,and 12 000 units.Show the contribution margin at each activity level. _ Sales price \ 24 per unit Variable costs: Manufacturing \ 12 per unit Administrative \ 3 per unit Selling \ 1 per unit Fixed costs: Manufacturing \ 60000 Administrative \ 20000 _

(Essay)

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Question 188

What does a favourable variance indicate? Variant question

(Multiple Choice)

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Question 189

When budgets are not achieved,the variances may signal that the company should consider a change in:

(Multiple Choice)

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Question 190

Answer the following questions using the information below: The Broken Hill Dustbusters Corporation manufactures two types of vacuum cleaners,the Terminator for commercial building use and the Dustmaid for residences.Budgeted and actual operating data for the year 2018 were as follows: Static Budget Terminator Dustmaid Total Number sold 5000 20000 25000 Contribution margin \ 1500000 \ 3000000 \ 4500000 Actual Results Terminator Dustmaid Total Number sold 4000 28000 32000 Contribution margin \ 1280000 \ 3920000 \ 5200000 Prior to the beginning of the year,a consulting firm estimated the total volume for vacuum cleaners of the Terminator and Dustmaid category to be 250 000 units,but actual industry volume was 256 000 units. -What is the budgeted contribution margin per composite unit of the budgeted mix?

(Multiple Choice)

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Question 191

To make sure that managers interpret variances correctly and make appropriate decisions based on them,managers need to recognise that variances can have ___________ cause(s).

(Multiple Choice)

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Question 192

The flexible-budget variance may be the result of inaccurate forecasting of units sold.

(True/False)

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Question 193

The market share variance is the difference in the budgeted contribution margin for actual market size in units caused solely by the actual market share being different from the budgeted market share.

(True/False)

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Question 194

A difficulty with the market share and market size variances is that accurate measures of market share and market size often do not exist.

(True/False)

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Question 195

What type of analysis can managers use to create a cycle of continuous improvement? Variant question

(Multiple Choice)

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Question 196

Explain the difference between a static budget and a flexible budget.Explain what is meant by a static-budget variance and a flexible-budget variance. _ _

(Essay)

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Question 197

Answer the following questions using the information below: The Tornado Dust Removers Corporation manufactures two vacuum cleaners,the Standard and the Supreme.The following information was gathered about the two products: Standard Supreme Bud geted sales in urits 4000 1000 Bud geted selling price \ 300 \ 850 Bud geted contribution margin per unit \ 210 \ 550 Actual sales in units 3500 1500 Actual selling price \ 325 \ 840 -What is the total sales-volume variance in terms of the contribution margin?

(Multiple Choice)

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Question 198

The flexible-budget variance is the difference between a budgeted result and the corresponding flexible-budget amount that reflects the sales and production levels that are now known.

(True/False)

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Question 199

A flexible-budget variance is $800 favourable for unit-related costs.This indicates that costs were:

(Multiple Choice)

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Question 200

Variance analysis is subject to the same ________________ test as all other phases of a management control system.

Efficiency refers to the relative amount of inputs used to achieve a given output level.

Managers benefit from variance analysis because it highlights individual aspects of performance.

What does a favourable variance indicate? Variant question

When budgets are not achieved,the variances may signal that the company should consider a change in:

To make sure that managers interpret variances correctly and make appropriate decisions based on them,managers need to recognise that variances can have ___________ cause(s).

The flexible-budget variance may be the result of inaccurate forecasting of units sold.

The market share variance is the difference in the budgeted contribution margin for actual market size in units caused solely by the actual market share being different from the budgeted market share.

A difficulty with the market share and market size variances is that accurate measures of market share and market size often do not exist.

What type of analysis can managers use to create a cycle of continuous improvement? Variant question

Explain the difference between a static budget and a flexible budget.Explain what is meant by a static-budget variance and a flexible-budget variance. _ _

The flexible-budget variance is the difference between a budgeted result and the corresponding flexible-budget amount that reflects the sales and production levels that are now known.

A flexible-budget variance is $800 favourable for unit-related costs.This indicates that costs were:

Management Accounting in Context

Different Costs for Different Purposes

Determining How Costs Behave

Costvolumeprofit Analysis

Estimating the Cost of Producing Services

Estimating the Costs of Products and Inventory

Target Costing, Managing Activities and Managing Capacity

Activity-Based Management and Activity-Based Costing

Pricing and Customer Profitability

Decision Making and Relevant Information

Budgeting, Management Control and Responsibility Accounting

Flexible Budgets, Overhead Cost Variances and Management Control

Allocation of Support-Department Costs, Common Costs and Revenues

Strategy Formation, Strategic Control and the Balanced Scorecard

Quality, Time and the Balanced Scorecard

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

Measuring and Reporting Sustainability

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