Question 1

The master budget is:

Accepted Answer

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

Question 2

The sales-quantity variance will be unfavourable when:

Accepted Answer

A) the actual sales mix shifts toward the less profitable units. 
B) the actual contribution margin is greater than the static-budget contribution margin. 
C) actual unit sales are less than budgeted unit sales. 
D) the composite unit for the actual mix is greater than for the budgeted mix. 
A) the actual sales mix shifts toward the less profitable units. 
B) the actual contribution margin is greater than the static-budget contribution margin. 
C) actual unit sales are less than budgeted unit sales. 
D) the composite unit for the actual mix is greater than for the budgeted mix.

Question 3

When benchmarking,the best levels of performance are typically found in companies that are totally different.

Accepted Answer

A) True 
 B)False

Question 4

Answer the following questions using the information below:
As part of the budgeting process,Lillee's Petanque Company developed the following static budget for August.Lillee is in the process of preparing the flexible budget and understanding the results.The actual results are for the month of August.
 $\begin{array}{lrlr}
&\text { Actual } & \text { Flexible } & \text { Static } \
&\text { Results } & \text { Budget } & \text { Budget }\
\text { Sales volume (in units) } & 20000 &\underline{\quad\quad} & 25000 \
& & & \
\text { Sales revenues } & \$ 1000000 & \$ & \$ 1250000 \
\text { Variable costs } & \underline{512000} & \$ \underline{\quad\quad}& \underline{600000} \
& & & \ 
\text { Contribution margin } & 488000 & \$ & 650000 \
& & &\
\text { Fixed costs } & 458000 & \$ \underline{\quad\quad}& 450000  \
\text { Operating profit } & \$ 30000 & \$ \underline{\quad\quad}& \$ 200000
\end{array}$
-The PRIMARY reason for low operating profits was:

Accepted Answer

A) increased fixed costs. 
B) the variable-cost variance. 
C) a poor management accounting system. 
D) lower sales volume than planned. 
A) increased fixed costs. 
B) the variable-cost variance. 
C) a poor management accounting system. 
D) lower sales volume than planned.

Question 5

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 market-size variance?

Accepted Answer

A) $1 260 000 F 
B) $108 000 F 
C) $360 000 U 
D) $1 152 000 F 
A) $1 260 000 F 
B) $108 000 F 
C) $360 000 U 
D) $1 152 000 F

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

A variance within an acceptable range is considered to be an 'in control occurrence' and calls for investigation or action by managers.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

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

Question 9

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.
 $\begin{array}{lrlr}
&\text { Actual } & \text { Flexible } & \text { Static } \
&\text { Results } & \text { Budget } & \text { Budget }\
\text { Sales volume (in units) } & 13000 & \underline{\quad\quad} & 12000 \
& & & \
\text { Sales revenues } & \$ 257500 & \$ &\$ 250000  \
\text { Variable costs } & 154000 & \$\underline{\quad\quad} &\underline{180000} \ 
& & & \
\text { Contribution margin } & 103500 & \$ & 70000 \
& & & \
\text { Fixed costs } & 50500 & \$\underline{\quad\quad}  & 49500 \
\text { Operating profit } & \$ 53000 & \$\underline{\quad\quad}  & \$ 20500
\end{array}$

-The flexible-budget variance for variable costs is:

Accepted Answer

A) $21 000 favourable. 
B) $41 000 unfavourable. 
C) $13 583 unfavourable. 
D) $41 000 favourable. 
A) $21 000 favourable. 
B) $41 000 unfavourable. 
C) $13 583 unfavourable. 
D) $41 000 favourable.

Question 10

Answer the following questions using the information below:
Bradpon Incorporated planned to use $37.50 of material per unit but actually used $36.75 of material per unit,and planned to make 1800 units but actually made 1600 units.
-The flexible-budget amount is:

Accepted Answer

A) $60 000. 
B) $1200. 
C) $67 500. 
D) $58 800. 
A) $60 000. 
B) $1200. 
C) $67 500. 
D) $58 800.

Question 11

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

Question 12

Managers benefit from variance analysis because it highlights individual aspects of:

Accepted Answer

A) costs. 
B) profit. 
C) prices. 
D) performance. 
A) costs. 
B) profit. 
C) prices. 
D) performance.

Question 13

The Omega Corporation manufactures two types of dishwashers: the ZENITH for commercial use and the House-Helper for homes.Budgeted and actual operating data for the year 2018 are as follows:
 $$\begin{array} { l r r r } 
\text { Static Budget } & \text { ZENTTH } & \text { House-Helper } & \text { Total } \
\text { Number sold } & 15000 & 60000 & 75000 \
\text { Contribution margin } & \$ 3750000 & \$ 12000000 & \$ 15750000 \
& & & \
\text { Actual Results } & \text { ZENTH } & \text { House-Helper } & \text { Total } \
\hline \text { Number sold } & 16500 & 38500 & 55000 \
\text { Contribution margin } & \$ 6200000 & \$ 10200000 & \$ 16400000
\end{array}$$ 
Required:
a.Calculate the contribution margin for the flexible budget.
b.Determine the total static-budget variance,the total flexible-budget variance,and the total sales-volume variance in terms of the contribution margin.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Budgeted contribution margin per unit:
@#LAT-DLM&

Question 14

A favourable variance can be automatically interpreted as 'good news.'

Accepted Answer

A) True 
 B)False

Question 15

Answer the following questions using the information below:
Bradpon Incorporated planned to use $37.50 of material per unit but actually used $36.75 of material per unit,and planned to make 1800 units but actually made 1600 units.
-The sales-volume variance is:

Accepted Answer

A) $1200 favourable. 
B) $7500 unfavourable. 
C) $7500 favourable. 
D) $1200 unfavourable. 
A) $1200 favourable. 
B) $7500 unfavourable. 
C) $7500 favourable. 
D) $1200 unfavourable.

Question 16

Additional insight can be gained by dividing the sales-mix variance into the flexible-budget variance and the sales-volume variance.

Accepted Answer

A) True 
 B)False

Question 17

Regier Company had planned for operating profit of $10 million in the master budget but actually achieved operating profit of only $7 million.

Accepted Answer

A) The flexible-budget variance for operating profit is $3 million favourable. 
B) The static-budget variance for operating profit is $3 million unfavourable. 
C) The flexible-budget variance for operating profit is $3 million unfavourable. 
D) The static-budget variance for operating profit is $3 million favourable. 
A) The flexible-budget variance for operating profit is $3 million favourable. 
B) The static-budget variance for operating profit is $3 million unfavourable. 
C) The flexible-budget variance for operating profit is $3 million unfavourable. 
D) The static-budget variance for operating profit is $3 million favourable.

Question 18

Answer the following questions using the information below:
V8 Engineering Pty used the following data to evaluate their current operating system.The company sells items for $14.50 each and had used a budgeted selling price of $15 per unit.
 $$\begin{array} { l r r } 
& \text { Actual } & \text { Budgeted } \
\text { Units sold } & 206000 \text { units } & 200000 \text { units } \
\text { Variable costs } & \$ 965000 & \$ 950000 \
\text { Fixed costs } & \$ 53000 & \$ 50000
\end{array}$$
-What is the static-budget variance of operating profit?

Accepted Answer

A) $31 000 unfavourable 
B) $28 000 favourable 
C) $28 000 unfavourable 
D) $26 000 favourable 
A) $31 000 unfavourable 
B) $28 000 favourable 
C) $28 000 unfavourable 
D) $26 000 favourable

Question 19

If benchmarks based on best practice are achieved,managers and management accountants can be sure that the company will be competitive in the marketplace.

Accepted Answer

A) True 
 B)False

Question 20

When budgets are not achieved,what may signal that the company should consider a change in strategy?
Variant question

Accepted Answer

A) Flowcharts 
B) Benchmarks 
C) Variances 
D) Management reports 
A) Flowcharts 
B) Benchmarks 
C) Variances 
D) Management reports

The master budget is:

The sales-quantity variance will be unfavourable when:

When benchmarking,the best levels of performance are typically found in companies that are totally different.

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

A variance within an acceptable range is considered to be an 'in control occurrence' and calls for investigation or action by managers.

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

Answer the following questions using the information below: Bradpon Incorporated planned to use $37.50 of material per unit but actually used $36.75 of material per unit,and planned to make 1800 units but actually made 1600 units. -The flexible-budget amount is:

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

Managers benefit from variance analysis because it highlights individual aspects of:

A favourable variance can be automatically interpreted as 'good news.'

Answer the following questions using the information below: Bradpon Incorporated planned to use $37.50 of material per unit but actually used $36.75 of material per unit,and planned to make 1800 units but actually made 1600 units. -The sales-volume variance is:

Additional insight can be gained by dividing the sales-mix variance into the flexible-budget variance and the sales-volume variance.

Regier Company had planned for operating profit of $10 million in the master budget but actually achieved operating profit of only $7 million.

If benchmarks based on best practice are achieved,managers and management accountants can be sure that the company will be competitive in the marketplace.

When budgets are not achieved,what may signal that the company should consider a change in strategy? Variant question

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

Filters

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

The master budget is:

The sales-quantity variance will be unfavourable when:

When benchmarking,the best levels of performance are typically found in companies that are totally different.

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

A variance within an acceptable range is considered to be an 'in control occurrence' and calls for investigation or action by managers.

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

Answer the following questions using the information below: Bradpon Incorporated planned to use $37.50 of material per unit but actually used $36.75 of material per unit,and planned to make 1800 units but actually made 1600 units. -The flexible-budget amount is:

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

Managers benefit from variance analysis because it highlights individual aspects of:

A favourable variance can be automatically interpreted as 'good news.'

Answer the following questions using the information below: Bradpon Incorporated planned to use $37.50 of material per unit but actually used $36.75 of material per unit,and planned to make 1800 units but actually made 1600 units. -The sales-volume variance is:

Additional insight can be gained by dividing the sales-mix variance into the flexible-budget variance and the sales-volume variance.

Regier Company had planned for operating profit of $10 million in the master budget but actually achieved operating profit of only $7 million.

If benchmarks based on best practice are achieved,managers and management accountants can be sure that the company will be competitive in the marketplace.

When budgets are not achieved,what may signal that the company should consider a change in strategy? Variant question

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

Filters