Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

All budgets are based on standard costs.

Accepted Answer

A) True 
 B)False

Question 3

Answer the following questions using the information below:
Hobart Garden Centre provides the following information for the month of May:
 $$\begin{array} {c}
&&&&&&&&&&&&&&&& { \text { Actual } } &&&&&&& & { \text { Budget } } \
\end{array}\
\begin{array} { l r r r r } 
& \text { Tulips } & \text { Geraniums } & \text { Tulips } & \text { Geraniums } \
\text { Sales in urits } & 1950 & 1800 & 2250 & 1500 \
\text { Contribution margin per urit } & \$ 11 & \$ 18 & \$ 10 & \$ 20
\end{array}$$
-What is the budgeted contribution margin per composite unit for the budgeted mix?

Accepted Answer

A) $14.80 
B) $14.00 
C) $14.36 
D) $13.80 
A) $14.80 
B) $14.00 
C) $14.36 
D) $13.80

Question 4

Managers must not interpret variances in isolation.

Accepted Answer

A) True 
 B)False

Question 5

When benchmarking,management accountants are MOST valuable when they:

Accepted Answer

A) provide insight into why costs or revenues differ across companies. 
B) highlight differences in the benchmarking data to management. 
C) provide complex mathematical analysis. 
D) present differences in the benchmarking data to management. 
A) provide insight into why costs or revenues differ across companies. 
B) highlight differences in the benchmarking data to management. 
C) provide complex mathematical analysis. 
D) present differences in the benchmarking data to management.

Question 6

During February the Mossman Engineering 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 favourable or unfavourable.The following information is for the manufacture of garage doors,its only product:
1.Direct materials price variance,$800 unfavourable.
2.Direct materials efficiency variance,$1800 favourable.
3.Direct manufacturing labour price variance,$4000 favourable.
4.Direct manufacturing labour efficiency variance,$600 unfavourable.
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' unfavourable price v

Question 7

_____________________ might be found in competing companies in the same industry or in companies in other industries that have similar processes.

Accepted Answer

A) Benchmarking 
B) Continuous improvement 
C) Best practice 
D) Target costing 
A) Benchmarking 
B) Continuous improvement 
C) Best practice 
D) Target costing

Question 8

Managers focus on the most significant deviations (often the largest variances).This is called:

Accepted Answer

A) target costing. 
B) target pricing. 
C) variance analysis. 
D) management by exception. 
A) target costing. 
B) target pricing. 
C) variance analysis. 
D) management by exception.

Question 9

Answer the following questions using the information below:
Tiger O'Reilly planned to use $85 of material per unit but actually used $82 of material per unit,and planned to make 1200 units but actually made 1000 units.
-The flexible-budget amount is:

Accepted Answer

A) $98 400 
B) $85 000 
C) $96 000 
D) $82 000 
A) $98 400 
B) $85 000 
C) $96 000 
D) $82 000

Question 10

Answer the following questions using the information below:
Hobart Garden Centre provides the following information for the month of May:
 $$\begin{array} {c}
&&&&&&&&&&&&&&&& { \text { Actual } } &&&&&&& & { \text { Budget } } \
\end{array}\
\begin{array} { l r r r r } 
& \text { Tulips } & \text { Geraniums } & \text { Tulips } & \text { Geraniums } \
\text { Sales in urits } & 1950 & 1800 & 2250 & 1500 \
\text { Contribution margin per urit } & \$ 11 & \$ 18 & \$ 10 & \$ 20
\end{array}$$
-What is the budgeted contribution margin per composite unit for the actual mix?

Accepted Answer

A) $14.00 
B) $14.36 
C) $13.80 
D) $14.80 
A) $14.00 
B) $14.36 
C) $13.80 
D) $14.80

Question 11

Managers can learn to budget more accurately by identifying errors in their budgeting logic.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Answer the following questions using the information below:
Wagga Wagga Printing Incorporated planned to use $12 of material per unit but actually used $14 of material per unit,and planned to make 1000 units but actually made 1200 units.
-The flexible-budget variance is:

Accepted Answer

A) $6000 favourable. 
B) $2400 unfavourable. 
C) $4800 favourable. 
D) $5000 unfavourable. 
A) $6000 favourable. 
B) $2400 unfavourable. 
C) $4800 favourable. 
D) $5000 unfavourable.

Question 14

Benchmarking is the continuous process of measuring products,services,and activities against the best possible levels of performance,either inside or outside the organisation.

Accepted Answer

A) True 
 B)False

Question 15

An unfavourable variance is conclusive evidence of poor performance.

Accepted Answer

A) True 
 B)False

Question 16

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:
 $$\begin{array} { l r r r } 
\text { Static Budget } & \text { ZENITH } & \text { House-Helper } & \text { Total } \
\text { Number sold } & 15000 & 60000 & 75000 \
\text { Contribution margin } & \$ 3750000 & \$ 12000000 & \$ 15750000 \
& & & \
\text { Actual Results } & \text { ZENITH } & \text { House-Helper } & \text { Total } \
\hline \text { Number sold } & 16500 & 38500 & 55000 \
\text { Contribution margin } & \$ 6200000 & \$ 10200000 & \$ 16400000
\end{array}$$ 
Required:
Calculate the sales-mix variance and the sales-quantity variance by type of dishwasher,and in total (in terms of the contribution margin).
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

Budgeted sales-mix percentage:
ZENITH @#LAT-DLM&
H

Question 17

Answer the following questions using the information below:
Some of Bondi Appliances financial data has been misplaced.Use the following information to replace the lost data:
 $\begin{array}{|c|c|c|c|c|c|}
\hline &\text { Actual } & \text { Flexible-Budget } & \text { Flexible } & \text { Sales-Volume } & \text { Static } \
&\text { Results } & \text { Variances } & \text { Budget } & \text { Variances } & \text { Budget }\
\hline \text { Units sold } & 225000 & & 225000 & & 206250 \
\hline \text { Revenues } & \$ 84160 & \$ 2000 \mathrm{~F} & \text { (A) } & \$ 2800 \mathrm{U} & (B)\
\hline \begin{array}{l}
\text { Variable } \
\text {costs }
\end{array} & \text { (C) } & \$ 400 \mathrm{U} & \$ 31720 & \$ 4680 \mathrm{~F} & \$ 36400 \
\hline \text { Fixed costs } & \$ 16560 & \$ 1720 \mathrm{~F} & \$ 18280 & 0 & \$ 18 280\
\hline \begin{array}{l}
\text { Operating } \
\text { profit }
\end{array} & \$ 354 & \text { (D) } & 332160 & \text { (E) } & \$20280\
\hline
\end{array}$

-What amounts are reported for revenues in the flexible budget (A)and the static budget (B),respectively?

Accepted Answer

A) $84 960;$88 960 
B) $84 960;$83 360 
C) $82 160;$84 960 
D) $82 160;$79 360 
A) $84 960;$88 960 
B) $84 960;$83 360 
C) $82 160;$84 960 
D) $82 160;$79 360

Question 18

Answer the following questions using the information below:
Barossa Valley Wines used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit.
 $$\begin{array} { l r r } 
& \text { Actual } & \text { Budgeted } \
\text { Units sold } & 495000 \text { units } & 500000 \text { units } \
\text { Variable costs } & \$ 1250000 & \$ 1500000 \
\text { Fixed costs } & \$ 925000 & \$ 900000
\end{array}$$
-What is the static-budget variance of operating profit?

Accepted Answer

A) $175 000 favourable 
B) $325 000 unfavourable 
C) $195 000 unfavourable 
D) $225 000 favourable 
A) $175 000 favourable 
B) $325 000 unfavourable 
C) $195 000 unfavourable 
D) $225 000 favourable

Question 19

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:
 $$\begin{array} { l r r } 
& \text { Standard } & \text { Supreme } \
\text { Bud geted sales in urits } & 4000 & 1000 \
\text { Bud geted selling price } & \$ 300 & \$ 850 \
\text { Bud geted contribution margin per unit } & \$ 210 & \$ 550 \
\text { Actual sales in units } & 3500 & 1500 \
\text { Actual selling price } & \$ 325 & \$ 840
\end{array}$$
-The market-share variance is the difference between:

Accepted Answer

A) actual market share and the budgeted market share. 
B) actual market size in units and the budgeted market size in units. 
C) budgeted contribution margin per composite unit for the actual mix and the budgeted contribution.margin per composite unit for the budgeted mix. 
D) actual contribution margin and the budgeted contribution margin. 
A) actual market share and the budgeted market share. 
B) actual market size in units and the budgeted market size in units. 
C) budgeted contribution margin per composite unit for the actual mix and the budgeted contribution.margin per composite unit for the budgeted mix. 
D) actual contribution margin and the budgeted contribution margin.

Question 20

Which of the following reflects the static-budget variance?
Variant question

Accepted Answer

A) The difference between the static-budget amount and the sales volume variance 
B) The difference between the budget amount in the static budget and the amount in the flexible budget 
C) The difference between an actual result and the budget amount in the static budget 
D) The difference between an actual result and the flexible budget amount 
A) The difference between the static-budget amount and the sales volume variance 
B) The difference between the budget amount in the static budget and the amount in the flexible budget 
C) The difference between an actual result and the budget amount in the static budget 
D) The difference between an actual result and the flexible budget amount

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

All budgets are based on standard costs.

Managers must not interpret variances in isolation.

When benchmarking,management accountants are MOST valuable when they:

_____________________ might be found in competing companies in the same industry or in companies in other industries that have similar processes.

Managers focus on the most significant deviations (often the largest variances).This is called:

Answer the following questions using the information below: Tiger O'Reilly planned to use $85 of material per unit but actually used $82 of material per unit,and planned to make 1200 units but actually made 1000 units. -The flexible-budget amount is:

Managers can learn to budget more accurately by identifying errors in their budgeting logic.

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

Answer the following questions using the information below: Wagga Wagga Printing Incorporated planned to use $12 of material per unit but actually used $14 of material per unit,and planned to make 1000 units but actually made 1200 units. -The flexible-budget variance is:

Benchmarking is the continuous process of measuring products,services,and activities against the best possible levels of performance,either inside or outside the organisation.

An unfavourable variance is conclusive evidence of poor performance.

Which of the following reflects the static-budget variance? 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 essence of variance analysis is to capture a departure from what was expected.

All budgets are based on standard costs.

Managers must not interpret variances in isolation.

When benchmarking,management accountants are MOST valuable when they:

_____________________ might be found in competing companies in the same industry or in companies in other industries that have similar processes.

Managers focus on the most significant deviations (often the largest variances).This is called:

Answer the following questions using the information below: Tiger O'Reilly planned to use $85 of material per unit but actually used $82 of material per unit,and planned to make 1200 units but actually made 1000 units. -The flexible-budget amount is:

Managers can learn to budget more accurately by identifying errors in their budgeting logic.

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

Answer the following questions using the information below: Wagga Wagga Printing Incorporated planned to use $12 of material per unit but actually used $14 of material per unit,and planned to make 1000 units but actually made 1200 units. -The flexible-budget variance is:

Benchmarking is the continuous process of measuring products,services,and activities against the best possible levels of performance,either inside or outside the organisation.

An unfavourable variance is conclusive evidence of poor performance.

Which of the following reflects the static-budget variance? 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