Question 1

Which of the following variances LEAST affects cost control?
Variant questi

Accepted Answer

A) Direct-material-price variance 
B) sales-volume variance 
C) Flexible-budget variance 
D) Direct manufacturing labour efficiency variance 
A) Direct-material-price variance 
B) sales-volume variance 
C) Flexible-budget variance 
D) Direct manufacturing labour efficiency variance

Question 2

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 variance is:

Accepted Answer

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

Question 3

Performance variance analysis can be used in activity-based costing systems.

Accepted Answer

A) True 
 B)False

Question 4

The sales-volume variance is the difference between a flexible-budget amount and the corresponding static-budget amount.

Accepted Answer

A) True 
 B)False

Question 5

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 revenues?

Accepted Answer

A) $50 000 favourable 
B) $50 000 unfavourable 
C) $5000 unfavourable 
D) $5000 favourable 
A) $50 000 favourable 
B) $50 000 unfavourable 
C) $5000 unfavourable 
D) $5000 favourable

Question 6

The degree to which a predetermined objective or target is met is called:

Accepted Answer

A) economy. 
B) benchmarking. 
C) effectiveness. 
D) efficiency. 
A) economy. 
B) benchmarking. 
C) effectiveness. 
D) efficiency.

Question 7

What might an unfavourable efficiency variance for direct manufacturing labour indicate?
Variant

Accepted Answer

A) Budgeted time standards are too lax 
B) Machines were not properly maintained 
C) Work was efficiently scheduled 
D) More higher-skilled workers were scheduled than planned 
A) Budgeted time standards are too lax 
B) Machines were not properly maintained 
C) Work was efficiently scheduled 
D) More higher-skilled workers were scheduled than planned

Question 8

In a(n)__________ standard there is no allowance for wastage or labour inefficiency.

Accepted Answer

A) ideal 
B) practical 
C) theoretical 
D) actual 
A) ideal 
B) practical 
C) theoretical 
D) actual

Question 9

Answer the following questions using the information below:
Cootamundra Industries (CI),developed standard costs for direct material and direct labour.In 2018,CI estimated the following standard costs for one of their major products,the 30-litre heavy-duty plastic container.
 $$\begin{array} { l l l } 
& \text { Budgeted quantity } & \text { Budgeted price } \
\text { Direct materials } & 0.20 \mathrm {~kg} & \$ 26 \text { per } \mathrm { kg } \
\text { Direct labour } & 0.10 \text { hours } & \$ 14 \text { per hour }
\end{array}$$ During July,CI produced and sold 10 000 containers using 2200 kg of direct materials at an average cost per kg of $24 and 1050 direct manufacturing labour hours at an average wage of $14.75 per hour.
-July's direct material efficiency variance is:

Accepted Answer

A) $4400 favourable. 
B) $800 unfavourable. 
C) $5200 unfavourable. 
D) None of these answers are correct. 
A) $4400 favourable. 
B) $800 unfavourable. 
C) $5200 unfavourable. 
D) None of these answers are correct.

Question 10

Answer the following questions using the information below:
Shepparton Water Sports 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.
 $$\begin{array} { l r r r } 
& \text { Flexible } & { \text { Variances } } \
& \underline { \text { Budget } } & \text { Price } & \text { Efficlency } \
\text { Material A } & \$ 20000 & \$ 1000 \mathrm {~F} & \$ 3000 \mathrm { U } \
\text { Material B } & 30000 & 500 \mathrm { U } & 1500 \mathrm {~F} \
\text { Direct mantufacturing labour } & 40000 & 500 \mathrm { U } & 2500 \mathrm {~F}
\end{array}$$
-The actual amount spent for Material B was:

Accepted Answer

A) $28 000. 
B) $29 000. 
C) $31 000. 
D) $30 000. 
A) $28 000. 
B) $29 000. 
C) $31 000. 
D) $30 000.

Question 11

An unfavourable sales-volume variance could result from:

Accepted Answer

A) customer dissatisfaction with the product. 
B) decreased demand for the product. 
C) competitors taking market share. 
D) All of these answers are correct. 
A) customer dissatisfaction with the product. 
B) decreased demand for the product. 
C) competitors taking market share. 
D) All of these answers are correct.

Question 12

Answer the following questions using the information below:
Ceylon Tea Products has an exclusive contract with West Sydney Tea Importers Corporation.Calamine and Ceylon are two brands of teas that are imported and sold to retail outlets.The following information is provided for the month of March:
 $$\begin{array}{c}
&&&&&&&&&&&&&{ \text { Actual } } &&&&&&&  { \text { Budget } } \
\end{array}\
\begin{array} { l r r r r r } 
& \text { Calamine } & \text { Ceylon } & & \text { Calamine } & \text { Ceylon } \
\text { Sales in kg } & 1850 \mathrm {~kg} & 1650 \mathrm {~kg} & & 2000 \mathrm {~kg} & 1500 \mathrm {~kg} \
\text { Price per kg } & \$ 2.50 & \$ 2.50 & & \$ 2.00 & \$ 3.00 \
\text { Variable cost per kg } & \underline { 1.00 } & \underline { 2.00 } && \underline { 1.00 } & \underline { 1.50 } \
\text { Contribution margin } &  \underline {\$ 1.50} & \underline { \$ 0.50} & & \underline { \$ 1.00} & \underline { \$ 1.50}
\end{array}$$ Budgeted and actual fixed corporate-sustaining costs are $1750 and $2000,respectively.
-What is the actual contribution margin for the month?

Accepted Answer

A) $4250 
B) $3750 
C) $4325 
D) $3600 
A) $4250 
B) $3750 
C) $4325 
D) $3600

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Gosford Company had the following journal entries recorded for the end of June.Unfortunately,the company's only accountant quit on 10 July and the CEO is at a loss as to the company's performance for the month of June.
 $\begin{array}{llr}
  \text { Materials Control} &150000\
 \text { Direct Materials Price Variance} &&5000\
 \text { Accounts Payable Control } &&145000\\
\text { Work-in-Process Control } & 60000 \
\text { Direct Materials Efficiency Variance } & 4000 \
\text { Materials Control } &&64000\\
 \text {Work-in-Process Control  } &425000\
 \text { Direct Manufacturing Labour Price Variance } &7500\
 \text { Direct Manufacturing Labour Efficiency Variance } &&9000\
 \text { 
Wages Pavable Control } &&423500\
\end{array}$
 
Required:
a.What kind of performance did the company have for June? Explain each variance.
b.Why is Direct Materials given in two entries?
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

a.The first entry is for materials purch

Question 15

_____________ standards provide realistic expectations which make them more appropriate for planning,but ideal standards can stretch employees to continue to improve.

Accepted Answer

A) Absolute 
B) Theoretical 
C) Actual 
D) Practical 
A) Absolute 
B) Theoretical 
C) Actual 
D) Practical

Question 16

A favourable market-size variance results with a decrease in market size.

Accepted Answer

A) True 
 B)False

Question 17

Answer the following questions using the information below:
Bathurst Company manufactures remote control devices for garage doors.The following information was collected during June:
 $$\begin{array} { l r } 
\text { Actual market size (urits) } & 10000 \
\text { Actual market share } & 32 \% \
\text { Actual average selling price } & \$ 10.00 \
\text { Budgeted market size (units) } & 11000 \
\text { Budgeted market share } & 30 \% \
\text { Budgeted average selling price } & \$ 11.00 \
\text { Budgeted contribution margin per } & \
\text { composite unit for budgeted mix } & \$ 4.00
\end{array}$$
-What is the sales-quantity variance?

Accepted Answer

A) $800 F 
B) $1200 U 
C) $400 U 
D) The variance cannot be determined. 
A) $800 F 
B) $1200 U 
C) $400 U 
D) The variance cannot be determined.

Question 18

NSW Hospital Supplies Corporation maintains a very large direct materials inventory because of critical demands placed upon it for rush orders from large hospitals.Item A contains hard-to-get material,Y.Currently,the standard cost of material Y is $3.00 per gram.During February,22 000 grams were purchased for $3.20 per gram,while only 20 000 grams were used in production.There was no beginning inventory of material Y.
Required:
a.Determine the direct materials price variance,assuming that all materials costs are the responsibility of the materials purchasing manager.
b.Determine the direct materials price variance,assuming that all materials costs are the responsibility of the production manager.
c.Discuss the issues involved in determining the price variance at the point of purchase versus the point of consumption.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

a. 
c.Measuring the price variance at th

Question 19

What would a favourable sales-quantity variance MOST likely be caused by?
Variant question

Accepted Answer

A) A new competitor providing better service in the high-margin product sector 
B) The company offering low-margin products at a higher price 
C) A competitor having distribution problems with high-margin products 
D) The company experiencing quality-control problems that get negative media coverage of low-margin products 
A) A new competitor providing better service in the high-margin product sector 
B) The company offering low-margin products at a higher price 
C) A competitor having distribution problems with high-margin products 
D) The company experiencing quality-control problems that get negative media coverage of low-margin products

Question 20

Answer the following questions using the information below:
These questions refer to flexible-budget variance formulas with the following descriptions for the variables: A = Actual;B = Budgeted;P = Price;Q = Quantity.
-The best label for the formula (AP - BP)AQ is the:

Accepted Answer

A) efficiency variance. 
B) spending variance. 
C) price variance. 
D) total flexible-budget variance. 
A) efficiency variance. 
B) spending variance. 
C) price variance. 
D) total flexible-budget variance.

Which of the following variances LEAST affects cost control? Variant questi

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 variance is:

Performance variance analysis can be used in activity-based costing systems.

The sales-volume variance is the difference between a flexible-budget amount and the corresponding static-budget amount.

The degree to which a predetermined objective or target is met is called:

What might an unfavourable efficiency variance for direct manufacturing labour indicate? Variant

In a(n)__________ standard there is no allowance for wastage or labour inefficiency.

An unfavourable sales-volume variance could result from:

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

_____________ standards provide realistic expectations which make them more appropriate for planning,but ideal standards can stretch employees to continue to improve.

A favourable market-size variance results with a decrease in market size.

What would a favourable sales-quantity variance MOST likely be caused by? Variant question

Answer the following questions using the information below: These questions refer to flexible-budget variance formulas with the following descriptions for the variables: A = Actual;B = Budgeted;P = Price;Q = Quantity. -The best label for the formula (AP - BP)AQ is the:

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

Which of the following variances LEAST affects cost control? Variant questi

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 variance is:

Performance variance analysis can be used in activity-based costing systems.

The sales-volume variance is the difference between a flexible-budget amount and the corresponding static-budget amount.

The degree to which a predetermined objective or target is met is called:

What might an unfavourable efficiency variance for direct manufacturing labour indicate? Variant

In a(n)__________ standard there is no allowance for wastage or labour inefficiency.

An unfavourable sales-volume variance could result from:

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

_____________ standards provide realistic expectations which make them more appropriate for planning,but ideal standards can stretch employees to continue to improve.

A favourable market-size variance results with a decrease in market size.

What would a favourable sales-quantity variance MOST likely be caused by? Variant question

Answer the following questions using the information below: These questions refer to flexible-budget variance formulas with the following descriptions for the variables: A = Actual;B = Budgeted;P = Price;Q = Quantity. -The best label for the formula (AP - BP)AQ is the:

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