Question 1

To calculate the numbers in a flexible budget,managers use ________.

Accepted Answer

A)  cost functions developed from regression analysis 
B)  flexible budget formulas 
C)  cost functions obtained from the high-low method 
D)  all of the above 
A)  cost functions developed from regression analysis 
B)  flexible budget formulas 
C)  cost functions obtained from the high-low method 
D)  all of the above

Question 2

The flexible budget variance for fixed overhead costs equals the ________ variance.

Accepted Answer

A)  efficiency 
B)  spending 
C)  static budget 
D)  operating budget 
A)  efficiency 
B)  spending 
C)  static budget 
D)  operating budget

Question 3

The static budget variance is equal to the sum of ________ and ________.

Accepted Answer

A)  direct materials variance; direct labor variance 
B)  fixed overhead variance; variable overhead variance 
C)  flexible budget variance; activity-level variance 
D)  direct materials price variance; direct materials quantity variance 
A)  direct materials variance; direct labor variance 
B)  fixed overhead variance; variable overhead variance 
C)  flexible budget variance; activity-level variance 
D)  direct materials price variance; direct materials quantity variance

Question 4

A company has the following information available about one of its products:
$\begin{array}{ll}
\text { Standard price per pound of input } & \$ 25 \
\text { Actual price per pound of input } & \$ 24 \
\text { Standard inputs per unit of output } & 3 \text { pounds } \
\text { Actual units of output } & 2,770 \
\text { Direct Materials Quantity Variance } & \$ 250 \mathrm{~F}
\end{array}$
How many pounds of material were used?

Accepted Answer

A)  $8,300 
B)  $8,310 
C)  $8,320 
D)  $8,330 
A)  $8,300 
B)  $8,310 
C)  $8,320 
D)  $8,330

Question 5

The quantity variance for direct materials can be computed by multiplying the standard price by the difference between the ________.

Accepted Answer

A)  standard inputs allowed and expected inputs allowed at actual output 
B)  quantity of inputs actually used and the quantity of inputs that should have been used for the expected output 
C)  standard inputs allowed and expected inputs allowed for expected output 
D)  quantity of inputs actually used and the quantity of inputs that should have been used for actual output 
A)  standard inputs allowed and expected inputs allowed at actual output 
B)  quantity of inputs actually used and the quantity of inputs that should have been used for the expected output 
C)  standard inputs allowed and expected inputs allowed for expected output 
D)  quantity of inputs actually used and the quantity of inputs that should have been used for actual output

Question 6

Which of the following statements about perfection standards is TRUE?

Accepted Answer

A)  It is generally believed that they have a negative influence on employee morale. 
B)  They are expressions of the most efficient performance possible. 
C)  They usually result in unfavorable variances. 
D)  All of the above 
A)  It is generally believed that they have a negative influence on employee morale. 
B)  They are expressions of the most efficient performance possible. 
C)  They usually result in unfavorable variances. 
D)  All of the above

Question 7

Perez Company had the following information available:
Expected Costs and Selling Price Based on 5,000 Units:
$\begin{array} { l  }
 \text {Variable manufacturing costs per unit }&\$32 \
 \text {Fixed manufacturing costs per unit }&\$20 \
 \text {Selling price per unit }&\$ 70\
\end{array}$

$\begin{array} { l  }
 \text {Expected production level }&5,000 \text { units } \
\end{array}$

In the flexible budget at 15,000 units,what is the total manufacturing cost?

Accepted Answer

A)  $480,000 
B)  $580,000 
C)  $680,000 
D)  $780,000 
A)  $480,000 
B)  $580,000 
C)  $680,000 
D)  $780,000

Question 8

In most companies,variances are investigated only if they exceed a minimum dollar amount or percentage deviation from budgeted amounts.

Accepted Answer

A) True 
 B)False

Question 9

A favorable materials price variance can affect all of the following variances except ________.

Accepted Answer

A)  labor rate variance 
B)  labor efficiency variance 
C)  materials quantity variance 
D)  flexible budget variance for direct materials 
A)  labor rate variance 
B)  labor efficiency variance 
C)  materials quantity variance 
D)  flexible budget variance for direct materials

Question 10

An example of a favorable variance is ________.

Accepted Answer

A)  actual revenues are less than expected revenues 
B)  actual expenses are less than expected expenses 
C)  actual material prices are greater than expected material prices 
D)  expected labor costs are less than actual labor costs 
A)  actual revenues are less than expected revenues 
B)  actual expenses are less than expected expenses 
C)  actual material prices are greater than expected material prices 
D)  expected labor costs are less than actual labor costs

Question 11

The static budget variance is the difference between actual results and the static budget for the original planned level of output.

Accepted Answer

A) True 
 B)False

Question 12

If actual expenses are less than expected expenses,the expense variance will be unfavorable.

Accepted Answer

A) True 
 B)False

Question 13

Barber Company produces 2,500 units.Each unit was expected to require 2 labor hours at a cost of $10 per hour.Total labor cost was $52,250 for 4,750 hours worked.Direct labor is measured in labor hours.What is the direct labor price variance?

Accepted Answer

A)  $2,500 Favorable 
B)  $2,500 Unfavorable 
C)  $4,750 Favorable 
D)  $4,750 Unfavorable 
A)  $2,500 Favorable 
B)  $2,500 Unfavorable 
C)  $4,750 Favorable 
D)  $4,750 Unfavorable

Question 14

In the relevant range,the sales-activity variance for fixed costs is always ________.

Accepted Answer

A)  greater than the flexible budget variance 
B)  less than the flexible budget variance 
C)  greater than the static budget variance 
D)  zero 
A)  greater than the flexible budget variance 
B)  less than the flexible budget variance 
C)  greater than the static budget variance 
D)  zero

Question 15

The following information is available for Munter Manufacturing Company.
-- Direct materials price standard is $3.25 per pound.
-- Direct materials quantity standard is six pounds per finished unit.
-- Budgeted production is 25,000 finished units.
-- 175,000 pounds of direct materials were purchased for $525,000.
-- 175,000 pounds of direct materials were used in production.
-- 25,600 finished units of product were produced.
What is the direct materials price variance?

Accepted Answer

A)  $43,750 Unfavorable 
B)  $43,750 Favorable 
C)  $350,000 Unfavorable 
D)  $350,000 Favorable 
A)  $43,750 Unfavorable 
B)  $43,750 Favorable 
C)  $350,000 Unfavorable 
D)  $350,000 Favorable

Question 16

If sales are the cost driver,unfavorable flexible budget variances result from ________.

Accepted Answer

A)  actual costs exceeding planned costs 
B)  planned costs exceeding actual costs 
C)  actual sales exceeding planned sales 
D)  planned sales exceeding actual sales 
A)  actual costs exceeding planned costs 
B)  planned costs exceeding actual costs 
C)  actual sales exceeding planned sales 
D)  planned sales exceeding actual sales

Question 17

Leshan Company planned to produce 12,000 units.This level of production required 20 setups at a cost of $18,000 plus $500 per setup.Actual production was 10,000 units,requiring 15 setups.Actual setup cost was $26,000.What is the flexible budget variance for setup costs?

Accepted Answer

A)  $500 Favorable 
B)  $500 Unfavorable 
C)  $2,000 Favorable 
D)  $2,000 Unfavorable 
A)  $500 Favorable 
B)  $500 Unfavorable 
C)  $2,000 Favorable 
D)  $2,000 Unfavorable

Question 18

The sales activity variance for ________ will always be zero.

Accepted Answer

A)  sales 
B)  contribution margin 
C)  variable costs 
D)  fixed costs 
A)  sales 
B)  contribution margin 
C)  variable costs 
D)  fixed costs

Question 19

When a firm meets a sales goal,it is said to be ________.When a firm incurs more direct material costs to manufacture products than expected,the firm is said to be ________.

Accepted Answer

A)  effective; ineffective 
B)  efficient; inefficient 
C)  effective; inefficient 
D)  efficient; ineffective 
A)  effective; ineffective 
B)  efficient; inefficient 
C)  effective; inefficient 
D)  efficient; ineffective

Question 20

Variances should be investigated if they ________.

Accepted Answer

A)  are favorable 
B)  are unfavorable 
C)  are smaller than the variances in the prior period 
D)  exceed certain dollar amounts or percentage deviations from the budget 
A)  are favorable 
B)  are unfavorable 
C)  are smaller than the variances in the prior period 
D)  exceed certain dollar amounts or percentage deviations from the budget

To calculate the numbers in a flexible budget,managers use ________.

The flexible budget variance for fixed overhead costs equals the ________ variance.

The static budget variance is equal to the sum of and .

The quantity variance for direct materials can be computed by multiplying the standard price by the difference between the ________.

Which of the following statements about perfection standards is TRUE?

In most companies,variances are investigated only if they exceed a minimum dollar amount or percentage deviation from budgeted amounts.

A favorable materials price variance can affect all of the following variances except ________.

An example of a favorable variance is ________.

The static budget variance is the difference between actual results and the static budget for the original planned level of output.

If actual expenses are less than expected expenses,the expense variance will be unfavorable.

Barber Company produces 2,500 units.Each unit was expected to require 2 labor hours at a cost of $10 per hour.Total labor cost was $52,250 for 4,750 hours worked.Direct labor is measured in labor hours.What is the direct labor price variance?

In the relevant range,the sales-activity variance for fixed costs is always ________.

If sales are the cost driver,unfavorable flexible budget variances result from ________.

Leshan Company planned to produce 12,000 units.This level of production required 20 setups at a cost of $18,000 plus $500 per setup.Actual production was 10,000 units,requiring 15 setups.Actual setup cost was $26,000.What is the flexible budget variance for setup costs?

The sales activity variance for ________ will always be zero.

When a firm meets a sales goal,it is said to be .When a firm incurs more direct material costs to manufacture products than expected,the firm is said to be .

Variances should be investigated if they ________.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 8: Flexible Budgets and Variance Analysis

To calculate the numbers in a flexible budget,managers use ________.

The flexible budget variance for fixed overhead costs equals the ________ variance.

The static budget variance is equal to the sum of ________ and ________.

The quantity variance for direct materials can be computed by multiplying the standard price by the difference between the ________.

Which of the following statements about perfection standards is TRUE?

In most companies,variances are investigated only if they exceed a minimum dollar amount or percentage deviation from budgeted amounts.

A favorable materials price variance can affect all of the following variances except ________.

An example of a favorable variance is ________.

The static budget variance is the difference between actual results and the static budget for the original planned level of output.

If actual expenses are less than expected expenses,the expense variance will be unfavorable.

Barber Company produces 2,500 units.Each unit was expected to require 2 labor hours at a cost of $10 per hour.Total labor cost was $52,250 for 4,750 hours worked.Direct labor is measured in labor hours.What is the direct labor price variance?

In the relevant range,the sales-activity variance for fixed costs is always ________.

If sales are the cost driver,unfavorable flexible budget variances result from ________.

Leshan Company planned to produce 12,000 units.This level of production required 20 setups at a cost of $18,000 plus $500 per setup.Actual production was 10,000 units,requiring 15 setups.Actual setup cost was $26,000.What is the flexible budget variance for setup costs?

The sales activity variance for ________ will always be zero.

When a firm meets a sales goal,it is said to be ________.When a firm incurs more direct material costs to manufacture products than expected,the firm is said to be ________.

Variances should be investigated if they ________.

Managerial Accounting,the Business Organization,and Professional Ethics

Introduction to Cost Behavior and Cost Volume Profit Relationships

Measurement of Cost Behavior

Cost Management Systems and Activity-Based Costing

Relevant Information for Decision Making With a Focus on Pricing Decisions

Relevant Information for Decision Making With a Focus on Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Order Costing and Process-Costing Systems

Basic Accounting: Concepts, techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

The static budget variance is equal to the sum of and .

When a firm meets a sales goal,it is said to be .When a firm incurs more direct material costs to manufacture products than expected,the firm is said to be .