Question 1

Which of the following statements is incorrect regarding variable overhead variances?

Accepted Answer

A)  Variable overhead variances are based on the same general formulas used to compute the materials and labor price variances. 
B)  Variable overhead costs represent many inputs such as supplies, utilities and indirect labor. 
C)  All companies must calculate price and usage variances for variable overhead costs. 
D)  None of these answers is correct. 
A)  Variable overhead variances are based on the same general formulas used to compute the materials and labor price variances. 
B)  Variable overhead costs represent many inputs such as supplies, utilities and indirect labor. 
C)  All companies must calculate price and usage variances for variable overhead costs. 
D)  None of these answers is correct.

Question 2

Unfavorable flexible budget variances are those that are the result of lower than expected sales volume.

Accepted Answer

A) True 
 B)False

Question 3

$$\begin{array} { l r c } 
\text { Item to Classify } & \text { Starddard } & \text { Actual } \
\text { Sales Reveruse } & 820,000 & 835,000 \
\text { Wages } & 125,000 & 128,000 \
\text { S\&A Expenses } & 400,000 & 408,000 \
\text { Cost of Goods Sold } & 608,000 & 600,000
\end{array}$$ Which of the following statements is incorrect?

Accepted Answer

A)  The cost of goods sold variance is favorable. 
B)  The S&A expense variance is favorable. 
C)  The sales revenue variance is favorable. 
D)  The wage expense variance is unfavorable. 
A)  The cost of goods sold variance is favorable. 
B)  The S&A expense variance is favorable. 
C)  The sales revenue variance is favorable. 
D)  The wage expense variance is unfavorable.

Question 4

Dandridge Company established a direct materials standard of 4 pounds at $4.50 per pound for one of its products.During April,Dandridge produced 22,000 units of the product,using 86,000 pounds of material.
Required:
Based on this information,
(a)Which variance can you calculate?
(b)What is the dollar amount of the variance?
(c)Is the variance favorable or unfavorable?
(d)Do you consider the variance to be sufficiently material that managers should investigate to discover the cause of the variance?

Accepted Answer

(a)Materials usage variance
(b)(86,000 −

Question 5

Which of the following statements is correct?

Accepted Answer

A)  Establishing standards is the least difficult aspect of using a standard cost system. 
B)  Managers should be praised or punished based on variances. 
C)  A favorable variance may indicate the existence of unfavorable conditions. 
D)  Budget slack exists when performance standards are set at an ideal, unachievable level. 
A)  Establishing standards is the least difficult aspect of using a standard cost system. 
B)  Managers should be praised or punished based on variances. 
C)  A favorable variance may indicate the existence of unfavorable conditions. 
D)  Budget slack exists when performance standards are set at an ideal, unachievable level.

Question 6

Which of the following is a difference between a static and a flexible budget?

Accepted Answer

A)  Static budgets use the same fixed cost amounts, whereas flexible budgets change the amount of fixed costs at different levels of activity. 
B)  Static budgets are based on the same per-unit variable amount, whereas flexible budgets are based on multiple per-unit variable amounts. 
C)  Static budgets are based on a single estimate of volume, whereas flexible budgets show estimated costs and revenues at a variety of activity levels. 
D)  None of these answers are correct. 
A)  Static budgets use the same fixed cost amounts, whereas flexible budgets change the amount of fixed costs at different levels of activity. 
B)  Static budgets are based on the same per-unit variable amount, whereas flexible budgets are based on multiple per-unit variable amounts. 
C)  Static budgets are based on a single estimate of volume, whereas flexible budgets show estimated costs and revenues at a variety of activity levels. 
D)  None of these answers are correct.

Question 7

The total sales variance includes both price and volume variances.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is incorrect?

Accepted Answer

A)  In deciding whether to investigate a variance, managers should not consider the materiality of the variance. 
B)  A material variance is one that will influence stockholders' investment decisions. 
C)  The primary advantage of a standard cost system is to price products consistently. 
D)  None of these answers are correct. 
A)  In deciding whether to investigate a variance, managers should not consider the materiality of the variance. 
B)  A material variance is one that will influence stockholders' investment decisions. 
C)  The primary advantage of a standard cost system is to price products consistently. 
D)  None of these answers are correct.

Question 9

In most cases,the production manager should be held accountable for fixed cost volume variances.

Accepted Answer

A) True 
 B)False

Question 10

The Wentworth Company,estimating its sales to be 40,000 units for the upcoming period,prepared the following static budget:
 $\begin{array}{lr}
\text {Units:}&40,000\
\text {Sales}&\$400,00\
\text {Tess variable costs.}\
\text { Manufacturing costs } & 140,000 \
\text { Selling and administrative costs } &  \underline{80,000} \
 \text { Contribution margin } & \$ 180,000\
\text { Less fixed costs: } &\
\text { Manufacturing costs } & 44,000 \
\text { Selling and administrative costs } &  \underline{34,000}\
\text { Net income } & \underline{ \$ 102,000}
\end{array}$ 
The owner of the business is not so sure about the 40,000 unit sales volume and has requested additional budgets.
Required:
In the table provided,prepare two additional budgets,one at 90% of the static budget volume level and one at 110% of the static budget volume level.

Accepted Answer

Flexible b

Question 11

If the master budget prepared at a volume level of 20,000 units includes factory rent of $40,000,a flexible budget based on a volume of 21,000 units would include factory rent of $40,000.

Accepted Answer

A) True 
 B)False

Question 12

The following information is provided by the Atlas Company: $$\begin{array} { l l } 
\text { Actual direct material cost } & \$ 20,000 \
\text { Standard direct material cost } & \$ 24,000 \
\text { Direct material usage variance } & \$ 3,000 \text { favorable }
\end{array}$$ What is the direct materials price variance?

Accepted Answer

A)  $1,000 favorable 
B)  $1,000 unfavorable 
C)  $5,000 unfavorable 
D)  Not enough information is provided 
A)  $1,000 favorable 
B)  $1,000 unfavorable 
C)  $5,000 unfavorable 
D)  Not enough information is provided

Question 13

To assess the importance of a variance,managers should consider,not just the materiality of the amount,but also the type of variance being analyzed.

Accepted Answer

A) True 
 B)False

Question 14

Which manager is normally held responsible for fixed cost volume variances?

Accepted Answer

A)  Production supervisor 
B)  Upper-level marketing managers 
C)  Plant manager 
D)  Purchasing agent 
A)  Production supervisor 
B)  Upper-level marketing managers 
C)  Plant manager 
D)  Purchasing agent

Question 15

Select the correct statement from the following,assuming Carmichael Company had a favorable direct materials price variance of $3,000 and an unfavorable direct materials usage variance of $2,000.

Accepted Answer

A)  The total direct materials variance is $1,000 unfavorable. 
B)  The total direct materials variance is $5,000 favorable. 
C)  The total direct materials variance is $5,000 unfavorable. 
D)  The total direct materials variance is $1,000 favorable. 
A)  The total direct materials variance is $1,000 unfavorable. 
B)  The total direct materials variance is $5,000 favorable. 
C)  The total direct materials variance is $5,000 unfavorable. 
D)  The total direct materials variance is $1,000 favorable.

Question 16

Indicate whether each of the following statements is true or false.
Standards for direct materials and direct labor should be set by a company's accounting department.______
Standards for direct materials and direct labor should be reevaluated frequently in order to remain relevant and useful.______
Historical information is of little use in establishing standards.______
A standard represents what should be,not what is or was.______
Managers should consider behavioral implications when developing standards.______

Accepted Answer

Standards for direct materials and direc

Question 17

Spark Company's static budget is based on a planned activity level of 45,000 units.At the same time the static budget was prepared,the management accountant prepared two additional budgets,one based on 40,000 units and one based on 50,000.The company actually produced and sold 49,000 units.In evaluating its performance,management should compare the company's actual revenues and costs to which of the following budgets?

Accepted Answer

A)  A budget based on 40,000 units 
B)  A budget based on 45,000 units 
C)  A budget based on 49,000 units 
D)  A budget based on 50,000 units 
A)  A budget based on 40,000 units 
B)  A budget based on 45,000 units 
C)  A budget based on 49,000 units 
D)  A budget based on 50,000 units

Question 18

Which manager is generally held responsible for the sales volume variance?

Accepted Answer

A)  Purchasing agent 
B)  Marketing manager 
C)  Plant manager 
D)  Production manager 
A)  Purchasing agent 
B)  Marketing manager 
C)  Plant manager 
D)  Production manager

Question 19

Which manager is usually held responsible for materials price variances?

Accepted Answer

A)  Plant manager 
B)  Purchasing agent 
C)  Production supervisor 
D)  Marketing manager 
A)  Plant manager 
B)  Purchasing agent 
C)  Production supervisor 
D)  Marketing manager

Question 20

Indicate whether each of the following statements is true or false.
Managerial performance can be evaluated by comparing actual amounts with standard amounts.______
Differences between standard and actual amounts are called variances.______
When the static budget is compared to a flexible budget based on actual volume of activity,any variances result from differences between standard and actual per-unit amounts.______
If the actual sales price per unit is higher than the standard,a company's sales price variance is unfavorable.______
Differences between flexible budget costs and revenues and the actual results are price variances.______

Accepted Answer

Managerial performance can be evaluated

Which of the following statements is incorrect regarding variable overhead variances?

Unfavorable flexible budget variances are those that are the result of lower than expected sales volume.

Item to Classify Starddard Actual Sales Reveruse 820,000 835,000 Wages 125,000 128,000 S\&A Expenses 400,000 408,000 Cost of Goods Sold 608,000 600,000 Which of the following statements is incorrect?

Which of the following statements is correct?

Which of the following is a difference between a static and a flexible budget?

The total sales variance includes both price and volume variances.

Which of the following statements is incorrect?

In most cases,the production manager should be held accountable for fixed cost volume variances.

If the master budget prepared at a volume level of 20,000 units includes factory rent of $40,000,a flexible budget based on a volume of 21,000 units would include factory rent of $40,000.

The following information is provided by the Atlas Company: Actual direct material cost \ 20,000 Standard direct material cost \ 24,000 Direct material usage variance \ 3,000 favorable What is the direct materials price variance?

To assess the importance of a variance,managers should consider,not just the materiality of the amount,but also the type of variance being analyzed.

Which manager is normally held responsible for fixed cost volume variances?

Select the correct statement from the following,assuming Carmichael Company had a favorable direct materials price variance of $3,000 and an unfavorable direct materials usage variance of $2,000.

Which manager is generally held responsible for the sales volume variance?

Which manager is usually held responsible for materials price variances?

Management Accounting and Corporate Governance

Cost Behavior, operating Leverage, and Profitability Analysis

Analysis of Cost, volume, and Pricing to Increase Profitability

Cost Accumulation,tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters

Exam 8: Performance Evaluation

Which of the following statements is incorrect regarding variable overhead variances?

Unfavorable flexible budget variances are those that are the result of lower than expected sales volume.

Item to Classify Starddard Actual Sales Reveruse 820,000 835,000 Wages 125,000 128,000 S\&A Expenses 400,000 408,000 Cost of Goods Sold 608,000 600,000 Which of the following statements is incorrect?

Which of the following statements is correct?

Which of the following is a difference between a static and a flexible budget?

The total sales variance includes both price and volume variances.

Which of the following statements is incorrect?

In most cases,the production manager should be held accountable for fixed cost volume variances.

If the master budget prepared at a volume level of 20,000 units includes factory rent of $40,000,a flexible budget based on a volume of 21,000 units would include factory rent of $40,000.

The following information is provided by the Atlas Company: Actual direct material cost \ 20,000 Standard direct material cost \ 24,000 Direct material usage variance \ 3,000 favorable What is the direct materials price variance?

To assess the importance of a variance,managers should consider,not just the materiality of the amount,but also the type of variance being analyzed.

Which manager is normally held responsible for fixed cost volume variances?

Select the correct statement from the following,assuming Carmichael Company had a favorable direct materials price variance of $3,000 and an unfavorable direct materials usage variance of $2,000.

Which manager is generally held responsible for the sales volume variance?

Which manager is usually held responsible for materials price variances?

Management Accounting and Corporate Governance

Cost Behavior, operating Leverage, and Profitability Analysis

Analysis of Cost, volume, and Pricing to Increase Profitability

Cost Accumulation,tracing,and Allocation

Cost Management in an Automated Business Environment: ABC, ABM, and TQM

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Responsibility Accounting

Planning for Capital Investments

Product Costing in Service and Manufacturing Entities

Job-Order, process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters