Question 1

Give at least three good reasons why an unfavorable efficiency variance for direct manufacturing labor might be reported.

Accepted Answer

Any three of the following:
a.More lower-skilled workers were scheduled than planned.
b.Work was inefficiently scheduled.
c.Machines were not properly maintained.
d.Budgeted time standards were too tight.

Question 2

A flexible-budget variance pertaining to revenues is often called a sales-volume variance.

Accepted Answer

A) True 
 B)False  False

Question 3

Benchmarking is a process ________.

Accepted Answer

A) in which overhead costs are absorbed into units of output,or 'jobs' 
B) in which a firm's performance levels are compared against the best levels of performance in competing companies or in companies having similar processes 
C) which is based on calculating the breakeven point and analyzing the consequences of changes in various factors calculating the breakeven point 
D) in which the underlying processes of an organization is optimized using a systematic approach to achieve more efficient goals 
A) in which overhead costs are absorbed into units of output,or 'jobs' 
B) in which a firm's performance levels are compared against the best levels of performance in competing companies or in companies having similar processes 
C) which is based on calculating the breakeven point and analyzing the consequences of changes in various factors calculating the breakeven point 
D) in which the underlying processes of an organization is optimized using a systematic approach to achieve more efficient goals B

Question 4

A favorable flexible-budget variance for variable costs may be the result of using more input quantities than were budgeted.

Accepted Answer

A) True 
 B)False

Question 5

Better Products Inc.planned to use $43 of material per unit but actually used $32 of material per unit,and planned to make 1,510 units but actually made 1,340 units.
The flexible-budget amount for materials is ________.

Accepted Answer

A) $57,620 
B) $64,930 
C) $48,320 
D) $42,880 
A) $57,620 
B) $64,930 
C) $48,320 
D) $42,880

Question 6

Heavy Products,Inc.developed standard costs for direct material and direct labor.In 2017,AII estimated the following standard costs for one of their major products,the 10-gallon plastic container.
 
During June,Heavy Products produced and sold 25,000 containers using 23,000 pounds of direct materials at an average cost per pound of $75 and 17,500 direct manufacturing labor-hours at an average wage of $35.75 per hour.
The direct material price variance during June is ________.

Accepted Answer

A) $115,000 unfavorable 
B) $500,000 favorable 
C) $500,000 unfavorable 
D) $13,125 favorable 
A) $115,000 unfavorable 
B) $500,000 favorable 
C) $500,000 unfavorable 
D) $13,125 favorable

Question 7

Goodard Inc.planned to use $156 of material per unit but actually used $141 of material per unit,and planned to make 1,150 units but actually made 920 units.
The flexible-budget variance for materials is ________.

Accepted Answer

A) $13,800 favorable 
B) $13,800 unfavorable 
C) $17,250 unfavorable 
D) $17,250 favorable 
A) $13,800 favorable 
B) $13,800 unfavorable 
C) $17,250 unfavorable 
D) $17,250 favorable

Question 8

A favorable variance indicates that ________.

Accepted Answer

A) budgeted costs are less than actual costs 
B) actual revenues exceed budgeted revenues 
C) actual operating income is less than the budgeted amount 
D) budgeted contribution margin is more than the actual amount 
A) budgeted costs are less than actual costs 
B) actual revenues exceed budgeted revenues 
C) actual operating income is less than the budgeted amount 
D) budgeted contribution margin is more than the actual amount

Question 9

Which of the following is the correct formula for the materials price variance?

Accepted Answer

A) (Actual price of input - Budgeted price of input)x Budgeted quantity of input 
B) (Actual quantity of input used - Budgeted quantity of input allowed for actual output)x Budgeted price of input 
C) (Actual price of input - Budgeted price of input)x Actual quantity of input 
D) (Actual quantity of input used - Budgeted quantity of input allowed for actual output)x Actual price of input 
A) (Actual price of input - Budgeted price of input)x Budgeted quantity of input 
B) (Actual quantity of input used - Budgeted quantity of input allowed for actual output)x Budgeted price of input 
C) (Actual price of input - Budgeted price of input)x Actual quantity of input 
D) (Actual quantity of input used - Budgeted quantity of input allowed for actual output)x Actual price of input

Question 10

A favorable variance can be automatically interpreted as "good news."

Accepted Answer

A) True 
 B)False

Question 11

Handley Manufacturing Company has prepared the following flexible budget for August and is in the process of interpreting the variances.F denotes a favorable variance and U denotes an unfavorable variance.
 
The actual amount spent for direct manufacturing labor was ________.

Accepted Answer

A) $88,000 
B) $91,100 
C) $89,300 
D) $86,700 
A) $88,000 
B) $91,100 
C) $89,300 
D) $86,700

Question 12

The actual information pertains to the third quarter.As part of the budgeting process,the Duck Decoy Department of Paralith Incorporated had developed the following static budget for the third quarter.Duck Decoy is in the process of preparing the flexible budget and understanding the results.

The flexible-budget variance for variable costs is ________.(Round the final answer to the nearest dollar. )

Accepted Answer

A) $17,000 favorable 
B) $33,400 unfavorable 
C) $17,000 unfavorable 
D) $63,000 favorable 
A) $17,000 favorable 
B) $33,400 unfavorable 
C) $17,000 unfavorable 
D) $63,000 favorable

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Which of the following could be a reason for a favorable material price variance?

Accepted Answer

A) the purchasing manager bargaining effectively with suppliers 
B) the purchasing manager giving orders for small quantity to reduce storage cost 
C) the purchasing manager accepting a bid from the highest-priced supplier to ensure the quality of material 
D) the personnel manager hiring underskilled workers 
A) the purchasing manager bargaining effectively with suppliers 
B) the purchasing manager giving orders for small quantity to reduce storage cost 
C) the purchasing manager accepting a bid from the highest-priced supplier to ensure the quality of material 
D) the personnel manager hiring underskilled workers

Question 15

Management by exception is the practice of concentrating on areas not operating as anticipated (such as a cost overrun)and placing less attention on areas operating as anticipated.

Accepted Answer

A) True 
 B)False

Question 16

Jalbert Incorporated planned to use materials of $11 per unit but actually used materials of $13 per unit,and planned to make 1,590 units but actually made 1,780 units.
The flexible-budget variance for materials is ________.

Accepted Answer

A) $3,180 favorable 
B) $3,560 unfavorable 
C) $3,180 unfavorable 
D) $3,560 favorable 
A) $3,180 favorable 
B) $3,560 unfavorable 
C) $3,180 unfavorable 
D) $3,560 favorable

Question 17

Which of the following is the correct formula for the materials price variance?

Accepted Answer

A) (Actual price of input - Budgeted price of input)x Budgeted quantity of input 
B) (Actual quantity of input used - Budgeted quantity of input allowed for actual output)x Budgeted price of input 
C) (Actual price of input - Budgeted price of input)x Actual quantity of input 
D) (Actual quantity of input used - Budgeted quantity of input allowed for actual output)x Actual price of input 
A) (Actual price of input - Budgeted price of input)x Budgeted quantity of input 
B) (Actual quantity of input used - Budgeted quantity of input allowed for actual output)x Budgeted price of input 
C) (Actual price of input - Budgeted price of input)x Actual quantity of input 
D) (Actual quantity of input used - Budgeted quantity of input allowed for actual output)x Actual price of input

Question 18

The actual information pertains to the third quarter.As part of the budgeting process,the controller for Foley Manufacturing had developed the following static budget for the third quarter.The company is in the process of preparing the flexible budget and understanding the results.

The primary reason for high actual operating profits was ________.

Accepted Answer

A) the variable-cost variance 
B) increased fixed costs 
C) flexible budget variance for revenues 
D) lower sales volume than planned 
A) the variable-cost variance 
B) increased fixed costs 
C) flexible budget variance for revenues 
D) lower sales volume than planned

Question 19

Standard cost per output unit for each variable direct cost input is calculated by multiplying ________.

Accepted Answer

A) standard input allowed for one output unit by standard price per input unit 
B) standard input allowed for one output unit by actual price per input unit 
C) actual input allowed for one output unit by standard price per input unit 
D) actual input allowed for one output unit by actual price per input unit 
A) standard input allowed for one output unit by standard price per input unit 
B) standard input allowed for one output unit by actual price per input unit 
C) actual input allowed for one output unit by standard price per input unit 
D) actual input allowed for one output unit by actual price per input unit

Question 20

Classic Products Company manufactures colonial style desks.Some of the company's data was misplaced.Use the following information to replace the lost data:
 
What is the total static-budget variance?

Accepted Answer

A) $11,790 favorable 
B) $7,350 favorable 
C) $4,440 unfavorable 
D) $4,440 favorable 
A) $11,790 favorable 
B) $7,350 favorable 
C) $4,440 unfavorable 
D) $4,440 favorable

Give at least three good reasons why an unfavorable efficiency variance for direct manufacturing labor might be reported.

A flexible-budget variance pertaining to revenues is often called a sales-volume variance.

Benchmarking is a process ________.

A favorable flexible-budget variance for variable costs may be the result of using more input quantities than were budgeted.

Better Products Inc.planned to use $43 of material per unit but actually used $32 of material per unit,and planned to make 1,510 units but actually made 1,340 units. The flexible-budget amount for materials is ________.

Goodard Inc.planned to use $156 of material per unit but actually used $141 of material per unit,and planned to make 1,150 units but actually made 920 units. The flexible-budget variance for materials is ________.

A favorable variance indicates that ________.

Which of the following is the correct formula for the materials price variance?

A favorable variance can be automatically interpreted as "good news."

Handley Manufacturing Company has prepared the following flexible budget for August and is in the process of interpreting the variances.F denotes a favorable variance and U denotes an unfavorable variance. The actual amount spent for direct manufacturing labor was ________.

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

Which of the following could be a reason for a favorable material price variance?

Management by exception is the practice of concentrating on areas not operating as anticipated (such as a cost overrun)and placing less attention on areas operating as anticipated.

Jalbert Incorporated planned to use materials of $11 per unit but actually used materials of $13 per unit,and planned to make 1,590 units but actually made 1,780 units. The flexible-budget variance for materials is ________.

Which of the following is the correct formula for the materials price variance?

Standard cost per output unit for each variable direct cost input is calculated by multiplying ________.

Classic Products Company manufactures colonial style desks.Some of the company's data was misplaced.Use the following information to replace the lost data: What is the total static-budget variance?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

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

Filters

Exam 7: Flexible Budgets,direct-Cost Variances,and Management Control

Give at least three good reasons why an unfavorable efficiency variance for direct manufacturing labor might be reported.

A flexible-budget variance pertaining to revenues is often called a sales-volume variance.

Benchmarking is a process ________.

A favorable flexible-budget variance for variable costs may be the result of using more input quantities than were budgeted.

Better Products Inc.planned to use $43 of material per unit but actually used $32 of material per unit,and planned to make 1,510 units but actually made 1,340 units. The flexible-budget amount for materials is ________.

Goodard Inc.planned to use $156 of material per unit but actually used $141 of material per unit,and planned to make 1,150 units but actually made 920 units. The flexible-budget variance for materials is ________.

A favorable variance indicates that ________.

Which of the following is the correct formula for the materials price variance?

A favorable variance can be automatically interpreted as "good news."

Handley Manufacturing Company has prepared the following flexible budget for August and is in the process of interpreting the variances.F denotes a favorable variance and U denotes an unfavorable variance. The actual amount spent for direct manufacturing labor was ________.

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

Which of the following could be a reason for a favorable material price variance?

Management by exception is the practice of concentrating on areas not operating as anticipated (such as a cost overrun)and placing less attention on areas operating as anticipated.

Jalbert Incorporated planned to use materials of $11 per unit but actually used materials of $13 per unit,and planned to make 1,590 units but actually made 1,780 units. The flexible-budget variance for materials is ________.

Which of the following is the correct formula for the materials price variance?

Standard cost per output unit for each variable direct cost input is calculated by multiplying ________.

Classic Products Company manufactures colonial style desks.Some of the company's data was misplaced.Use the following information to replace the lost data: What is the total static-budget variance?

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, rework, and Scrap

Balanced Scorecard: Quality and Time

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

Filters