Question 1

A favorable variance indicates that budgeted costs are less than actual costs.

Accepted Answer

A) True 
 B)False

Question 2

A firm's inefficiencies,such as the wastage of direct materials,are incorporated in past data.Hence the data represents the ideal performance of a firm.

Accepted Answer

A) True 
 B)False

Question 3

It is best to rely totally on financial performance measures rather than using a combination of financial and nonfinancial performance measures.

Accepted Answer

A) True 
 B)False

Question 4

J)C Coats Inc.carefully develops standards for its coat making operation.Its specifications call for 2 square yards of wool per coat.The budgeted price of wool is $44 per square yard.The actual price for the wool was $36 and the usage was only 1.70 yards of wool per coat.What would be the standard cost per output for the wool?

Accepted Answer

A) $61.20 per coat 
B) $72.00 per coat 
C) $88.00 per coat 
D) $74.80 per coat 
A) $61.20 per coat 
B) $72.00 per coat 
C) $88.00 per coat 
D) $74.80 per coat

Question 5

Bennett Street Table Company manufactures tables for schools.The 2018 operating budget is based on sales of 45,000 units at $55 per table.Operating income is anticipated to be $240,000.Budgeted variable costs are $35 per unit,while fixed costs total $660,000.
Actual income for 2018 was a surprising $569,000 on actual sales of 46,000 units at $60 each.Actual variable costs were $34 per unit and fixed costs totaled $627,000.
Required:
Prepare a variance analysis report with both flexible-budget and sales-volume variances.

Accepted Answer

@#IMG-DLM&_TB5540_00_TB5540_00 @#IMG-DLM&_TB5540_0

Question 6

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

Accepted Answer

A) $192,250;$175,990 
B) $182,250;$188,510 
C) $187,250;$185,990 
D) $180,990;$188,510 
A) $192,250;$175,990 
B) $182,250;$188,510 
C) $187,250;$185,990 
D) $180,990;$188,510

Question 7

Variance analysis should be used ________.

Accepted Answer

A) to understand why variances arise and to improve future performance 
B) as the sole source of information for performance evaluation 
C) to punish employees that do not meet standards 
D) to set the standards which are very easy to achieve to encourage employees to focus on meeting standards 
A) to understand why variances arise and to improve future performance 
B) as the sole source of information for performance evaluation 
C) to punish employees that do not meet standards 
D) to set the standards which are very easy to achieve to encourage employees to focus on meeting standards

Question 8

The actual information pertains to the month of June.As a part of the budgeting process,Great Cabinets Company developed the following static budget for June.Great Cabinets is in the process of preparing the flexible budget and understanding the results.

The flexible-budget variance for variable costs is ________.

Accepted Answer

A) $2,210 unfavorable 
B) $202,275 unfavorable 
C) $89,270 favorable 
D) $137,930 favorable 
A) $2,210 unfavorable 
B) $202,275 unfavorable 
C) $89,270 favorable 
D) $137,930 favorable

Question 9

An unfavorable flexible-budget variance for variable costs may be the result of ________.

Accepted Answer

A) using more input quantities than were budgeted 
B) paying lower prices for inputs than were budgeted 
C) selling output at a higher selling price than budgeted 
D) selling less quantity compared to the budgeted 
A) using more input quantities than were budgeted 
B) paying lower prices for inputs than were budgeted 
C) selling output at a higher selling price than budgeted 
D) selling less quantity compared to the budgeted

Question 10

Expected performance is also called budgeted performance.

Accepted Answer

A) True 
 B)False

Question 11

A favorable price variance for direct manufacturing labor might indicate that ________.

Accepted Answer

A) employees were paid more than planned 
B) unexpected increase in direct labor rates 
C) underskilled employees are being hired 
D) congestion due to scheduling problems 
A) employees were paid more than planned 
B) unexpected increase in direct labor rates 
C) underskilled employees are being hired 
D) congestion due to scheduling problems

Question 12

Explain the difference between a static budget and a flexible budget.Explain what is meant by a static budget variance and a flexible budget variance.

Accepted Answer

A static budget is one based on the leve

Question 13

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)(AQ)- (BP)(BQ)] is the ________.

Accepted Answer

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

Question 14

When benchmarking,management accountants are most valuable when they ________.

Accepted Answer

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

Question 15

Jalbert Incorporated planned to use materials of $9 per unit but actually used materials of $14 per unit,and planned to make 1,640 units but actually made 1,770 units.
The sales-volume variance for materials is ________.

Accepted Answer

A) $1,170 unfavorable 
B) $1,820 unfavorable 
C) $1,170 favorable 
D) $1,820 favorable 
A) $1,170 unfavorable 
B) $1,820 unfavorable 
C) $1,170 favorable 
D) $1,820 favorable

Question 16

Daniels Corporation used the following data to evaluate their current operating system.The company sells items for $18 each and had used a budgeted selling price of $19 per unit.
 
What is the static-budget variance of operating income?

Accepted Answer

A) $325,000 favorable 
B) $325,000 unfavorable 
C) $316,000 favorable 
D) $316,000 unfavorable 
A) $325,000 favorable 
B) $325,000 unfavorable 
C) $316,000 favorable 
D) $316,000 unfavorable

Question 17

Mid City Products Inc.(MCP),developed standard costs for direct material and direct labor.In 2017,MCP estimated the following standard costs for one of their most popular products.
 
During September,MCP produced and sold 1,000 units using 1,400 pounds of direct materials at an average cost per pound of $8.00 and 160 direct labor hours at an average wage of $13.50 per hour.
The direct material price variance during September is ________.

Accepted Answer

A) $840 favorable 
B) $840 unfavorable 
C) $2,600 unfavorable 
D) $2,600 favorable 
A) $840 favorable 
B) $840 unfavorable 
C) $2,600 unfavorable 
D) $2,600 favorable

Question 18

Mayberry Company had the following journal entries recorded for the end of June.Unfortunately,the company's only accountant quit on July 10 and the president is at a loss as to the company's performance for the month of June.

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 19

Describe the purpose of variance analysis.

Accepted Answer

Variance analysis should help

Question 20

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 19,000 containers using 1,200 pounds of direct materials at an average cost per pound of $63 and 17,100 direct manufacturing labor-hours at an average wage of $31.25 per hour.
The direct manufacturing labor price variance during June is ________.

Accepted Answer

A) $21,375 unfavorable 
B) $21,375 favorable 
C) $3,600 unfavorable 
D) $950,400 unfavorable 
A) $21,375 unfavorable 
B) $21,375 favorable 
C) $3,600 unfavorable 
D) $950,400 unfavorable

A favorable variance indicates that budgeted costs are less than actual costs.

A firm's inefficiencies,such as the wastage of direct materials,are incorporated in past data.Hence the data represents the ideal performance of a firm.

It is best to rely totally on financial performance measures rather than using a combination of financial and nonfinancial performance measures.

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

Variance analysis should be used ________.

An unfavorable flexible-budget variance for variable costs may be the result of ________.

Expected performance is also called budgeted performance.

A favorable price variance for direct manufacturing labor might indicate that ________.

Explain the difference between a static budget and a flexible budget.Explain what is meant by a static budget variance and a flexible budget variance.

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)(AQ)- (BP)(BQ)] is the ________.

When benchmarking,management accountants are most valuable when they ________.

Jalbert Incorporated planned to use materials of $9 per unit but actually used materials of $14 per unit,and planned to make 1,640 units but actually made 1,770 units. The sales-volume variance for materials is ________.

Daniels Corporation used the following data to evaluate their current operating system.The company sells items for $18 each and had used a budgeted selling price of $19 per unit. What is the static-budget variance of operating income?

Describe the purpose of variance analysis.

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

A favorable variance indicates that budgeted costs are less than actual costs.

A firm's inefficiencies,such as the wastage of direct materials,are incorporated in past data.Hence the data represents the ideal performance of a firm.

It is best to rely totally on financial performance measures rather than using a combination of financial and nonfinancial performance measures.

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

Variance analysis should be used ________.

An unfavorable flexible-budget variance for variable costs may be the result of ________.

Expected performance is also called budgeted performance.

A favorable price variance for direct manufacturing labor might indicate that ________.

Explain the difference between a static budget and a flexible budget.Explain what is meant by a static budget variance and a flexible budget variance.

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)(AQ)- (BP)(BQ)] is the ________.

When benchmarking,management accountants are most valuable when they ________.

Jalbert Incorporated planned to use materials of $9 per unit but actually used materials of $14 per unit,and planned to make 1,640 units but actually made 1,770 units. The sales-volume variance for materials is ________.

Daniels Corporation used the following data to evaluate their current operating system.The company sells items for $18 each and had used a budgeted selling price of $19 per unit. What is the static-budget variance of operating income?

Describe the purpose of variance analysis.

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