Question 1

A difference between the static-budget and the flexible-budget amounts is called the sales-volume variance.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) $6,000 favorable 
B) $11,000 unfavorable 
C) $14,000 favorable 
D) $5,000 unfavorable 
A) $6,000 favorable 
B) $11,000 unfavorable 
C) $14,000 favorable 
D) $5,000 unfavorable

Question 3

A favorable efficiency variance for direct materials might indicate that ________.

Accepted Answer

A) lower-quality materials were purchased 
B) work is scheduled efficiently 
C) there is an unexpected increase in direct labor rates 
D) management hired underskilled workers 
A) lower-quality materials were purchased 
B) work is scheduled efficiently 
C) there is an unexpected increase in direct labor rates 
D) management hired underskilled workers

Question 4

Jalbert Incorporated planned to use materials of $11 per unit but actually used materials of $15 per unit,and planned to make 1,560 units but actually made 1,730 units.
The flexible-budget amount for materials is ________.

Accepted Answer

A) $17,160 
B) $23,400 
C) $19,030 
D) $25,950 
A) $17,160 
B) $23,400 
C) $19,030 
D) $25,950

Question 5

Management by exception is a practice whereby managers focus more closely on ________.

Accepted Answer

A) variances in the larger departments 
B) areas not operating as anticipated and less closely on areas that are operating as anticipated 
C) activity-based budgeting 
D) unfavorable variances 
A) variances in the larger departments 
B) areas not operating as anticipated and less closely on areas that are operating as anticipated 
C) activity-based budgeting 
D) unfavorable variances

Question 6

Which of the following is an example of nonfinancial performance measure?

Accepted Answer

A) percentage of products started and completed without requiring any rework 
B) direct manufacturing labor efficiency variance 
C) direct materials price variance 
D) quantity discounts obtained on order of large quantity 
A) percentage of products started and completed without requiring any rework 
B) direct manufacturing labor efficiency variance 
C) direct materials price variance 
D) quantity discounts obtained on order of large quantity

Question 7

A master budget is ________.

Accepted Answer

A) a budget which starts from a zero base 
B) based on the level of expected output at the start of the budget period 
C) developed at the end of a period 
D) a type of flexible budget once actual results are known 
A) a budget which starts from a zero base 
B) based on the level of expected output at the start of the budget period 
C) developed at the end of a period 
D) a type of flexible budget once actual results are known

Question 8

Nonfinancial performance measures ________.

Accepted Answer

A) are usually used in combination with financial measures for control purposes 
B) are rarely used to evaluate overall efficiency 
C) allow managers to make informed tradeoffs 
D) are often the sole basis of a manager's performance evaluations 
A) are usually used in combination with financial measures for control purposes 
B) are rarely used to evaluate overall efficiency 
C) allow managers to make informed tradeoffs 
D) are often the sole basis of a manager's performance evaluations

Question 9

Johnson Company had planned for operating income of $10 million in the master budget with a contribution margin of $3 million,but actually achieved operating income of only $7 million and a contribution margin of $2.5 million.

Accepted Answer

A) The static-budget variance for operating income is $3 million favorable. 
B) The static-budget variance for operating income is $3 million unfavorable. 
C) The flexible-budget variance for operating income is $3 million favorable. 
D) The flexible-budget variance for operating income is $3 million unfavorable. 
A) The static-budget variance for operating income is $3 million favorable. 
B) The static-budget variance for operating income is $3 million unfavorable. 
C) The flexible-budget variance for operating income is $3 million favorable. 
D) The flexible-budget variance for operating income is $3 million unfavorable.

Question 10

Littrell Company produces chairs and has determined the following direct cost categories and budgeted amounts:
   
Actual performance for the company is shown below:
   
Required:
a.What is the combined total of the flexible-budget variances?
b.What is the price variance of the direct materials?
c.What is the price variance of the direct manufacturing labor and the direct marketing labor,respectively?
d.What is the efficiency variance for direct materials?
e.What are the efficiency variances for direct manufacturing labor and direct marketing labor,respectively?

Accepted Answer

@#IMG-DLM&_TB5540_00_TB5540_00 b.($7.75 - $7.50)×

Question 11

Goodard Inc.planned to use $153 of material per unit but actually used $140 of material per unit,and planned to make 1,100 units but actually made 940 units.
The flexible-budget amount for materials is ________.

Accepted Answer

A) $168,300 
B) $143,820 
C) $154,000 
D) $131,600 
A) $168,300 
B) $143,820 
C) $154,000 
D) $131,600

Question 12

When actual revenues exceed budgeted revenues,a favorable variance arises.

Accepted Answer

A) True 
 B)False

Question 13

Schooner Corporation used the following data to evaluate its current operating system.The company sells items for $23 each and used a budgeted selling price of $23 per unit.
 
What is the static-budget variance of revenues?

Accepted Answer

A) $368,000 favorable 
B) $368,000 unfavorable 
C) $16,000 favorable 
D) $16,000 unfavorable 
A) $368,000 favorable 
B) $368,000 unfavorable 
C) $16,000 favorable 
D) $16,000 unfavorable

Question 14

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

Accepted Answer

A) $171,000 favorable 
B) $171,000 unfavorable 
C) $6,000 favorable 
D) $9,000 unfavorable 
A) $171,000 favorable 
B) $171,000 unfavorable 
C) $6,000 favorable 
D) $9,000 unfavorable

Question 15

The textbook discusses three levels of variances,Level 0,Level 1,Level 2,and Level 3.Briefly explain the meaning of each of those levels and provide an example of a variance at each of those levels.

Accepted Answer

A Level 0 variance is simply the differe

Question 16

A variance is the difference between the actual cost for the current and expected (or budgeted)performance.

Accepted Answer

A) True 
 B)False

Question 17

An unfavorable variance indicates that ________.

Accepted Answer

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

Question 18

Which variance is calculated using the formula (AQ - BQ)BP 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 19

Which of the following can be a reason for a favorable price variance for direct materials?

Accepted Answer

A) a decrease in the price of materials due to an oversupply of materials 
B) an unexpected increase in the price of materials 
C) less amount of material used during production than planned for actual output 
D) workers taking less time to produce the products 
A) a decrease in the price of materials due to an oversupply of materials 
B) an unexpected increase in the price of materials 
C) less amount of material used during production than planned for actual output 
D) workers taking less time to produce the products

Question 20

With disregard to all other factors,the use of high-quality raw materials is likely to result in a favorable efficiency variance and an unfavorable price variance.

Accepted Answer

A) True 
 B)False

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

A difference between the static-budget and the flexible-budget amounts is called the sales-volume variance.

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

A favorable efficiency variance for direct materials might indicate that ________.

Jalbert Incorporated planned to use materials of $11 per unit but actually used materials of $15 per unit,and planned to make 1,560 units but actually made 1,730 units. The flexible-budget amount for materials is ________.

Management by exception is a practice whereby managers focus more closely on ________.

Which of the following is an example of nonfinancial performance measure?

A master budget is ________.

Nonfinancial performance measures ________.

Johnson Company had planned for operating income of $10 million in the master budget with a contribution margin of $3 million,but actually achieved operating income of only $7 million and a contribution margin of $2.5 million.

Goodard Inc.planned to use $153 of material per unit but actually used $140 of material per unit,and planned to make 1,100 units but actually made 940 units. The flexible-budget amount for materials is ________.

When actual revenues exceed budgeted revenues,a favorable variance arises.

Schooner Corporation used the following data to evaluate its current operating system.The company sells items for $23 each and used a budgeted selling price of $23 per unit. What is the static-budget variance of revenues?

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

The textbook discusses three levels of variances,Level 0,Level 1,Level 2,and Level 3.Briefly explain the meaning of each of those levels and provide an example of a variance at each of those levels.

A variance is the difference between the actual cost for the current and expected (or budgeted)performance.

An unfavorable variance indicates that ________.

Which variance is calculated using the formula (AQ - BQ)BP is the ________.

Which of the following can be a reason for a favorable price variance for direct materials?

With disregard to all other factors,the use of high-quality raw materials is likely to result in a favorable efficiency variance and an unfavorable price 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

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