Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The Boyle Company estimated that April sales would be 150,000 units with an average selling price of $6.00. Actual sales for April were 149,000 units and average selling price was $6.12.The sales volume variance was:

Accepted Answer

A) $6,120 favorable. 
B) $6,000 unfavorable. 
C) $17,880 favorable. 
D) $17,880 unfavorable. 
A) $6,120 favorable. 
B) $6,000 unfavorable. 
C) $17,880 favorable. 
D) $17,880 unfavorable.

Question 3

Sometimes the sales staff will deliberately underestimate the amount of expected sales. This practice is known as:

Accepted Answer

A) making the numbers. 
B) cooking the books. 
C) lowballing. 
D) budget slack. 
A) making the numbers. 
B) cooking the books. 
C) lowballing. 
D) budget slack.

Question 4

Baker charges its customers $60 per hour. The chief operating officer expected that the company would provide 40,000 hours of service to clients. However, the vice president for marketing argues that the actual number of hours may range from 36,000 to 44,000 hours. Baker's standard variable cost is $32.50 per hour, and its standard fixed cost is $750,000.Required:
Prepare flexible budgets for 36,000, 40,000, and 44,000 hours.

Accepted Answer

The answer of Baker charges its customers $60 per hour....

Question 5

Indicate whether each of the following statements is true or false.A favorable variance may indicate the existence of unfavorable conditions.Managers should be praised or punished based on variances.Budget slack exists when performance standards are set at an ideal, unachievable level.Establishing standards is the least difficult aspect of using a standard cost system.A standard is the amount a price, cost, or quantity should be.

Accepted Answer

A favorable variance may indicate the ex

Question 6

Select the correct statement regarding general, selling, and administrative (GS&A) costs.

Accepted Answer

A) Variable general, selling, and administrative costs can have price variances. 
B) Variable general, selling, and administrative costs cannot have usage variances. 
C) Cost variances are not generally computed for fixed general, selling, and administrative costs. 
D) All of these answers are correct. 
A) Variable general, selling, and administrative costs can have price variances. 
B) Variable general, selling, and administrative costs cannot have usage variances. 
C) Cost variances are not generally computed for fixed general, selling, and administrative costs. 
D) All of these answers are correct.

Question 7

The differences between the standard and actual amounts are called variances.

Accepted Answer

A) True 
 B)False

Question 8

When would a variance be labeled as favorable?

Accepted Answer

A) When actual costs are less than standard costs 
B) When standard costs are equal to actual costs 
C) When standard costs are less than actual costs 
D) When estimated costs are greater than actual costs 
A) When actual costs are less than standard costs 
B) When standard costs are equal to actual costs 
C) When standard costs are less than actual costs 
D) When estimated costs are greater than actual costs

Question 9

Indicate whether each of the following statements is true or false.In deciding whether to investigate a variance, managers should consider the materiality, but not the type or direction of the variance.A material variance is one that will influence stockholders' investment decisions.The primary advantage of a standard cost system is controlling costs efficiently.Ideal standards will likely lead to variances that need not be investigated because they are not the result from abnormalities.Even a well-established and maintained standard cost system is likely to damage employee morale.

Accepted Answer

In deciding whether to investigate a var

Question 10

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 11

The accountant for Dalton Company prepared the following performance report:
Required:
1) Compute the sales volume variance in units.2) Compute the percentage increase in revenue generated by the increase in activity.3) Compute the percentage increase in budgeted profitability that resulted from the increase in revenue. Explain this result.4) How would differences between planned and actual volume impact companies that use a cost-plus pricing strategy?

Accepted Answer

1) Sales volume variance = 500 units fav

Question 12

How do differences between planned and actual volume impact companies that use a cost plus pricing strategy?

Accepted Answer

Answers will vary
When a company uses a

Question 13

When would a sales variance be listed as favorable?

Accepted Answer

A) When actual sales exceed budgeted or expected sales 
B) When actual sales are less than budgeted or expected sales 
C) When actual sales are equal to budgeted or expected sales 
D) None of these answers is correct. 
A) When actual sales exceed budgeted or expected sales 
B) When actual sales are less than budgeted or expected sales 
C) When actual sales are equal to budgeted or expected sales 
D) None of these answers is correct.

Question 14

In general, budget variances should not be used to single out managers for praise or punishment.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is an incorrect statement regarding variances?

Accepted Answer

A) A variance is favorable when expected sales are more than actual sales. 
B) A variance is a difference between budgeted and actual amounts. 
C) A variance can be calculated for both revenues and expenses. 
D) A variance can be both favorable and unfavorable. 
A) A variance is favorable when expected sales are more than actual sales. 
B) A variance is a difference between budgeted and actual amounts. 
C) A variance can be calculated for both revenues and expenses. 
D) A variance can be both favorable and unfavorable.

Question 16

Stafford Company prepared a static budget for a production and sales volume of 10,000 units.What is net income if 9,000 units are sold? $\begin{array}{|l|l|ll|}
\hline & & & \text { Static Budget } \
\hline \text { Number of units } & & \text { \$ } & 10,000 \
\hline & \begin{array}{l}
\text { Per unit } \
\text { standards }
\end{array} & & \
\hline \text { Sales revenue } & \$ \quad 65.00 & \$ & 650,000 \\hline \text { Variable manufacturing costs: } & & & \
\hline \text { Materials } & \$ 11.00 & 110,000 \
\hline \text { Labor } & \$  9.00 & 90,000 \
\hline \text { Overhead } & \$  4.20 & 42,000 \\hline \begin{array}{l}
\text { Variable general, selling, and } \
\text { administrative costs }
\end{array} & \$ \quad 11.00 &  110,000 \
\hline \text { Contribution margin } && \$  298,000 \\hline \text { Fixed costs } & & \
\hline \text { Manufacturing overhead } & & 100,800 \
\hline \begin{array}{l}
\text { General, selling, and administrative } \
\text { costs }
\end{array} & & 45,000\
\hline \text { Net income } & & \$152,200 \
\hline
\end{array}$

Accepted Answer

A) $152,100 
B) $152,400 
C) $137,300 
D) $122,400 
A) $152,100 
B) $152,400 
C) $137,300 
D) $122,400

Question 17

The sales volume variance is the difference between sales revenue on the static budget and sales revenue on the flexible budget.

Accepted Answer

A) True 
 B)False

Question 18

The sales volume variance was: $\begin{array}{ccc}\text { Item to Classify }&\text {Standard}&\text { Actual }\
\text { Sales volume } & 100.000 \text { units } & 96.000 \text { units } \
\text { Sales price } & \$ 4 \text { per unit } & \$ 3.90 \text { per unit } \
\text { Materials usage } & 40,000 \text { gallons } & 42.000 \text { gallons } \
\text { Labor price } & 12.50 \text { per Hour } & 12.45 \text { per hour }
\end{array}$

Accepted Answer

A) $16,000 favorable. 
B) $16,000 unfavorable. 
C) $25,000 unfavorable. 
D) $25,000 favorable. 
A) $16,000 favorable. 
B) $16,000 unfavorable. 
C) $25,000 unfavorable. 
D) $25,000 favorable.

Question 19

Which manager is usually held responsible for labor price variances?

Accepted Answer

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

Question 20

A budget prepared at a single volume of activity is referred to as a:

Accepted Answer

A) Strategic budget. 
B) Standard budget. 
C) Static budget. 
D) Flexible budget. 
A) Strategic budget. 
B) Standard budget. 
C) Static budget. 
D) Flexible budget.

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

The Boyle Company estimated that April sales would be 150,000 units with an average selling price of $6.00. Actual sales for April were 149,000 units and average selling price was $6.12.The sales volume variance was:

Sometimes the sales staff will deliberately underestimate the amount of expected sales. This practice is known as:

Select the correct statement regarding general, selling, and administrative (GS&A) costs.

The differences between the standard and actual amounts are called variances.

When would a variance be labeled as favorable?

How do differences between planned and actual volume impact companies that use a cost plus pricing strategy?

When would a sales variance be listed as favorable?

In general, budget variances should not be used to single out managers for praise or punishment.

Which of the following is an incorrect statement regarding variances?

The sales volume variance is the difference between sales revenue on the static budget and sales revenue on the flexible budget.

The sales volume variance was: Item to Classify Standard Actual Sales volume 100.000 units 96.000 units Sales price \ 4 per unit \ 3.90 per unit Materials usage 40,000 gallons 42.000 gallons Labor price 12.50 per Hour 12.45 per hour

Which manager is usually held responsible for labor price variances?

A budget prepared at a single volume of activity is referred to as a:

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

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

The Boyle Company estimated that April sales would be 150,000 units with an average selling price of $6.00. Actual sales for April were 149,000 units and average selling price was $6.12.The sales volume variance was:

Sometimes the sales staff will deliberately underestimate the amount of expected sales. This practice is known as:

Select the correct statement regarding general, selling, and administrative (GS&A) costs.

The differences between the standard and actual amounts are called variances.

When would a variance be labeled as favorable?

How do differences between planned and actual volume impact companies that use a cost plus pricing strategy?

When would a sales variance be listed as favorable?

In general, budget variances should not be used to single out managers for praise or punishment.

Which of the following is an incorrect statement regarding variances?

The sales volume variance is the difference between sales revenue on the static budget and sales revenue on the flexible budget.

The sales volume variance was: Item to Classify Standard Actual Sales volume 100.000 units 96.000 units Sales price \ 4 per unit \ 3.90 per unit Materials usage 40,000 gallons 42.000 gallons Labor price 12.50 per Hour 12.45 per hour

Which manager is usually held responsible for labor price variances?

A budget prepared at a single volume of activity is referred to as a:

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