Question 1

Answer the following questions using the information below:
Hobart Garden Centre provides the following information for the month of May:
 $$\begin{array} {c } 
&&&&&&&&&&&&&&&&& { \text { Actual } } & &&&&&{ \text { Budget } } \
\end{array}\
\begin{array} { l r r r r } 
& \text { Fuchsia } & \text { Dogwood } & \text { Fuchsia } & \text { Dogwood } \
\text { Sales in units } & 10000 & 2500 & 8000 & 2000 \
\text { Contribution margin per unit } & \$ 9 & \$ 7 & \$ 10 & \$ 8
\end{array}$$
-For May,Hobart will report a(n):

Accepted Answer

A) favourable sales-mix variance. 
B) unfavourable sales-volume variance. 
C) favourable sales-volume variance. 
D) unfavourable sales-mix variance.

Question 2

The flexible-budget variance for direct cost inputs can be further subdivided into a:

Accepted Answer

A) sales-volume variance and an efficiency variance. 
B) static-budget variance and a price variance. 
C) static-budget variance and a sales-volume variance. 
D) price variance and an efficiency variance.

Question 3

To control a production process,supervisors cannot wait for an accounting report with variances reported in:

Accepted Answer

A) units. 
B) kilometres. 
C) foreign currencies. 
D) dollars.

Question 4

An underemphasis on performance evaluation and meeting individual variance targets can undermine learning and continuous improvement.

Accepted Answer

A) True 
 B)False

Question 5

Answer the following questions using the information below:
The Tornado Dust Removers Corporation manufactures two vacuum cleaners,the Standard and the Supreme.The following information was gathered about the two products:
 $$\begin{array} { l r r } 
& \text { Standard } & \text { Supreme } \
\text { Bud geted sales in urits } & 4000 & 1000 \
\text { Bud geted selling price } & \$ 300 & \$ 850 \
\text { Bud geted contribution margin per unit } & \$ 210 & \$ 550 \
\text { Actual sales in units } & 3500 & 1500 \
\text { Actual selling price } & \$ 325 & \$ 840
\end{array}$$
-What is the total sales-mix variance in terms of the contribution margin?

Accepted Answer

A) $278 000 favourable 
B) $170 000 favourable 
C) $448 000 favourable 
D) $110 000 favourable

Question 6

Answer the following questions using the information below:
The Broken Hill Dustbusters Corporation manufactures two types of vacuum cleaners,the Terminator for commercial building use and the Dustmaid for residences.Budgeted and actual operating data for the year 2018 were as follows:
 $$\begin{array} { l r r r } 
\text { Static Budget } & \text { Terminator } & \text { Dustmaid } & \text { Total } \
\text { Number sold } & 5000 & 20000 & 25000 \
\text { Contribution margin } & \$ 1500000 & \$ 3000000 & \$ 4500000 \
& & & \
\text { Actual Results } & \text { Terminator } & \text { Dustmaid } & \text { Total } \
\hline \text { Number sold } & 4000 & 28000 & 32000 \
\text { Contribution margin } & \$ 1280000 & \$ 3920000 & \$ 5200000
\end{array}$$ Prior to the beginning of the year,a consulting firm estimated the total volume for vacuum cleaners of the Terminator and Dustmaid category to be 250 000 units,but actual industry volume was 256 000 units.
-What is the total flexible-budget variance in terms of the contribution margin?

Accepted Answer

A) $360 000 unfavourable 
B) $900 000 favourable 
C) $200 000 unfavourable 
D) $700 000 favourable

Question 7

Answer the following questions using the information below:
The Tornado Dust Removers Corporation manufactures two vacuum cleaners,the Standard and the Supreme.The following information was gathered about the two products:
 $$\begin{array} { l r r } 
& \text { Standard } & \text { Supreme } \
\text { Bud geted sales in urits } & 4000 & 1000 \
\text { Bud geted selling price } & \$ 300 & \$ 850 \
\text { Bud geted contribution margin per unit } & \$ 210 & \$ 550 \
\text { Actual sales in units } & 3500 & 1500 \
\text { Actual selling price } & \$ 325 & \$ 840
\end{array}$$
-The market-share variance will be favourable when:

Accepted Answer

A) actual market size in units is less than budgeted market size in units. 
B) the actual market share is greater than the budgeted market share. 
C) the flexible-budget contribution margin is greater than the static-budget contribution margin. 
D) actual unit sales are less than budgeted unit sales.

Question 8

Answer the following questions using the information below:
Bland Corporation used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit.
 $$\begin{array} { l r r } 
& \text { Actual } & \text { Budgeted } \
\text { Units sold } & 184000 \text { units } & 180000 \text { units } \
\text { Variable costs } & \$ 901600 & \$ 864000 \
\text { Fixed costs } & \$ 190000 & \$ 200000
\end{array}$$
-What is the static-budget variance of variable costs?

Accepted Answer

A) $40 000 favourable 
B) $37 600 unfavourable 
C) $2400 unfavourable 
D) $2400 favourable

Question 9

Although computed separately,price variances and efficiency variances should not be analysed separately from each other.

Accepted Answer

A) True 
 B)False

Question 10

Answer the following questions using the information below:
Hunter Valley Orchards (HVO),developed standard costs for direct material and direct labour.In 2018,HVO estimated the following standard costs for one of their most well-loved products,the HVO classic Grandma's large apple pie which had a brown sugar coating on the top of the crust as well as including cranberry and mince ingredients in addition to the apples.
 $$\begin{array} { l l l } 
& \text { Budgeted quantity } & \text { Budgeted price } \
\text { Direct materials } & 1.5 \mathrm {~kg} & \$ 7.25 \text { per } \mathrm { kg } \
\text { Direct labour } & 0.25 \text { hours } & \$ 14.00 \text { per hour }
\end{array}$$ During September,HVO produced and sold 1200 pies using 1875 kg of direct materials at an average cost per kg of $7.00 and 280 direct labour hours at an average wage of $14.25 per hour.
-September's direct material price variance is:

Accepted Answer

A) $468.75 favourable. 
B) $75.00 unfavourable. 
C) $468.75 unfavourable. 
D) None of these answers are correct.

Question 11

A(n)__________________ on performance evaluation may also cause managers to take actions to achieve the budget and avoid an unfavourable variance,even if such actions could hurt the company in the long run.

Accepted Answer

A) underemphasis 
B) focus 
C) overemphasis 
D) emphasis

Question 12

How does variance analysis help with activity-based costing.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of How does variance analysis help with activity-based...

Question 13

The sales-mix variance results from a difference between the:

Accepted Answer

A) actual market size in units and the budgeted market size in units. 
B) actual market share and the budgeted market share. 
C) budgeted contribution margin per composite unit for the actual mix and the budgeted contribution margin per composite unit for the budgeted mix. 
D) actual contribution margin and the budgeted contribution margin.

Question 14

What might be unfavourable flexible-budget variance for variable costs the result of?
Variant question

Accepted Answer

A) Using more input quantities than were budgeted 
B) Paying higher prices for inputs than were budgeted 
C) Selling output at a higher selling price than budgeted 
D) Both A and B are correct.

Question 15

From the perspective of control,all variances are isolated at the _____________ time.

Accepted Answer

A) latest 
B) same 
C) best 
D) earliest possible

Question 16

Answer the following questions using the information below:
The Tornado Dust Removers Corporation manufactures two vacuum cleaners,the Standard and the Supreme.The following information was gathered about the two products:
 $$\begin{array} { l r r } 
& \text { Standard } & \text { Supreme } \
\text { Bud geted sales in urits } & 4000 & 1000 \
\text { Bud geted selling price } & \$ 300 & \$ 850 \
\text { Bud geted contribution margin per unit } & \$ 210 & \$ 550 \
\text { Actual sales in units } & 3500 & 1500 \
\text { Actual selling price } & \$ 325 & \$ 840
\end{array}$$
-What is the total sales-quantity variance in terms of the contribution margin?

Accepted Answer

A) $278 000 favourable 
B) $170 000 favourable 
C) $110 000 favourable 
D) Nil variance

Question 17

Sometimes a favourable direct materials efficiency variance may signal a need to change product strategy,perhaps because the product cannot be made at a low enough cost.

Accepted Answer

A) True 
 B)False

Question 18

Answer the following questions using the information below:
Shepparton Water Sports has prepared the following flexible budget for September and is in the process of interpreting the variances.F denotes a favourable variance and U denotes an unfavourable variance.
 $$\begin{array} { l r r r } 
& \text { Flexible } & { \text { Variances } } \
& \underline { \text { Budget } } & \text { Price } & \text { Efficlency } \
\text { Material A } & \$ 20000 & \$ 1000 \mathrm {~F} & \$ 3000 \mathrm { U } \
\text { Material B } & 30000 & 500 \mathrm { U } & 1500 \mathrm {~F} \
\text { Direct mantufacturing labour } & 40000 & 500 \mathrm { U } & 2500 \mathrm {~F}
\end{array}$$
-The MOST likely explanation of the above variances for Material A is that:

Accepted Answer

A) the company used a higher-priced supplier. 
B) higher-quality raw materials were used than were planned. 
C) Material A used during September was $2000 less than expected. 
D) a lower price than expected was paid for Material A.

Question 19

Some of the individual variances are favourable (F)and some variances are unfavourable (U).

Accepted Answer

A) True 
 B)False

Question 20

Geelong Electronics manufactures TVs and DVD players.During February,the following activities occurred:
 $$\begin{array} { l r r } 
& \text { TVs } & \text { DVDs } \
\text { Budgeted units sold } & 17640 & 66360 \
\text { Budgeted contribution margin per unit } & \$ 90 & \$ 156 \
\text { Actual units sold } & 20000 & 80000 \
\text { Actual contribution margin per unit } & \$ 100 & \$ 158
\end{array}$$ 
Required:
Compute the following variances in terms of the contribution margin.
a.Determine the total sales-mix variance.
b.Determine the total sales-quantity variance.
c.Determine the total sales-volume variance.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Accepted Answer

The answer of Geelong Electronics manufactures TVs and DVD players.During...

Exam 12: Flexible Budgets, Direct Cost Variances and Management Control

The flexible-budget variance for direct cost inputs can be further subdivided into a:

To control a production process,supervisors cannot wait for an accounting report with variances reported in:

An underemphasis on performance evaluation and meeting individual variance targets can undermine learning and continuous improvement.

Although computed separately,price variances and efficiency variances should not be analysed separately from each other.

A(n) __________________ on performance evaluation may also cause managers to take actions to achieve the budget and avoid an unfavourable variance,even if such actions could hurt the company in the long run.

How does variance analysis help with activity-based costing. _ _

The sales-mix variance results from a difference between the:

What might be unfavourable flexible-budget variance for variable costs the result of? Variant question

From the perspective of control,all variances are isolated at the _____________ time.

Sometimes a favourable direct materials efficiency variance may signal a need to change product strategy,perhaps because the product cannot be made at a low enough cost.

Some of the individual variances are favourable (F)and some variances are unfavourable (U).

Exam 12: Flexible Budgets, Direct Cost Variances and Management Control

The flexible-budget variance for direct cost inputs can be further subdivided into a:

To control a production process,supervisors cannot wait for an accounting report with variances reported in:

An underemphasis on performance evaluation and meeting individual variance targets can undermine learning and continuous improvement.

Although computed separately,price variances and efficiency variances should not be analysed separately from each other.

A(n) __________________ on performance evaluation may also cause managers to take actions to achieve the budget and avoid an unfavourable variance,even if such actions could hurt the company in the long run.

How does variance analysis help with activity-based costing. _____________________________________________________________________________________________ _____________________________________________________________________________________________

The sales-mix variance results from a difference between the:

What might be unfavourable flexible-budget variance for variable costs the result of? Variant question

From the perspective of control,all variances are isolated at the _____________ time.

Sometimes a favourable direct materials efficiency variance may signal a need to change product strategy,perhaps because the product cannot be made at a low enough cost.

Some of the individual variances are favourable (F)and some variances are unfavourable (U).

How does variance analysis help with activity-based costing. _ _