ACC 350 Week 8 Quiz – Strayer
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Quiz 6 Chapter 7
Flexible Budgets, Direct-Cost
Variances, and Management Control
1)
The
master budget is one type of flexible budget.
2)
A
flexible budget is calculated at the start of the budget period.
3)
Information
regarding the causes of variances is provided when the master budget is
compared with actual results.
4)
A
variance is the difference between the actual cost for the current and previous
year.
5)
A
favorable variance results when budgeted revenues exceed actual revenues.
6)
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.
7)
The
essence of variance analysis is to capture a departure from what was
expected.
8)
A
favorable variance should be ignored by management.
9)
An
unfavorable variance may be due to poor planning rather than due to
inefficiency.
10)
The only
difference between the static budget and flexible budget is that the static
budget is prepared using planned output.
11)
The
static-budget variance can be subdivided into the flexible-budget variance and
the sales-volume variance.
12)
The
flexible-budget variance may be the result of inaccurate forecasting of units
sold.
13)
Decreasing
demand for a product may create a favorable sales-volume variance.
14)
An
unfavorable variance is conclusive evidence of poor performance.
15)
A
company would not need to use a flexible budget if it had perfect foresight
about actual output units.
16)
The
flexible-budget variance pertaining to revenues is often called a selling-price
variance.
17)
Cost
control is the focus of the sales-volume variance.
18)
The term
efficiency variance is the direct-cost portion of the flexible-budget
variance.
19)
Managers
generally have more control over efficiency variances than price
variances.
20)
To
prepare budgets based on actual data from past periods is preferred since past
inefficiencies are excluded.
21)
All
budgets are based on standard costs.
22)
A
standard is attainable through efficient operations but allows for normal
disruptions such as machine breakdowns and defective production.
23)
One
advantage of using standard times to develop a budget is they are simple to
compile, are based solely on the past actual history, and do not require
expected future changes to be taken into account.
24)
The
presumed cause of a material price variance will determine how a company
responds.
25)
The
price variance is the difference between the actual price and the budgeted
price of the input, multiplied by the actual quantity of input.
26)
For any
actual level of output, the efficiency variance is the difference between
actual quantity of input used and the budgeted quantity of input allowed to
produce actual output, multiplied by the actual price.
27)
The use
of high-quality raw materials is likely to result in a favorable efficiency
variance and an unfavorable price variance.
28)
The
direct manufacturing labor price variance is likely to be favorable if
higher-skilled workers are put on a job.
29)
Although
computed separately, price variances and efficiency variances should not be
analyzed separately from each other.
30)
A
favorable variance can be automatically interpreted as "good
news."
31)
Variances
often affect each other.
32)
If
variance analysis is used for performance evaluation, managers are encouraged
to meet targets using creativity and resourcefulness.
33)
When
using variance for performance evaluation, managers often focus on
effectiveness and efficiency as two of the common attributes used in comparing
expected results with actual results.
34)
For
critical items such as product defects, a small variance may prompt
investigation.
35)
A
particular variance generally signals one particular problem.
36)
If
budgets contain slack, cost variances will tend to be favorable.
37)
Continuous
improvement budgeted costs target price reductions and efficiency
improvements.
38)
Improvement
opportunities are easier to identify when products have been on the market for
a considerable period of time.
39)
It is
best to rely totally on financial performance measures rather than using a
combination of financial and nonfinancial performance measures.
40)
From the
perspective of control, the direct materials price variance should be isolated
at the time the direct materials are requisitioned for use.
41)
The goal
of variance analysis is for managers to understand why variances arise, to
learn, and to improve future performance.
42)
Employees
logging in to production floor terminals and other modern technologies greatly
facilitate the use of a standard costing system.
43)
Performance
variance analysis can be used in activity-based costing systems.
44)
Price
variances can be calculated for batch-level costs as well as for output
unit-level costs.
45)
Benchmarking
is the continuous process of measuring products, services, and activities
against the best possible levels of performance, either inside or outside the
organization.
46)
When
benchmarking, the best levels of performance are typically found in companies
that are totally different.
47)
One
problem with benchmarking is ensuring that numbers are comparable.
48)
When
benchmarking it is best when management accountants simply analyze the costs
and allow management to provide the insight as to why the revenues and costs
differ between companies.
49)
The
master budget is:
A)
a
flexible budget
B)
a static
budget
C)
developed
at the end of the period
D)
based on
the actual level of output
50)
A
flexible budget:
A)
is
another name for management by exception
B)
is
developed at the end of the period
C)
is based
on the budgeted level of output
D)
provides
favorable operating results
51)
Management
by exception is the practice of concentrating on:
A)
the
master budget
B)
areas
not operating as anticipated
C)
favorable
variances
D)
unfavorable
variances
52)
A
variance is:
A)
the gap
between an actual result and a benchmark amount
B)
the
required number of inputs for one standard output
C)
the
difference between an actual result and a budgeted amount
D)
the
difference between a budgeted amount and a standard amount
53)
An
unfavorable variance indicates that:
A)
actual
costs are less than budgeted costs
B)
actual
revenues exceed budgeted revenues
C)
the
actual amount decreased operating income relative to the budgeted amount
D)
All of
these answers are correct.
54)
A
favorable variance indicates that:
A)
budgeted
costs are less than actual costs
B)
actual
revenues exceed budgeted revenues
C)
the
actual amount decreased operating income relative to the budgeted amount
D)
All of
these answers are correct.
Answer
the following questions using the information below:
Abernathy
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.
Actual Budgeted
Units sold 92,000 units 90,000
units
Variable costs $450,800 $432,000
Fixed costs $ 95,000 $100,000
55)
What is
the static-budget variance of revenues?
A)
$20,000
favorable
B)
$20,000
unfavorable
C)
$2,000
favorable
D)
$2,000
unfavorable
56)
What is
the static-budget variance of variable costs?
A)
$1,200
favorable
B)
$18,800
unfavorable
C)
$20,000
favorable
D)
$1,200
unfavorable
57)
What is
the static-budget variance of operating income?
A)
$3,800
favorable
B)
$3,800
unfavorable
C)
$6,200
favorable
D)
$6,200
unfavorable
Answer
the following questions using the information below:
Bates
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.
Actual Budgeted
Units sold 495,000 units 500,000
units
Variable costs $1,250,000 $1,500,000
Fixed costs $ 925,000 $ 900,000
58)
What is
the static-budget variance of revenues?
A)
$50,000
favorable
B)
$50,000
unfavorable
C)
$5,000
favorable
D)
$5,000
unfavorable
59)
What is
the static-budget variance of variable costs?
A)
$200,000
favorable
B)
$50,000
unfavorable
C)
$250,000
favorable
D)
$250,000
unfavorable
60)
What is
the static-budget variance of operating income?
A)
$175,000
favorable
B)
$195,000
unfavorable
C)
$225,000
favorable
D)
$325,000
unfavorable
Answer
the following questions using the information below:
Racine
Filter Corporation used the following data to evaluate their current operating
system. The company sells items for $14.50 each and had used a budgeted selling
price of $15 per unit.
Actual Budgeted
Units sold 206,000 units 200,000
units
Variable costs $965,000 $950,000
Fixed costs $ 53,000 $ 50,000
61)
What is
the static-budget variance of revenues?
A)
$90,000
favorable
B)
$13,000
favorable
C)
$13,000
unfavorable
D)
$6,000
favorable
62)
What is
the static-budget variance of variable costs?
A)
$13,000
favorable
B)
$13,000
unfavorable
C)
$15,000
favorable
D)
$15,000
unfavorable
63)
What is
the static-budget variance of operating income?
A)
$31,000
unfavorable
B)
$26,000
favorable
C)
$28,000
favorable
D)
$28,000
unfavorable
64)
Regier
Company had planned for operating income of $10 million in the master budget
but actually achieved operating income of only $7 million.
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.
65)
The
flexible budget contains:
A)
budgeted
amounts for actual output
B)
budgeted
amounts for planned output
C)
actual
costs for actual output
D)
actual
costs for planned output
66)
The
following items are the same for the flexible budget and the master budget
EXCEPT the same:
A)
variable
cost per unit
B)
total
fixed costs
C)
units
sold
D)
sales
price per unit
67)
The
sales-volume variance is due to:
A)
using a
different selling price from that budgeted
B)
inaccurate
forecasting of units sold
C)
poor
production performance
D)
Both A
and B are correct.
68)
An
unfavorable sales-volume variance could result from:
A)
decreased
demand for the product
B)
competitors
taking market share
C)
customer
dissatisfaction with the product
D)
All of
these answers are correct.
69)
If a
sales-volume variance was caused by poor-quality products, then the ________
would be in the best position to explain the variance.
A)
production
manager
B)
sales
manager
C)
purchasing
manager
D)
management
accountant
70)
The
variance that is BEST for measuring operating performance is the:
A)
static-budget
variance
B)
flexible-budget
variance
C)
sales-volume
variance
D)
selling-price
variance
71)
An
unfavorable flexible-budget variance for variable costs may be the result
of:
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.
72)
An
unfavorable variance:
A)
may
suggest investigation is needed
B)
is
conclusive evidence of poor performance
C)
demands
that standards be recomputed
D)
indicates
continuous improvement is needed
73)
All of
the following are needed to prepare a flexible budget EXCEPT determining
the:
A)
budgeted
variable cost per output unit
B)
budgeted
fixed costs
C)
actual
selling price per unit
D)
actual
quantity of output units
74)
The variance
that LEAST affects cost control is the:
A)
flexible-budget
variance
B)
direct-material-price
variance
C)
sales-volume
variance
D)
direct
manufacturing labor efficiency variance
75)
A
flexible-budget variance is $800 favorable for unit-related costs. This
indicates that costs were:
A)
$800
more than the master budget
B)
$800
less than for the planned level of activity
C)
$800
more than standard for the achieved level of activity
D)
$800
less than standard for the achieved level of activity
Answer
the following questions using the information below:
JJ White
planned to use $82 of material per unit but actually used $80 of material per
unit, and planned to make 1,200 units but actually made 1,000 units.
76)
The
flexible-budget amount is:
A)
$80,000
B)
$82,000
C)
$96,000
D)
$98,400
77)
The
flexible-budget variance is:
A)
$2,000
favorable
B)
$14,000
unfavorable
C)
$16,400
unfavorable
D)
$2,400
favorable
78)
The
sales-volume variance is:
A)
$2,000
favorable
B)
$14,000
unfavorable
C)
$16,400
unfavorable
D)
$2,400
favorable
79)
Aebi
Corporation currently produces cardboard boxes in an automated process.
Expected production per month is 20,000 units, direct-material costs are $0.60
per unit, and manufacturing overhead costs are $9,000 per month. Manufacturing
overhead is allocated based on units of production. What is the flexible budget
for 10,000 and 20,000 units, respectively?
A)
$10,500;
$16,500
B)
$10,500;
$21,000
C)
$15,000;
$21,000
D)
None of
these answers are correct.
Answer
the following questions using the information below:
McKenna
Incorporated planned to use $24 of material per unit but actually used $25 of
material per unit, and planned to make 1,000 units but actually made 1,200
units.
80)
The
flexible-budget amount is:
A)
$24,000
B)
$25,000
C)
$28,800
D)
$30,000
81)
The
flexible-budget variance is:
A)
$4,800
favorable
B)
$1,200
unfavorable
C)
$5,000
unfavorable
D)
$6,000
favorable
82)
The
sales-volume variance is:
A)
$4,800
favorable
B)
$1,200
unfavorable
C)
$5,000
unfavorable
D)
$6,000
favorable
Answer
the following questions using the information below:
Seldon
Incorporated planned to use $37.50 of material per unit but actually used
$36.75 of material per unit, and planned to make 900 units but actually made
800 units.
83)
The
flexible-budget amount is:
A)
$30,000
B)
$33,750
C)
$29,400
D)
$600
84)
The
flexible-budget variance is:
A)
$3,750
favorable
B)
$3,750
unfavorable
C)
$600
unfavorable
D)
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