Question 1

Zip-up Company provides the following data developed for its master budget:
  Required:
Prepare flexible budgets for sales of 20,000, 22,000 and 24,000 units. Use a contribution margin format.

Accepted Answer

The answer of Zip-up Company provides the following data developed...

Question 2

A company provided the following direct materials cost information. Compute the direct materials price variance.

Accepted Answer

A)   $81,000 Favorable.
B)   $81,000 Unfavorable.
C)   $80,750 Unfavorable.
D)   $80,750 Favorable.
E)   $78,250 Favorable.F) A) and C)
G) D) and E)

Question 3

A flexible budget expresses all costs on a per unit basis, regardless of cost behavior.

Accepted Answer

A) True 
 B)False

Question 4

An analytical technique used by management to focus attention on the most significant variances and give less attention to the areas where performance is reasonably close to standard is known as:

Accepted Answer

A)   Controllable management.
B)   Management by variance.
C)   Performance management.
D)   Management by objectives.
E)   Management by exception.F) A) and B)
G) B) and D)

Question 5

The following company information is available. The direct materials quantity variance is:

Accepted Answer

A)   $10,000 unfavorable.
B)   $13,200 unfavorable.
C)   $9,600 unfavorable.
D)   $10,000 favorable.
E)   $13,200 favorable.F) A) and B)
G) None of the above

Question 6

While companies strive to achieve ideal standards, reality implies that some loss of materials usually occurs with any process.

Accepted Answer

A) True 
 B)False

Question 7

Briefly describe management by exception.

Accepted Answer

Management by exception is an analytical...

Question 8

Another name for a static budget is a variable budget.

Accepted Answer

A) True 
 B)False

Question 9

The standard materials cost to produce 1 unit of Product R is 6 pounds of material at a standard price of $50 per pound. In manufacturing 8,000 units, 47,000 pounds of material were used at a cost of $51 per pound. What is the direct materials price variance?

Accepted Answer

A)   $47,000 unfavorable.
B)   $47,000 favorable.
C)   $50,000 unfavorable.
D)   $50,000 favorable.
E)   $3,000 favorable.F) D) and E)
G) A) and B)

Question 10

All of the following are associated with the volume variance except:

Accepted Answer

A)   It results from operating at a different capacity than predicted.
B)   Failing to meet expected production results from lower customer demand.
C)   The volume variance is based solely on fixed overhead.
D)   It is considered to be under management's control.
E)   It is considered outside the control of the product manager.F) C) and E)
G) B) and E)

Question 11

What are the four steps in the effective management of variance analysis?

Accepted Answer

The four steps are: (1) prepar...

Question 12

Standard costs can be used by management to assess the reasonableness of actual costs incurred.

Accepted Answer

A) True 
 B)False

Question 13

Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials quantity variance is:

Accepted Answer

A)   $27,500 unfavorable.
B)   $50,000 unfavorable.
C)   $50,000 favorable.
D)   $22,500 unfavorable.
E)   $22,500 favorable.F) All of the above
G) B) and E)

Question 14

A ________ contains relevant information that compares actual results to planned activities.

Accepted Answer

The answer of A ________ contains relevant information that compares...

Question 15

A favorable direct materials price variance might lead to an unfavorable direct materials quantity variance because the company purchased inferior materials.

Accepted Answer

A) True 
 B)False

Question 16

Fletcher Company collected the following data regarding production of one of its products. Compute the variable overhead spending variance.

Accepted Answer

A)   $25,450 favorable.
B)   $4,000 favorable.
C)   $4,000 unfavorable.
D)   $21,450 unfavorable..
E)   $21,450 favorable.F) B) and C)
G) C) and D)

Question 17

Linx Company's output for a period was assigned the standard direct labor cost of $17,160. If the company had a favorable direct labor rate variance of $1,000 and an unfavorable direct labor efficiency variance of $275, what was the total actual cost of direct labor incurred during the period?

Accepted Answer

The answer of Linx Company's output for a period was...

Question 18

Cost variances are ignored under management by exception.

Accepted Answer

A) True 
 B)False

Question 19

Claremont Company sells refurbished copiers. During the month, the company sold 180 copiers at an average price of $3,000 each. The budget for the month was to sell 175 copiers at an average price of $3,200. The expected total sales for 180 copiers were:

Accepted Answer

A)   $540,000.
B)   $576,000.
C)   $525,000.
D)   $560,000.
E)   $550,000.F) A) and D)
G) A) and C)

Question 20

A company has established 5 pounds of Material J at $2 per pound as the standard for the material in its Product Z. The company has just produced 1,000 units of this product, using 5,200 pounds of Material J that cost $9,880. The direct materials quantity variance is:

Accepted Answer

A)   $400 unfavorable.
B)   $120 favorable.
C)   $400 favorable.
D)   $520 favorable.
E)   $520 unfavorable.F) A) and D)
G) A) and E)

Exam 8: Flexible Budgets and Standard Costs

The following company information is available. The direct materials quantity variance is:

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Another name for a static budget is a variable budget.

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A favorable direct materials price variance might lead to an unfavorable direct materials quantity variance because the company purchased inferior materials.

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All of the following are associated with the volume variance except:

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A flexible budget expresses all costs on a per unit basis, regardless of cost behavior.

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Claremont Company sells refurbished copiers. During the month, the company sold 180 copiers at an average price of $3,000 each. The budget for the month was to sell 175 copiers at an average price of $3,200. The expected total sales for 180 copiers were:

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Fletcher Company collected the following data regarding production of one of its products. Compute the variable overhead spending variance.

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Zip-up Company provides the following data developed for its master budget: Required: Prepare flexible budgets for sales of 20,000, 22,000 and 24,000 units. Use a contribution margin format.

Correct AnswerverifiedShow Answer

Cost variances are ignored under management by exception.

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Briefly describe management by exception.

Correct AnswerverifiedManagement by exception is an analytical...View AnswerShow Answer

What are the four steps in the effective management of variance analysis?

Correct AnswerverifiedThe four steps are: (1) prepar...View AnswerShow Answer

Linx Company's output for a period was assigned the standard direct labor cost of $17,160. If the company had a favorable direct labor rate variance of $1,000 and an unfavorable direct labor efficiency variance of $275, what was the total actual cost of direct labor incurred during the period?

Correct AnswerverifiedShow Answer

The standard materials cost to produce 1 unit of Product R is 6 pounds of material at a standard price of $50 per pound. In manufacturing 8,000 units, 47,000 pounds of material were used at a cost of $51 per pound. What is the direct materials price variance?

Correct AnswerverifiedShow Answer

While companies strive to achieve ideal standards, reality implies that some loss of materials usually occurs with any process.

Correct AnswerverifiedShow Answer

A company has established 5 pounds of Material J at $2 per pound as the standard for the material in its Product Z. The company has just produced 1,000 units of this product, using 5,200 pounds of Material J that cost $9,880. The direct materials quantity variance is:

Correct AnswerverifiedShow Answer

A ________ contains relevant information that compares actual results to planned activities.

Correct AnswerverifiedShow Answer

Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials quantity variance is:

Correct AnswerverifiedShow Answer

Standard costs can be used by management to assess the reasonableness of actual costs incurred.

Correct AnswerverifiedShow Answer

A company provided the following direct materials cost information. Compute the direct materials price variance.

Correct AnswerverifiedShow Answer

An analytical technique used by management to focus attention on the most significant variances and give less attention to the areas where performance is reasonably close to standard is known as:

Correct AnswerverifiedShow Answer

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Management by exception is an analytical...
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The four steps are: (1) prepar...
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