acc exam 3 concept questions ch.9
A flexible budget performance report combines the ______. a. manager's performance with the employee's performance b. net income for two periods c. activity variances with the revenue and spending variances
activity variances with the revenue and spending variances
When preparing a flexible budget, the level of activity ______. a. has no effect on costs b. affects variable costs only c. affects both fixed and variable costs d. affects fixed costs only
affects variable costs only
Commission expense is budgeted to be $16,000 at a planned sales level of 4,000 units. If only 2,900 units are sold, how much commission expense will appear on the flexible budget, and is the activity variance favorable or unfavorable? a. $11,600 and favorable b. $4,400 and favorable c. $87,000 and unfavorable d. $11,600 and unfavorable
$11,600 and favorable
Commission expense is budgeted to be $16,000 at a planned sales level of 4,000 units. If only 2,900 units are sold, how much commission expense will appear on the flexible budget, and is the activity variance favorable or unfavorable? a. $4,400 and favorable b. $87,000 and unfavorable c. $11,600 and unfavorable d. $11,600 and favorable
$11,600 and favorable
Using multiple cost drivers on a flexible budget report will generally ______. a. have no impact on expected or actual net income b. not impact the planning budget c. increase accuracy
increase accuracy
When comparing the static planning budget to actual activity, a problem that arises when actual activity is higher than budgeted activity is that ______. a. net income is higher than expected but all or most expense variances are unfavorable b. net income is lower than expected but all or most expense variances are favorable c. there are no revenue or expense variances
net income is higher than expected but all or most expense variances are unfavorable
A budget that is prepared at the beginning of the period for a specific level of activity is called a ______ budget. a. flexible b. planning c. strategic
planning
The difference between what the total sales should have been, given the actual level of activity for the period, and the actual total sales is a(n) ___________ variance
revenue
The difference between how much a cost should have been, given the actual level of activity, and the actual amount of the cost is a(n) __________ variance.
spending
If the actual cost is greater than what the cost should have been, the variance is labeled as _____________
unfavorable
The difference between a revenue or cost item in the planning budget and the same item in the flexible budget at the actual level of activity is a(n) ______ variance.
activity
The variance analysis cycle ______. a. includes the investigation of all variances b. begins with the preparation of the budget c. is used to assign blame for poor performance d. begins with the preparation of performance reports
begins with the preparation of performance reports
Nonprofit organizations ______. -never have costs -usually have significant funding sources other than sales -may have revenue sources that are fixed -never have variable revenue sources
-usually have significant funding sources other than sales -may have revenue sources that are fixed
A performance report shows that the planning revenue was $200,000, the flexible budget revenue was $225,000, and actual revenue was $223,000. Which of the following statements are true? -The activity variance is $25,000 Unfavorable. -The revenue variance is $2,000 Favorable. -The revenue variance is $2,000 Unfavorable. -The activity variance is $25,000 Favorable.
-The revenue variance is $2,000 Unfavorable. -The activity variance is $25,000 Favorable.
options to generate a favorable revenue and spending variance include ______. a. reduce the prices of inputs b. increase the number of clients c. protecting the selling price d. increase operating efficiency
-reduce the prices of inputs -protecting the selling price -increase operating efficiency
A flexible budget shows ______. -what variable costs should have been at the actual level of activity -why the actual level of activity differs from the budgeted level of activity -what fixed costs should have been at the actual level of activity -what revenue should have been at the actual level of activity
-what variable costs should have been at the actual level of activity -what fixed costs should have been at the actual level of activity -what revenue should have been at the actual level of activity
Revenue on the planning budget is expected to be $380,000 for 1,900 client visits. The revenue on the flexible budget is $410,000, showing that there were actually ______ client visits. a. 2,050 b. 2,000 c. 1,950
2,050 Reason: $380,000 ÷ 1,900 = $200 per client visit. $410,000 ÷ $200 = 2,050 client visits.
A revenue variance is the ______. a. actual total revenue earned b. difference between what a cost should have been at the actual level of activity and the actual amount of the cost c. difference between total revenue in the planning budget and actual total revenue d. difference between what revenue should have been at the actual level of activity and the actual revenue
difference between what revenue should have been at the actual level of activity and the actual revenue
Performance reports for cost centers ______. a. do not include revenues or net income b. are not common in most organizations c. are significantly different than reports prepared for other departments
do not include revenues or net income
When actual revenue ______ what the revenue should have been, the variance is labeled favorable. a. is less than b. exceeds c. is equal to
exceeds
Given planning budget revenue of $284,000, actual revenue of $275,000, and flexible budget revenue of $290,000, there is a(n) ___________ activity variance.
favorable
The prominent difference between performance reports in nonprofit and for-profit organizations is that nonprofit organizations ______. a. generally do not compute revenue and spending variances b. rarely have any fixed costs c. usually receive significant funding from sources other than sales
usually receive significant funding from sources other than sales
The spending variance is labeled as favorable when the ______. a. actual cost is more than what the cost should have been at the actual level of activity b. amount spent is less than what was spent last period c. actual cost is less than what the cost should have been at the planned level of activity d. actual cost is less than what the cost should have been at the actual level of activity
actual cost is less than what the cost should have been at the actual level of activity
A revenue variance is the ______. a. difference between total revenue in the planning budget and actual total revenue b. actual total revenue earned c. difference between what a cost should have been at the actual level of activity and the actual amount of the cost d. difference between what revenue should have been at the actual level of activity and the actual revenue
difference between what revenue should have been at the actual level of activity and the actual revenue
Estimates of what revenues and costs should have been based on the actual level of activity are shown on the _________ budget.
flexible