Chapter 9: Flexible Budgets, Standard Costs, and Variance AnalysisAssignment

The difference between the standard and the actual direct labor wages per hour is reflected in the labor rateBlank 1Blank 1 rate , Correct Unavailable variance. (Enter only one word per blank.)

rate

The material variance terms price and quantity are replaced with the terms BLANK and BLANK when computing direct labor variances

hour or hours rate or rates

When 100% peak effort from the most skilled and efficient workers is assumed, the direct labor hours required per unit is being set using BLANK standards.

ideal

Using multiple cost drivers on a flexible budget report will generally Blank______. Multiple choice question. not impact the planning budget have no impact on expected or actual net income increase accuracy

increases accuracy

When direct labor is used as the overhead allocation base, the variable overhead efficiency variance Blank______. Multiple choice question. cannot be calculated will be favorable when the direct labor efficiency variance is favorable will always be unfavorable explains how efficient overhead resources were used

will be favorable when the direct labor efficiency variance is favorable

The materials price variance is the difference between the actual price of materials Blank______. Multiple choice question. times the actual quantity of materials and the standard price of materials times the standard quantity allowed for production and the standard price for materials with the difference multiplied by the actual quantity of materials and the standard price for materials with the difference multiplied by the standard quantity of material allowed

and the standard price for materials with the difference multiplied by the actual quantity of materials

If the activity level for the month is 4,000 units, actual revenue is $6,000, actual variable costs are $0.20 unit, and actual fixed costs total $500, which of the following are true? Multiple select question. $800 in total costs $4,200 net income $1,300 in total costs $4,700 net income

$1,300 in total costs $4,700 net income

The planning budget, based on 1,000 units, shows revenue of $24,000 and $6,250 for supplies. A total of 1,200 units were actually produced and sold. The flexible budget will show Blank______. $7,500 for supplies Reason: $6,250 ÷ 1,000 = $6.25 per unit × 1,200 = $7,500 $24,000 revenue Reason: When the units sold increase, total revenue increases. $6,250 for supplies Reason: Supplies is a variable cost, so it increases when activity increases. $28,800 revenue

$7,500 for supplies $28,800 revenue

If the planned budget revenue for 5,000 units is $120,000, the flexible budget revenue for 4,500 units is Blank

108k

Which statement regarding variable overhead variance analysis is true? Multiple choice question. The variable overhead efficiency is calculated by multiplying the variance in the labor hours with the variable portion of the predetermined overhead rate. Variable overhead variances are easy to interpret. Efficient use of variable overhead results in a favorable variable overhead efficiency variance. The variable overhead efficiency variance uses exactly the same inputs as the direct labor efficiency variance.

The variable overhead efficiency is calculated by multiplying the variance in the labor hours with the variable portion of the predetermined overhead rate.

Which of the following are used to calculate the standard quantity per unit of direct materials? Multiple select question. Direct materials requirements per unit of finished product Freight and transportation costs Allowance for waste and spoilage

Direct materials requirements per unit of finished product Allowance for waste and spoilage

The materials price variance is calculated using the Blank______ quantity of the input purchased. Multiple choice question. actual standard

actual

The material quantity variance measures the difference between the BLANKquantity of materials used in production and the BLANKquantity of materials allowed for the actual output, multiplied by the standard price per unit of materials

actual standard

A price variance is the difference between the Blank______. Multiple choice question. actual price and the standard price multiplied by the actual amount of the input standard quantity allowed and the actual quantity used multiplied by the actual price standard quantity allowed and the actual quantity used multiplied by the standard price actual price and the standard price multiplied by the standard amount allowed

actual price and the standard price multiplied by the actual amount of the input

When preparing a flexible budget, the level of activity Blank______. Multiple choice question. affects variable costs only affects fixed costs only affects both fixed and variable costs has no effect on costs

affects variable costs only

The variance analysis cycle Blank______. begins with the preparation of performance reports includes the investigation of all variances Reason: Only significant variances are investigated. is used to assign blame for poor performance Reason: The variance analysis cycle should not be used to assign blame. begins with the preparation of the budget Reason: It begins with the preparation of the performance report.

begins with the preparation of performance reports

Standards are Blank______. Multiple select question. compared to the actual quantities and costs of inputs rarely used outside of management accounting benchmarks for measuring performance set for each major production input or task

compared to the actual quantities and costs of inputs benchmarks for measuring performance set for each major production input or task

A spending variance is the ______. Multiple choice question. difference between the actual amount of the cost and how much a cost should have been, given the actual level of activity actual amount spent difference between the budgeted cost of the item and the actual cost of the item projected amount to be spent

difference between the actual amount of the cost and how much a cost should have been, given the actual level of activity

A revenue variance is the ______. Multiple choice question. difference between what a cost should have been at the actual level of activity and the actual amount of the cost difference between the actual total revenue and what the total revenue should have been, given the actual level of activity for the period difference between total revenue in the planning budget and actual total revenue actual total revenue earned

difference between the actual total revenue and what the total revenue should have been, given the actual level of activity for the period

The difference between the actual hours used and the standard hours allowed for the actual output is used in the calculation of the labor efficiencyBlank 1Blank 1 efficiency , Correct Unavailable variance

efficiency

The materials price variance is generally calculated at the time materials are purchased because

it allows materials to be carried in the inventory accounts at standard cost it simplifies bookkeeping management can generate more timely variance reports

The terms price and quantity are used when computing direct _variance, while the terms rate and hours are used when computing direct _variances.

material labor

Variances are more accurate when using Blank______. Multiple choice question. a single cost driver multiple cost drivers

multiple cost drivers

A budget that is prepared at the beginning of the period for a specific level of activity is called a Blank______ budget. Multiple choice question. planning flexible strategic

planning

The difference between the actual price paid for the material and what should have been paid according to the standard is reflected in the direct materials blank variance.

price

The difference between the actual price paid for the material and what should have been paid according to the standard is reflected in the direct materialsblank variance.

price

.Most companies compute the material price variance when materials are Blank______ and the material quantity variance when materials are Blank______. Multiple choice question. purchased, purchased purchased, used used, purchased used, used

purchased used

The difference between the actual materials used in production and the standard amount allowed for the actual output is reflected in the materials BLANK variance

quantity

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) BLANK variance

spending

A benchmark used in measuring performance is called a(n) BLANK

standard

A benchmark used in measuring performance is called a(n)BLANK .

standard

The amount of direct-labor hours that should be used to produce one unit of finished goods is the hours per unit.

standard

The labor efficiency variance is the difference between actual hours used and standard hours allowed multiplied by the Blank______ hourly rate. Multiple choice question. actual standard

standard

An unchanged planning budget is known as a(n) BLANK planning budget.

static

The same basic formulas used for materials and labor are used to analyze Blank______ portion of manufacturing overhead. Multiple choice question. the variable the fixed both the variable and fixed neither the variable nor fixed

variable

he standard cost for Blank______ manufacturing overhead is computed the same way as the standard cost for direct labor. Multiple choice question. variable both variable and fixed fixed

variable

The standard rate per unit that a company expects to pay for variable overhead equals the Blank______. Multiple choice question. variable portion of the predetermined overhead rate total predetermined overhead rate total actual overhead the company expects to incur variable portion of actual overhead the company expects to incur

variable portion of the predetermined overhead rate

Companies use the BLANK BLANK cycle to evaluate and improve performance

variance analysis

The labor rate variance measures the productivity of direct labor. True false question.TrueFalse

f

The standard hours per unit includes both direct and indirect labor hours. True false question.TrueFalse

f

The difference between the actual total revenue and what the total revenue should have been, given the actual level of activity for the period is called a(n) BLANK variance

revenue

Planning budgets are sometimes called Blank______ budgets. Multiple choice question. static flexible

static