mgmt 201 exam 2

material price variance

AQ(AP-SP) (quantity of materials purchased)

Which of the following statements is true? A batch-level activity cost will decrease as the number of units in the batch increases. A batch-level activity cost will increase as the number of units in the batch increases. A batch-level activity cost is unaffected by the number of units in the batch. Batch-level activity costs are often used in traditional absorption costing systems to allocate batch-level costs.

A batch-level activity cost is unaffected by the number of units in the batch.

Which of the following statements is true? A product-level activity cost will decrease as the number of products produced increases. A product-level activity cost will increase as the number of products produced increases. A product-level activity cost is unaffected by the number of units produced. Product-level activity costs are often used in traditional absorption costing systems to allocate product-level costs.

A product-level activity cost is unaffected by the number of units produced.

labor rate variance

AH(AR-SR)

variable overhead rate variance

AH(AR-SR)

Which of the following is an example of a product-level activity?

Advertising products

Which of the following statements is false with respect to the sales budget including a schedule of expected cash collections? Estimating cash collections also enables managers to estimate accounts receivable on the balance sheet. Although the estimated amounts of sales and cash collections may differ from one another on a month-to-month or quarterly basis, these two estimates must equal each other on an annual basis. Estimating sales ultimately impacts the estimated ending retained earnings on the balance sheet. Estimating cash collections plays a role in preparing a cash budget.

Although the estimated amounts of sales and cash collections may differ from one another on a month-to-month or quarterly basis, these two estimates must equal each other on an annual basis.

Which of the following is an example of a unit-level activity?

Assembling products

Which of the following statements is true? Batch-level activities are performed each time a batch is produced. Batch-level activities are performed each time a unit is produced. Batch-level activities are performed each time a new product is introduced. Batch-level activities are a specific type of organization-sustaining activity.

Batch-level activities are performed each time a batch is produced.

Which of the following statements is true? A product-level activity cost is unaffected by the number of batches produced. A product-level activity cost will increase as the number of batches produced increases. A product-level activity cost will decrease as the number of batches produced increases. Product-level activity costs are often used in traditional absorption costing systems to allocate product-level costs.

Correct A product-level activity cost is unaffected by the number of batches produced. A product-level activity cost will increase as the number of batches produced increases. A product-level activity cost will decrease as the number of batches produced increases. Product-level activity costs are often used in traditional absorption costing systems to allocate product-level costs.

Which of the following equations is false with respect to the direct materials budget? Units of raw materials to be purchased × unit cost of raw materials = cost of raw material purchases Units of raw materials needed to meet production + desired units of ending raw materials inventory − units of beginning raw materials inventory = units of raw materials to be purchased Required production in units of finished goods × units of raw materials needed per unit of finished goods = units of raw materials needed to meet production Estimated sales in units of finished goods × units of raw materials needed per unit of finished goods = units of raw materials needed to meet production

Estimated sales in units of finished goods × units of raw materials needed per unit of finished goods = units of raw materials needed to meet production

Which of the following statements is true? First-stage allocation assigns overhead costs to activities. First-stage allocation assigns activity costs to products or customers. First-stage allocation assigns direct materials and direct labor to products. First-stage allocation redistributes organization-sustaining costs to the batch-level and product-level activities.

First-stage allocation assigns overhead costs to activities.

Which of the following is an example of an organization-sustaining activity?

Heating a manufacturing facility

Which of the following statements is true with respect to the labor spending variance? It encompasses the labor rate variance, but excludes the labor efficiency variance. It encompasses the labor rate and efficiency variances. It encompasses the labor efficiency variance, but excludes the labor rate variance. It is separate and independent from the labor rate and efficiency variances.

It encompasses the labor rate and efficiency variances.

Which of the following statements is false with respect to the manufacturing overhead budget? It excludes depreciation because it is not a cash flow. It estimates the cash disbursements for overhead that appear in the cash budget. It includes estimated variable overhead and estimated fixed overhead. It impacts the budgeted cost of goods sold reported on the income statement.

It excludes depreciation because it is not a cash flow.

Which of the following statements is false with respect to the selling and administrative expense budget? It excludes depreciation expense because it is not a cash flow. It estimates the cash disbursements for selling and administrative expenses that appear in the cash budget. It includes estimated variable and fixed selling and administrative expenses. It impacts the budgeted net operating income reported on the income statement.

It excludes depreciation expense because it is not a cash flow.

Which of the following statements is false with respect to the selling and administrative expense budget? It excludes depreciation expense because selling and administrative expenses are period costs and not product costs. It estimates the cash disbursements for selling and administrative expenses that appear in the cash budget. It includes estimated variable and fixed selling and administrative expenses. It impacts the budgeted net operating income reported on the income statement.

It excludes depreciation expense because selling and administrative expenses are period costs and not product costs.

Which of the following statements is false with respect to the manufacturing overhead budget? It includes depreciation even though it is not a cash flow. It estimates the cash disbursements for overhead that appear in the cash budget. It includes estimated variable overhead and estimated fixed overhead. It flows through to cost of goods sold on the income statement for merchandising companies.

It flows through to cost of goods sold on the income statement for merchandising companies.

Which of the following statements is false with respect to the selling and administrative expense budget? It includes depreciation expense even though it is not a cash flow. It estimates the cash disbursements for selling and administrative expenses that appear in the cash budget. It includes estimated variable and fixed selling and administrative expenses. It impacts the budgeted cost of goods sold reported on the income statement.

It impacts the budgeted cost of goods sold reported on the income statement.

Which of the following statements is true with respect to the labor rate variance? It is computed using the standard hours allowed for the actual output. It is computed using the difference between the actual hours worked and the standard hours allowed for the actual output. It is computed using the actual hours worked. It is computed based solely on the standard hourly rate.

It is computed using the actual hours worked.

Which of the following statements is true with respect to the labor efficiency variance? It is computed using the standard hourly rate. It is computed using the difference between the actual and standard hourly rates. It is computed using the actual hourly rate. It is computed based solely on the actual hours worked.

It is computed using the standard hourly rate.

Which of the following statements is true with respect to the materials quantity variance? It is computed using the actual price. It is computed using the actual quantity of materials purchased. It is computed using the difference between the actual and standard prices . It is computed using the standard price.

It is computed using the standard price.

Which of the following statements is false with respect to the production budget? It does not include dollar figures. Its estimate of required production (in units) will equal the estimated unit sales for a company that does not maintain any beginning or ending finished goods inventory. Its estimate of required production (in units) is included in the variable portion of the selling and administrative expense budget. Its estimate of required production (in units) appears in the direct materials budget.

Its estimate of required production (in units) is included in the variable portion of the selling and administrative expense budget.

When the units produced exceed the units sold, which of the following equations explains the difference between absorption costing and variable costing net operating income?

Number of units deferred in ending inventory × fixed manufacturing overhead cost per unit

When the units produced are less than the units sold, which of the following equations explains the difference between absorption costing and variable costing net operating income?

Number of units released from ending inventory × fixed manufacturing overhead cost per unit

Which of the following statements is true? Organization-sustaining activity costs should be allocated to products using an organization-level activity measure. Organization-sustaining activity costs should be allocated to products using a batch-level activity measure. Organization-sustaining activity costs should be allocated to products using a product-level activity measure. Organization-sustaining activity costs should not be allocated to products.

Organization-sustaining activity costs should not be allocated to products.

Relying exclusively on unit-level overhead allocation is most likely to:

Overcost high-volume products.

Which of the following statements is true? Planning involves developing goals and preparing various budgets to achieve those goals. Planning involves gathering feedback that enables organizations to make modifications as circumstances change. The definition of planning states that managers should be held responsible for those items—and only those items—that the manager can actually control. Planning is usually done independent from the budgeting process.

Planning involves developing goals and preparing various budgets to achieve those goals.

Which of the following equations is used to prepare a direct labor budget?

Required production in units × Direct labor-hours per unit = Total direct labor-hours needed

material quantity variance

SP(AQ-SQ) (quantity of materials used in production

labor efficiency variance

SR(AH-SH)

variable overhead efficiency variance

SR(AH-SH)

Which of the following statements is true? Second-stage allocation assigns overhead costs to activities. Second-stage allocation assigns activity costs to products or customers. Second-stage allocation assigns direct materials and direct labor to products. Second-stage allocation redistributes organization-sustaining costs to the batch-level and product-level activities.

Second-stage allocation assigns activity costs to products or customers.

Which of the following is an example of a batch-level activity?

Setting up machines

Which of the following statements is true? The activity variance for a variable expense will usually equal zero. The activity variance for a variable expense will be favorable if the actual level of activity is greater than the planned level of activity. The activity variance for a variable expense will be favorable if the actual level of activity is less than the planned level of activity. The activity variance for a variable expense can be favorable or unfavorable depending on whether the actual expense incurred is greater than or less than the planned expense.

The activity variance for a variable expense will be favorable if the actual level of activity is less than the planned level of activity.

Which of the following statements is true? The activity variance for a variable expense will equal zero when the planned level of activity equals the actual level of activity. The activity variance for a variable expense will be unfavorable if the actual level of activity is less than the planned level of activity. The activity variance for a variable expense can be favorable or unfavorable depending on whether the actual expense incurred is greater than or less than the expense allowed for the actual level of activity. The activity variance for a variable expense can be favorable or unfavorable depending on whether the actual expense incurred is greater than or less than the planned expense.

The activity variance for a variable expense will equal zero when the planned level of activity equals the actual level of activity.

Which of the following statements is true?

The activity variance for a variable expense will usually equal zero. Correct The activity variance for a variable expense will be unfavorable if the actual level of activity is greater than the planned level of activity. The activity variance for a variable expense will be unfavorable if the actual level of activity is less than the planned level of activity. The activity variance for a variable expense can be favorable or unfavorable depending on whether the actual expense incurred is greater than or less than the planned expense.

Which of the following statements is true? The activity variance for revenue will usually equal zero. The activity variance for revenue will be favorable if the actual level of activity is greater than the planned level of activity. The activity variance for revenue will be favorable if the actual level of activity is less than the planned level of activity. The activity variance for revenue can be favorable or unfavorable depending on whether the actual revenue earned is greater than or less than the planned revenue.

The activity variance for revenue will be favorable if the actual level of activity is greater than the planned level of activity.

Which of the following statements is true? The activity variance for revenue will usually equal zero. The activity variance for revenue will be unfavorable if the actual level of activity is greater than the planned level of activity. The activity variance for revenue will be unfavorable if the actual level of activity is less than the planned level of activity. The activity variance for revenue can be favorable or unfavorable depending on whether the actual revenue earned is greater than or less than the planned revenue.

The activity variance for revenue will be unfavorable if the actual level of activity is less than the planned level of activity.

Which of the following statements is true? The activity variance for revenue will equal zero when the planned level of activity equals the actual level of activity. The activity variance for revenue will be unfavorable if the actual level of activity is greater than the planned level of activity. The activity variance for revenue can be favorable or unfavorable depending on whether the actual revenue earned is greater than or less than the revenue expected for the actual level of activity. The activity variance for revenue can be favorable or unfavorable depending on whether the actual revenue earned is greater than or less than the planned revenue.

The activity variance for revenue will equal zero when the planned level of activity equals the actual level of activity.

Which of the following estimates is not used in preparing a sales budget including a schedule of expected cash collections? The number of units sold The selling price per unit The percent of next quarter's unit sales in ending inventory The credit sales collection pattern

The percent of next quarter's unit sales in ending inventory

Which of the following statements is true? The revenue variance will usually equal zero. The revenue variance will be favorable if the revenue in the flexible budget exceeds the actual revenue. The revenue variance will be favorable if the revenue in the flexible budget is less than the actual revenue. The revenue variance can be favorable or unfavorable depending on the planned level of activity.

The revenue variance will be favorable if the revenue in the flexible budget is less than the actual revenue.

Which of the following statements is true? The revenue variance will usually equal zero. The revenue variance will be unfavorable if the revenue in the flexible budget exceeds the actual revenue. The revenue variance will be unfavorable if the revenue in the flexible budget is less than the actual revenue. The revenue variance can be favorable or unfavorable depending on the planned level of activity.

The revenue variance will be unfavorable if the revenue in the flexible budget exceeds the actual revenue.

Which of the following statements is true? Unit-level activities are performed each time a batch is produced. Unit-level activities are performed each time a unit is produced. Unit-level activities are performed each time a new product is introduced. Unit-level activities are performed each time a customer places an order.

Unit-level activities are performed each time a unit is produced.

Which of the following statements is true? The revenue variance will equal zero if the actual revenue earned equals the revenue expected for the actual level of activity. The revenue variance will be favorable if the revenue in the flexible budget exceeds the revenue in the planning budget. The revenue variance can be favorable or unfavorable depending on the formula used to create the flexible budget. The revenue variance can be favorable or unfavorable depending on the planned level of activity.

The revenue variance will equal zero if the actual revenue earned equals the revenue expected for the actual level of activity.

Which of the following statements is true? The spending variance for a fixed expense will equal zero when the planned level of activity equals the actual level of activity. The spending variance for a fixed expense will be favorable if the amount of the expense contained in the flexible budget is greater than the actual amount of the expense. The spending variance for a fixed expense will be favorable if the amount of the expense contained in the flexible budget is less than the actual amount of the expense. The spending variance for a fixed expense can be favorable or unfavorable depending on whether the actual expense is greater than or less than the planned expense.

The spending variance for a fixed expense will be favorable if the amount of the expense contained in the flexible budget is greater than the actual amount of the expense.

Which of the following statements is true? The spending variance for a fixed expense will equal zero when the planned level of activity equals the actual level of activity. The spending variance for a fixed expense will be unfavorable if the amount of the expense contained in the flexible budget is greater than the actual amount of the expense. The spending variance for a fixed expense will be unfavorable if the amount of the expense contained in the flexible budget is less than the actual amount of the expense. The spending variance for a fixed expense can be favorable or unfavorable depending on whether the actual expense is greater than or less than the planned expense.

The spending variance for a fixed expense will be unfavorable if the amount of the expense contained in the flexible budget is less than the actual amount of the expense.

Which of the following statements is true? The spending variance for a fixed expense will equal zero if the actual expense incurred equals the expense expected for the actual level of activity. The spending variance for a fixed expense will be unfavorable if the amount of the expense contained in the flexible budget is greater than the actual amount of the expense. The spending variance for a fixed expense will be unfavorable if the amount of the expense contained in the flexible budget is less than the planned amount of the expense. The spending variance for a fixed expense can be favorable or unfavorable depending on whether the actual expense is greater than or less than the planned expense.

The spending variance for a fixed expense will equal zero if the actual expense incurred equals the expense expected for the actual level of activity.

Which of the following statements is true? The spending variance for a variable expense will usually equal zero. The spending variance for a variable expense will be favorable if the amount of the expense contained in the flexible budget is greater than the actual amount of the expense. The spending variance for a variable expense will be favorable if the amount of the expense contained in the flexible budget is less than the actual amount of the expense. The spending variance for a variable expense can be favorable or unfavorable depending on whether the actual expense is greater than or less than the planned expense.

The spending variance for a variable expense will be favorable if the amount of the expense contained in the flexible budget is greater than the actual amount of the expense.

Which of the following statements is true? The spending variance for a variable expense will usually equal zero. The spending variance for a variable expense will be unfavorable if the amount of the expense contained in the flexible budget is greater than the actual amount of the expense. The spending variance for a variable expense will be unfavorable if the amount of the expense contained in the flexible budget is less than the actual amount of the expense. The spending variance for a variable expense can be favorable or unfavorable depending on whether the actual expense is greater than or less than the planned expense.

The spending variance for a variable expense will be unfavorable if the amount of the expense contained in the flexible budget is less than the actual amount of the expense.

Which of the following equations is false with respect to the direct materials budget? Units of raw materials to be purchased × unit cost of raw materials = cost of raw material purchases Units of raw materials needed to meet production + desired units of ending raw materials inventory − units of beginning raw materials inventory = units of raw materials to be purchased Units of raw materials to be purchased × unit cost of raw materials = cash disbursements for material purchases Required production in units of finished goods × units of raw materials needed per unit of finished goods = units of raw materials needed to meet production

Units of raw materials to be purchased × unit cost of raw materials = cash disbursements for material purchases

Which of the following statements is true? The spending variance for a variable expense will equal zero if the actual expense incurred equals the expense expected for the actual level of activity. The spending variance for a variable expense will be unfavorable if the amount of the expense contained in the flexible budget is greater than the actual amount of the expense. The spending variance for a variable expense will be unfavorable if the amount of the expense contained in the flexible budget is less than the planned amount of the expense. The spending variance for a variable expense can be favorable or unfavorable depending on whether the actual expense is greater than or less than the planned expense.

The spending variance for a variable expense will equal zero if the actual expense incurred equals the expense expected for the actual level of activity.

Which of the following statements is true? Traditional cost systems usually allocate too much nonmanufacturing costs to products whereas activity-based costing systems usually do not allocate enough nonmanufacturing costs to products. Traditional cost systems usually overcost high volume products and undercost low volume products when compared to activity-based costing systems. Traditional cost systems usually undercost high volume products and overcost low volume products when compared to activity-based costing systems. Traditional cost systems may use different allocation bases than activity-based costing systems, but ultimately both approaches result in the same amount of total cost being allocated to each product.

Traditional cost systems usually overcost high volume products and undercost low volume products when compared to activity-based costing systems.

Which of the following statements is true? When the units produced are greater than the units sold, absorption costing income will be greater than variable costing income because absorption costing defers some fixed manufacturing overhead cost in ending inventory whereas variable costing expenses each period's fixed manufacturing overhead on the income statement. When the units produced are greater than the units sold, absorption costing income will be less than variable costing income because absorption costing defers some fixed manufacturing overhead cost in ending inventory whereas variable costing expenses each period's fixed manufacturing overhead on the income statement. When the units produced are greater than the units sold, absorption costing income will be greater than variable costing income because absorption costing defers some variable manufacturing overhead cost in ending inventory whereas variable costing expenses each period's variable manufacturing overhead on the income statement. When the units produced are greater than the units sold, absorption costing income will be less than variable costing income because absorption costing defers some variable manufacturing overhead cost in ending inventory whereas variable costing expenses each period's variable manufacturing overhead on the income statement.

When the units produced are greater than the units sold, absorption costing income will be greater than variable costing income because absorption costing defers some fixed manufacturing overhead cost in ending inventory whereas variable costing expenses each period's fixed manufacturing overhead on the income statement.

Which of the following statements is true? When the units produced are greater than the units sold, absorption costing income will be greater than variable costing income because absorption costing releases some fixed manufacturing overhead cost from ending inventory whereas variable costing expenses each period's variable manufacturing overhead on the income statement. When the units produced are greater than the units sold, absorption costing income will be less than variable costing income because absorption costing defers some fixed manufacturing overhead cost in ending inventory whereas variable costing expenses each period's fixed manufacturing overhead on the income statement. When the units produced are greater than the units sold, absorption costing income will be greater than variable costing income because absorption costing defers some fixed manufacturing overhead cost in ending inventory whereas variable costing expenses each period's fixed manufacturing overhead on the income statement. When the units produced are greater than the units sold, absorption costing income will be less than variable costing income because absorption costing releases some fixed manufacturing overhead cost from ending inventory whereas variable costing expenses each period's variable manufacturing overhead on the income statement.

When the units produced are greater than the units sold, absorption costing income will be greater than variable costing income because absorption costing defers some fixed manufacturing overhead cost in ending inventory whereas variable costing expenses each period's fixed manufacturing overhead on the income statement.

Which of the following statements is true? When the units produced are less than the units sold, absorption costing income will be greater than variable costing income because absorption costing releases some fixed manufacturing overhead cost from ending inventory whereas variable costing expenses each period's fixed manufacturing overhead on the income statement. When the units produced are less than the units sold, absorption costing income will be less than variable costing income because absorption costing releases some fixed manufacturing overhead cost from ending inventory whereas variable costing expenses each period's fixed manufacturing overhead on the income statement. When the units produced are less than the units sold, absorption costing income will be greater than variable costing income because absorption costing releases some variable manufacturing overhead cost from ending inventory whereas variable costing expenses each period's variable manufacturing overhead on the income statement. When the units produced are less than the units sold, absorption costing income will be less than variable costing income because absorption costing releases some variable manufacturing overhead cost from ending inventory whereas variable costing expenses each period's variable manufacturing overhead on the income statement.

When the units produced are less than the units sold, absorption costing income will be less than variable costing income because absorption costing releases some fixed manufacturing overhead cost from ending inventory whereas variable costing expenses each period's fixed manufacturing overhead on the income statement.

An activity cost pool is:

a "bucket" in which costs are accumulated in an activity-based costing system.

An activity measure is:

an allocation base in an activity-based costing system.

An activity is:

an event that causes the consumption of overhead resources.

Which of the following statements is true with respect to the materials price variance? It is computed using the actual quantity of materials used in production. It is computed using the actual quantity of materials purchased. It is computed using the standard quantity of materials used in production. It is computed using the standard quantity of materials purchased.

quantity of materials used in production.