ACG 3343 Smartbook Chapter 17: Additional Topics in Variance Analysis

When production is greater than sales, Blank______.

only the variable production cost variance is affected

There is no fixed overhead efficiency variance when a company uses Blank______ costing.

variable

Variances that should get the most attention from management are Blank______.

highly controllable,high-impact

Regarding fixed overhead variances, Blank______.

a production volume variance only occurs when fixed costs are unitized,there is no efficiency variance

An approach that requires emphasis of the deviation from an accepted base point, such as, a standard, a budget, an industry average, or a prior period experience is called by . (Enter only one word per blank.)

management,exception

When using process control charts, Blank______.

managers may choose NOT to investigate a variance with a fluctuation of less than three standard deviations from the mean,one must keep in mind that the reliability of the statistical estimates for accounting variances are lower

A variance that comes from the relative proportion of different products sold is called a sales Blank______ variance.

mix

Differences in sales and production units do NOT impact the Blank______ variances.

sales activity,sales price ,marketing & administrative

When a company sells multiple products that are imperfect substitutes for each other, the result can be a(n) variance. (Enter only one word per blank.)

sales,mix

The variance that occurs in multi-product companies from the change in volume of sales, independent of change in sales mix is called the variance. (Enter only one word per blank.)

sales,quantity

The accounting staff must carefully check variance reports before sending them to operating managers since many variances occur because of errors in Blank______.

bookkeeping adjustments,recording,timing problems

Capacity variance, idle capacity variance and denominator variances are all names for the production variance. (Enter only one word per blank.)

volume

A budget prepared for various levels of anticipated activity is called a(n) budget. (Enter only one word per blank.)

flex

A budget that indicates revenues, cost, and profits at different levels of activity is known as a(n) Blank______ budget.

flexible

Which of the following statements is correct?

If wages rates used to set standards are the same as those in the union contract, labor price variances will not occur.

The number that should be used to evaluate production performance is the variance from the budget. (Enter only one word per blank.)

flexible

Variances dealing with the cost of energy are difficult for a company to take action to improve the variance in the short-run due to the variance being Blank______.

high-impact, difficult to control

The variance that arises from a charge in the relative proportion of inputs (materials or labor mix) is called a(n) production variance. (Enter only one word per blank.)

mix

A production volume variance occurs if the Blank______.

number of units produced differs from the number used to estimate fixed cost per unit

When computing a flexible budget and variances, Blank______ marketing and administrative costs are expected to change.

only variable

Professional staff hours, number of guests or patient-days are all examples of measures used by service organizations. (Enter only one word per blank.)

output

A variance that is expected to occur if certain conditions affect operations is called a(n) variance. (Enter only one word per blank.)

planned

Both actual overhead costs and the relationship between overhead costs and direct labor hours could impact the variable production overhead variance. (Enter only one word per blank.)

price

The difference between actual costs and budgeted costs due to changes in the cost of inputs to a production process or other activity is a(n) Blank______ variance.

price

Under the four-way analysis of overhead variances, Blank______ variances are computed for both fixed and variable overhead.

price

A graph or other visualization that plots or reflects process outcomes over time is a(n) Blank______.

process control chart

When computing variances, marketing and administrative costs are treated like Blank______ costs.

production

Operating budgets include Blank______.

production budget,cost of goods sold budget,budgeted income statement

if less overhead is applied that was budgeted, the production volume variance is Blank______.

unfavorable

Immediate corrective actions can generally be taken for Blank______ variances which occur frequently and are easily corrected as soon as they are discovered.

usage,efficiency

There is no fixed overhead efficiency variance when a company uses costing. (Enter only one word per blank.)

variable

The four-way analysis of overhead variances computes which of the following variances?

variable overhead price variance,fixed overhead price variance

A favorable variance Blank______.

increases operating profits,is not necessarily good

The need for analysis of price and efficiency variances in nonmanufacturing settings is Blank______.

increasing

The two reasons for a sales activity variance are changes related to volume or differences in market share. (Enter only one word per blank.)

industry

The sales activity variances that can be computed are the Blank______ variances.

industry volume,market share

Using a planned variance Blank______.

is common when temporary changes occur,does not affect the performance evaluation activity

Results for Desserts by Jacki's pie crust information for last quarter was as follows

$1,980 unfavorable

Addams, Inc. produces water sealant that is made from two chemicals:

$10,000 unfavorable

Given the following information, calculate the sales price variance.

$16,500 unfavorable

Given the following information, calculate the purchasing department's price variance.

$2,400 favorable

Given the following information, calculate the direct material price variance.

$2,625 favorable

Results for Desserts by Jacki's pies last quarter were as follows:

$26,250 favorable

Typical types of outputs used by service organizations for profit variance analysis include Blank______.

patient days,staff hours

When recording the entry for the use of raw materials, the Blank______ inventory account is debited.

work-in-process

The difference between expected output from a given level of inputs and the actual output obtained from those inputs is called the production variance. (Enter only one word per blank.)

yield

Given the following information, calculate the direct material efficiency variance.

$1,125 unfavorable

Given the following information, calculate the purchasing department's efficiency variance.

$4,400 unfavorable

A company budgets 1,000 hours for a service job using a partner for 200 hours and staff for the remaining hours at $400 and $100 respectively. Due to scheduling issues, the partners work 400 hours on the job while staff works 600 hours. The production mix variance is Blank______.

$60,000

Budgeted fixed manufacturing cost was $890,000 for 40,000 units or 100,000 hours, Actual fixed overhead totaled $910,000. The standard fixed production overhead cost per unit was $. (Round your answer to two decimal places.)

22.25

Which of the following shows details about the differences between budgeted earnings and actual earnings?

Profit variance analysis

Which of the following are true?

The labels “favorable†and “unfavorable†are used to indicate how actual income differs from budgeted income. ,An unfavorable variance is not necessarily bad.

Which of the following are true of process control charts?

They plot process outcomes over time on a chart that is centered around the mean outcome.,They have lower and upper limits set based on the estimated variance of a process.

A profit variance analysis compares Blank______.

actual results with both the flexible budget and master budget

The sales activity variance highlights differences due to Blank______.

changes in the number of units sold only

Because managements' time is a scare resource, priorities must be set to determine which variances should be investigated using - analysis. (Enter only one word per blank.)

cost,benefit

True or false: When non-manufacturing organizations use efficiency measures to analyze variances, it is important to link causes with quantitative outputs.

FALSE

True or false: The variable overhead efficiency variance measures the efficient use of resources such as electricity.

FALSE

Budgeted fixed manufacturing cost was $890,000 for 40,000 units or 100,000 direct-labor hours, Actual fixed overhead totaled $910,000. The standard fixed production overhead cost per direct-labor hour was $. (Round your answer to two decimal places.)

8.9

Which of the following are true of monitoring process outcomes?

A process control chart is a graphical approach based on monitoring the variation in a process.,Process outcomes can have normal operating fluctuations caused by random, uncontrollable events.,The purpose of a process control chart is to ignore the normal fluctuations due to noise and investigate when the fluctuation is signaling a systematic problem.Â

Which of the following statements are correct?

A sales activity variance impacts variable production costs.,Production performance should be evaluated based on the flexible budget.

Which of the following are true of variance analysis?

An important part of variance analysis is understanding what portion of the total variance is due to each cause of a variance.,An important part of variance analysis is understanding what might cause a variance.

True or false: A direct labor efficiency variance is always the responsibility of the production department manager.

FALSE

True or false: Investigating variances that are not controllable in the short-run normally have high benefits to a company.

FALSE

The master budget includes Blank______.

both operating and financial budgets

The variable overhead price variance contains Blank______.

both price and efficiency items

When recording the purchase of raw materials at standard cost, the entry includes a Blank______.

credit to Accounts Payable,debit to Materials Inventory

If a company purchases 100,000 pounds of material with an actual price of $0.20 per pound and a standard price of $0.10 per pound, the entry will include a Blank______ to material price variance for $10,000.

debit

Within the relevant range of activity, variance analysis treats fixed and variable production costs Blank______.

differently

A company applies overhead on the basis of direct labor hours. The manager held accountable for the variable overhead efficiency variance is generally the same manager who is responsible for the Blank______.

direct labor efficiency variance

Differences between budgeted and actual results due to differences between budgeted and actual inputs used is a(n) Blank______ variance.

efficiency

Immediate corrective actions can generally be taken for or usage variances that occur frequently and are easily corrected as soon as they are discovered. (Enter only one word per blank.)

efficiency

When recording the entry for the use of raw materials, the difference between work-in-process inventory and raw materials inventory is recorded as the materials Blank______ variance.

efficiency

The variable overhead efficiency variance is related to Blank______.

efficiency in using the base on which variable overhead is applied

When a company uses full absorption costing and production and sales volume are not the same, fixed production costs are allocated to and finished goods. (Enter only one word per blank.)

ending,inventory

On a standard cost sheet, overhead is Blank______.

expressed in terms of the burden rate

The difference between actual and budgeted costs is the Blank______ production cost variance.

fixed

When a company uses variable costing, the entire production cost is expensed. (Enter only one word per blank.)

fixed

A company budgets 1,000 hours for a service job using a partner for 200 hours and staff for the remaining hours at $400 and $100 respectively. Due to scheduling issues, the partners works 400 hours on the job while staff work 600 hours. This will result in a Blank______ variance.

production mix

The difference between budgeted and applied fixed overhead is the Blank______ variance.

production volume

If a company purchases more material than is used in production in a period, the difference will affect the Blank______ variance.

purchase price

When materials purchased is different than materials used, the variance is impacted. (Enter only one word per blank.)

purchase,price

The components of the sales activity variance are the sales variance and the sales variance. (Enter only one word per blank.)

quantity,mix

A difference between actual and standard labor costs per hour results in a direct labor variance. (Enter only one word per blank.)

rate

A difference between the number of budgeted units sold and actual units sold results in a(n) Blank______ variance.

sales activity

Unfavorable direct labor efficiency variances can be caused by Blank______.

scheduling issues,poorly trained workers,faulty equipment

Quantities of each input used to produce a unit of output along with the budgeted unit price for each input are shown on the Blank______.

standard cost sheet

Factors that are important to consider when working with mix variances are Blank______.

substitutability of inputs,different input costs

When a CPA firm replaces a tax partner's time on a job with a staff person, this is an example of of inputs. (Enter only one word per blank.)

substitute