acg exam 3

In an activity-based flexible budget, each overhead item has the same cost driver, identified by flexible overhead budget for that cost item.

False

What is the primary difference between a static budget and a flexible budget?

The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels

The activity-based flexible budget provides a more accurate benchmark against which to compare actual costs than does a conventional flexible budget.

True

Which type of budget reflects a company's anticipated costs based on variations in activity levels?

a flexible budget

Flexible budgets reflect a company's anticipated costs based on variations in:

activity levels

Which system(s) use a predetermined overhead rate?

both normal and standard costing

A company's plan for the acquisition of long-lived assets, such as buildings and equipment, is commonly called a:

capital budget

A company's expected receipts from sales and planned disbursements to pay bills is commonly called a:

cash budget

Which of the following is not an operating budget?

cash budget

What are some reasons for a material quantity variance?

more qualified workers

The direct materials budget is prepared using which budget's information?

production budget

Which of the following is a predetermined estimated cost that can be used in the calculation of a variance?

standard cost

What are some possible reasons for a material price variance?

substandard material

Which of the following statements is not correct?

the direct materials budget begins with the sales estimated for each period

The comprehensive set of budgets that serves as a company's overall financial plan is commonly known as:

the master budget

A manufacturer develops budgets for the direct materials, direct labor, and overhead that will be required in the production process from which of the following?

the production budget

What is the main difference between static and flexible budgets?

the variable costs are adjusted in a flexible budget

Variances are computed by taking the difference between the product cost and standard cost.

False

Which variance is created when actual labor hours worked exceed standard hours allowed?

Unfavorable labor efficiency variance

Variances are computed by taking the difference between which of the following?

actual cost and standard cost

A budget serves as a benchmark against which

actual results can be compared

The units required in production each period are computed by which of the following methods?

adding budgeted sales to the desired ending inventory and subtracting beginning inventory

Which of the following could be found on a flexible overhead budget?

all of the listed choices are correct

Which of the following should have the strongest cause and effect relationship with overhead costs?

cost drivers

A production supervisor generally has little influence over the:

direct-material price variance

Which of the following is a possible cause of an unfavorable labor rate variance?

hiring higher-quality workers at a higher wage

A standard cost:

is a budget for the production of one unit of a product or service

A static budget:

is based on one anticipated activity level

What are some possible reasons for a direct labor time variance?

less qualified workers

Which of the following is a possible cause of an unfavorable material price variance?

purchasing higher-quality material

The individual generally responsible for the direct-material price variance is the:

purchasing manager

Which of the following is a possible cause of an unfavorable material quantity variance?

purchasing substandard material

The _________________ department would generally begin an initial investigation of an unfavorable material price variance, and the _______________department would generally begin an initial investigation of an unfavorable materials quantity variance.

purchasing; production

Which of the operating budgets is prepared first?

sales budget

The activity measure selected for use in a variable-and fixed-overhead flexible budget:

should vary in a similar behavior pattern tot he way that variable overhead varies

This variance is the difference involving spending more or using more than the standard amount.

unfavorable variance

With respect to overhead, what is the difference between normal costing and standard costing?

use of standard hours versus actual hours

When is the materials price variance favorable?

when the actual price is less than the standard price

When is the material price variance unfavorable?

when the actual price paid is greater than the standard price

When is the material quantity variance favorable?

when the actual quantity used is less than the standard quantity