chapter 9 sb accounting
When preparing a flexible budget, the level of activity Blank______. Multiple choice question. affects variable costs only has no effect on costs affects fixed costs only affects both fixed and variable costs
affects variable costs only
Revenue variances can be caused by Blank______. Multiple select question. poor accounting controls changes in the mix of products sold changes in selling price changes in the level of activity
poor accounting controls changes in the mix of products sold changes in selling price
Options to generate favorable revenue and spending variances include Blank______. Multiple select question. reducing the prices of inputs increasing the number of clients protecting the selling price increasing operating efficiency
reducing the prices of inputs protecting the selling price increasing operating efficiency
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
A flexible budget shows what budgeted amounts should have been at the actual level of activity. As a result of this change in activity, the flexible budget will show a change in total Blank______. Multiple select question. variable cost revenue fixed cost
variable cost revenue
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) Blank______ variance. Multiple choice question. spending revenue activity
activity
A budget that takes into account how costs are affected by changes in level of activity is a(n) _________________________ budget
flexible
Fancy Nail's monthly rent is $2,500. The company's static budget for March was based on the activity level of 2,000 manicures. Total sales was budgeted at $40,000 and nail technician wages (a variable cost based on the number of manicures) was budgeted at $20,000. Actual manicures in March totaled 2,200. Assuming no other expenses, Fancy Nails' flexible budget will show Blank______. Multiple select question. net operating income of $19,500 rent expense of $2,750 wages of $20,000 sales of $44,000
net operating income of $19,500 sales of $44,000
Activity variances help managers understand why actual net income differs from what it should have been at the actual level of activity. True false question. True False
false
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______. Multiple select question. $28,800 revenue $7,500 for supplies $6,250 for supplies $24,000 revenue
$28,800 revenue $7,500 for supplies
A performance report shows that the planning revenue was $240,000, the flexible budget revenue was $225,000, and actual revenue was $230,000. The activity variance is ______________________________ ___________________________
15000 unfavorable
Possible causes of a spending variance include Blank______. Multiple select question. producing more or less product than expected changes in technology paying less than expected for inputs using too many inputs for the actual level of activity
changes in technology paying less than expected for inputs using too many inputs for the actual level of activity
A revenue variance is the Blank______. Multiple choice question. difference between what a cost should have been at the actual level of activity and the actual amount of the cost actual total revenue earned difference between total revenue in the planning budget and actual total revenue 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
If the planned budget revenue for 5,000 units is $120,000, the flexible budget revenue for 4,500 units is Blank______. Multiple choice question. $108,000 $118,000 $120,000 $180,000
$108,000
Companies use the _____________ ____________________ cycle to evaluate and improve performance
variance analysis
Which of the following statements is true? Multiple choice question. It is easier to significantly reduce variable costs than to reduce fixed costs. A cost is fixed if it is proportional to activity. Fixed costs are often more controllable than variable costs.
Fixed costs are often more controllable than variable costs.
A spending variance is the Blank______. Multiple choice question. difference between the budgeted cost at the budgeted level of activity and the actual amount of the cost actual amount spent on a cost projected amount to be spent on a cost difference between what a cost should have been at the actual level of activity and the actual amount of the cost
difference between what a cost should have been at the actual level of activity and the actual amount of the cost
Comparing actual costs to what the costs should have been for the actual level of activity is done on a______________________budget.
flexible
A favorable activity variance may not indicate good performance because a favorable activity variance Blank______. Multiple choice question. for a variable cost will occur simply because the actual level of activity is less than the budgeted level of activity for a fixed cost will occur simply because the actual level of activity is less than the budgeted level of activity may occur simply because the purchasing department acquired low quality supplies at a discount
for a variable cost will occur simply because the actual level of activity is less than the budgeted level of activity
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? Multiple select question. The activity variance is $25,000 Unfavorable. The revenue variance is $2,000 Unfavorable. The activity variance is $25,000 Favorable. The revenue variance is $2,000 Favorable.
The revenue variance is $2,000 Unfavorable. The activity variance is $25,000 Favorable.
A spending variance is the Blank______. 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 budgeted cost at the budgeted level of activity and the actual amount of the cost actual amount spent on a cost projected amount to be spent on a cost
difference between what a cost should have been at the actual level of activity and the actual amount of the cost
Unfavorable activity variances may not indicate bad performance because Blank______. Multiple choice question. increased activity should result in higher variable costs increased activity should result in higher fixed costs costs should not change as activity changes
increased activity should result in higher variable costs
Planning budgets are sometimes called Blank______ budgets. Multiple choice question. flexible static
static
