managerial accounting ch 9

Estimates of what revenues and costs should have been based on the actual level of activity are shown on the _______ budget

flexible

Excessive inventory on hand, especially in the work in process inventory account, may lead to ______.

high defect rates inefficient operations obsolete goods

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 ______.

revenue and variable cost

Direct materials price variance =

(actual price - standard price) x actual quantity

Material Price Variance (MPV)

(standard price-actual price)actual quantity purchased

Labor Rate Variance

The difference between the actual hourly labor rate and the standard rate, multiplied by the number of hours worked during the period.

Variable Overhead Rate Variance

The difference between the actual variable overhead cost incurred during a period and the standard cost that should have been incurred based on the actual activity of the period.

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?

Net income= 6000- (4000x.20)-500=4700 Total costs= 4000x.20+500= 1300

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________

Net operating income: $44,000 - $22,000 - $2,500 sales: (40,000/2000) x 2200= 44,000

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 _______

Revenue= 24000/1000x1200= 28800 Supplies= 6250/1000x1200=7500

Net Operating Income = Sales - [Production Costs + Utility Expenses + Selling and Administrative Expenses + Rent Expenses]

Sales- (production costs + utility expenses + selling and administrative expenses + rent expenses)

The materials price variance is calculated using the ______ quantity of the input purchased.

actual

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

actual ; standard

standard quality allowed=

actual output x standard quantity per unit

A price variance is the difference between the ______.

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

When preparing a flexible budget, the level of activity ______.

affects variable costs only

The variance analysis cycle ______.

begins with the preparation of performance reports

a flexible budget performance report for variable manufacturing costs shows ________

both the activity variances and the spending variances

Variances are more accurate when using ______.

multiple cost drivers

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 _______

price variance

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) _______

revenue variance

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) ______

spending variance

When the standard hours allowed are lower than the actual hours used, the labor efficiency variance is

unfavorable

The standard price of the material is used in the calculation of the material quantity variance because ________

using actual prices would hold the production manager responsible for the inefficiencies of the purchasing manager

The standard cost for ______ manufacturing overhead is computed the same way as the standard cost for direct labor.

variable

The standard rate per unit that a company expects to pay for variable overhead equals the ______.

variable portion of the predetermined overhead rate

Companies use the _______ _______ cycle to evaluate and improve performance.

variance analysis

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

static

The materials price variance is the difference between the actual price of materials ___________

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

A quantity variance is ______.

calculated using the standard price of the input

A(n) _______ _______ is the difference between how much of an input was actually used and how much should have been used and is stated in dollar terms using the standard price of the input

quantity variance

The labor efficiency variance is the difference between actual hours used and standard hours allowed multiplied by the ______ hourly rate.

standard

When calculating the labor rate variance, multiply the actual hours worked with the ________ labor rate and subtract this figure from the product of the actual hours worked and the ________ labor rate

standard ; actual

The _______ _______ per unit defines the amount of direct materials that should be used for each unit of finished product, including for normal inificiencies such as scrap and spoilage

standard quantity