ACC 200 SB 12

Commission expense is budgeted to be $16,000 at a planned sales level of 4,000 units. If only 2,900 units are sold, how much commission expense will appear on the flexible budget, and is the activity variance favorable or unfavorable? ] $4,400 and favorable $11,600 and unfavorable $87,000 and unfavorable $11,600 and favorable

!6,000/4000 = $4 per unit 4*29,000 = 11,600 =$11,600 and favorable

Fancy Nails has an estimated cost for supplies of $0.75 per manicure. June's budget was based on 2,400 manicures and a total cost for supplies of $1,800. June's actual activity was 2,500 manicures. The actual cost of supplies in June was $2,000. Calculate the spending variance for June. $200 F $200 U $125 U $125 F

$125 U

When preparing a flexible budget, the level of activity ___________. affects fixed costs only affects both fixed and variable costs affects variable costs only has no effect on costs

affects variable costs only

The variance analysis cycle ______. begins with the preparation of performance reports is used to assign blame for poor performance includes the investigation of all variances begins with the preparation of the budget

begins with the preparation of performance reports

A revenue variance is the ______. actual total revenue earned difference between total revenue in the planning budget and actual total revenue difference between the actual total revenue and what the total revenue should have been, given the actual level of activity for the period. difference between what a cost should have been at the actual level of activity and the actual amount of the cost

difference between the actual total revenue and what the total revenue should have been, given the actual level of activity for the period.

Given planning budget revenue of $284,000, actual revenue of $275,000, and flexible budget revenue of $290,000, there is a(n) ___________ activity variance. (favorable or unfavorable)

favorable

A budget that takes into account how costs are affected by changes in level of activity is a(n) ___________________ budget.

flex or flexible

An estimate of what revenue and costs should have been, based on the actual level of activity is shown on a __________. planning budget profit and loss statement flexible budget fixed budget

flexible budget

A favorable activity variance may not indicate good performance because a favorable activity variance _________. 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

for a variable cost will occur simply because the actual level of activity is less than the budgeted level of activity

A static budget is being compared to actual activity. The variance is F for net income but U for most expenses. This suggests that actual activity was __________ budgeted activity. equal to higher than lower than

higher than

The spending variance is labeled as favorable when the actual cost is __________ level of activity. less than what the cost should have been at the planned less than what the cost should have been at the actual less than what the cost should have been at the planned more than what the cost should have been at the actual

less than what the cost should have been at the actual

The system that compares actual results to a budget so that significant deviations can be flagged and investigated further is called ___________ _______________ _____________________.

management by exception

The concept that focuses on important variances and ignores trivial ones is ______. static budgeting management by exception the variance analysis cycle flexible budgeting

management by execution

When comparing the static planning budget to actual activity, a problem that arises when actual activity is higher than budgeted activity is that ________________. net income is higher than expected but all or most expense variances are unfavorable there are no revenue or expense variances net income is lower than expected but all or most expense variances are favorable

met income is higher than expected or most expense variances are unfavorable

The percentage change in net income in the flexible budget is generally greater than the percentage change in activity due to __________. revenue mixed costs fixed costs variable costs

mixed costs fixed costs

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 _________. (select all that apply) net operating income of $19,500 wages of $20,000 sales of $44,000 rent expense of $2,750

net operating income of $19,500 sales of $44,000

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 ______. (select all that apply) revenue variable cost fixed cost

revenue, variable cost

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) _____________ variance.

spending

Planning budgets are sometimes called __________ budgets. static flexible

static

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

variance analysis

Unfavorable activity variances may not indicate bad performance because _________. costs should not change as activity changes increased activity should result in higher variable costs increased activity should result in higher fixed costs

increased activity should result in higher variable costs

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______. $7,500 for supplies $6,250 for supplies $28,800 revenue $24,000 revenue

$7,500 for supplies, $28,800 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) ______ variance. spending revenue activity

activity

A budget that is prepared before the beginning of the period for a specific level of activity is called a ___________ budget. strategic planning flexible

planning