Accounting

a favorable material price variance ______.

may be based on the quality of the goods may be due to price fluctuations may be due to a quantity discount

A favorable material price variance ______.

may be due to a quantity discount may be due to price fluctuations may be based on the quality of the goods

To encourage continuous improvement, ______.

standards should increase in difficulty over time

Combining the direct materials price variance with the direct materials quantity variance is a way to compute the direct materials variance.

spending

f the actual cost is greater than budgeted cost, the variance is labeled as . (Enter your answer as a word.)

unfavorable

The difference between the standard hours allowed for a job and the actual hours used is reflected in the direct variance. (Enter only one word per blank.)

labor effeciency

Abba, Inc. has developed the following standards for one of its products: Direct materials - 1/2 pound at $6.00 per pound Direct labor - 1/4 hour at $20.00 per hour Variable overhead - 20% of direct labor cost Total fixed overhead is expected to be $15,000 and the company expects to produce 7,500 units. The standard cost card for this product would show a cost per unit of ______.

$11.00

If the planned fixed overhead for 5,000 units is $120,000, what is the flexible budget fixed overhead for 4,500 units?

$120,000

A static budget shows variable supply cost of $6,250 based on 1,000 units. A flexible budget based on 1,200 units should show ______ for supplies.

$7,500

Favorable variances always indicate good performance

False

The materials price variance is generally the responsibility of the manager. (Enter only one word per blank.)

Purchasing

A flexible budget variance is calculated by comparing actual costs to the flexible budget. (Enter only one word per blank.)

Spending

Which of the following statements is true?

The production manager is most often responsible for the materials quantity variance.

Fancy Nails' master budget for June was based on 2,400 manicures and supplies were budgeted at a total cost of $1,800. During June, 2,500 manicures were done and the total cost for supplies was $2,000. Which of the following statements are true?

The spending variance is $125 U. The volume variance is $75 U.

A master budget calls for 3,000 units of production and budgeted fixed overhead of $6,000. Actual production was 3,500 units and total fixed overhead was $6,150. Which of the following statements is true?

The spending variance is ($150).

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

actual

A variance is labeled as favorable when the ______.

actual cost is less than the standard or budgeted cost

A price variance is the difference between the ______.

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

The materials price variance is calculated using the ______.

actual price of the input actual quantity of the input purchased standard price of the input

The direct materials price variance is the difference between the actual price of materials ______.A price variance is the difference between the ______.

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

A company with a $2,500 favorable direct materials price variance and a $700 unfavorable direct materials quantity variance has a direct material variance of $ favorable. (Enter only one word per blank.)

blank 1: spending Blank 2: 1800 or 1,800

A quantity variance is ______.

calculated using the standard price of the input

True or false: In order to foster continuous improvement, standards should remain consistent over time.

false

The actual cost is compared to what the cost should have been when calculating a(n) variance.

price or spending

The actual cost is compared to what the cost should have been when calculating a(n) variance. (Enter only one word per blank.)

price or spending

The materials price variance is generally the responsibility of the manager. (Enter only one word per blank.)

purchasing

The formula for the direct materials variance is (SQ - AQ) × SP. (Enter only one word per blank.)

quantity, usage, or efficiency

Fancy Nail's monthly rent is $2,500. The company's static budget is based on an activity level of 2,000 manicures per month. It shows nail technician wages (a variable cost) of $20,000. Fancy Nails' flexible budget for 2,200 manicures will show ______.

wages of $22,000 rent expense of $2,500

Which of the following statements are true?

Favorable and unfavorable reflect a difference between actual and standard costs. Sometimes a favorable variance can indicate poor performance.

If the actual cost is greater than budgeted cost, the variance is labeled as .

Unfavorable

Which of the following are common causes of favorable variances?

Using less direct materials than expected Using less of a variable resource than expected

The process of comparing actual and budgeted results is called

Variance Analysis

Which of the following are common causes of favorable variances?

Using less of a variable resource than expected Taking less time to produce a unit than expected Using less direct materials than expected