ACCT CHAPTER 9

The difference between actual results and the flexible budget amount is a(n) ------- variance.

spending

The labor efficiency variance is the difference between actual hours allowed multiplied by the ------- hourly rate.

standard

Planning budgets are sometimes called ------ budgets.

static

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

flexible

When demand for a product is insufficient to keep all of the production workers busy and no layoffs occur, an unfavorable ----------- ----------- variance may occur.

labor efficiency

Unfavorable variance

Actual revenue is less than budgeted revenue.

Favorable variance

Actual revenue is more than budgeted revenue.

The difference between the actual hours used and the standard hours allowed for the actual output is used in the calculation of the labor --------- variance.

Efficiency

The quantity variance is --------.

calculated using the standard price of the input

The materials price variance is --------.

-Charged to the production manager when production problems occur -Impacted by the delivery method chosen -Generally the responsibility of the purchasing manager

Standards are ----------.

-Compared to the actual quantities and cost of inputs -Benchmarks for measuring performance -Set for each major production input or task

true statements:

-Excessive inventories contribute to inefficient operations. -Building inventories can reduce unfavorable labor efficiency variances.

True statements:

-Overtime premiums can cause an unfavorable labor rate variance. -How production supervisors use direct labor workers can lead to labor rate variances.

The calculation of a standard price per unit of direct materials includes --------.

-Purchase of materials -Shipping costs -Purchase discounts

Revenues and costs are adjusted as the level of activity changes on a(n) ----- budget.

flexible

SR(AH-SH) is the formula for the ------ variance

labor efficiency

If poor-quality materials results in excessive labor processing time, the ------ manager will probably be held responsible for the labor efficiency variance.

purchasing