ACC 202 Ch 9 PreWork- BURGESS

$125 U - flexible budget amounts for supplies: $0.75 x 2,500 manicures = $1,875Spending variance: $1,875 - $2,000 = $125 U

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. Total cost of supplies in June was $2,000. Calculate the spending variance for June. $200 U $125 F $200 F $125 U

favorable

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.

unfavorable

If the actual cost is greater than what the cost should have been, the variance is labeled as _____

False

True or false: 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 lower than budgeted.

increase accuracy

Using multiple cost drivers on a flexible budget report will generally ______. have no impact on expected or actual net income increase accuracy not impact the planning budget

multiple cost drivers

Variances are more accurate when using ______. multiple cost drivers a single cost driver

exceeds

When actual revenue ______ what the revenue should have been, the variance is labeled favorable. Multiple choice question. is equal to is less than exceeds

revenue net operating income

A cost center's performance report does not include ______. costs variances revenue net operating income

net operating income

A cost center's performance report does not include ______. net operating income fixed costs flexible costs

Planning

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

activity variances with the revenue and spending variances

A flexible budget performance report combines the ______. manager's performance with the employee's performance net income for two periods activity variances with the revenue and spending variances

The revenue variance is $2,000 Unfavorable. The activity variance is $25,000 Favorable.

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? The activity variance is $25,000 Unfavorable. The revenue variance is $2,000 Favorable. The revenue variance is $2,000 Unfavorable. The activity variance is $25,000 Favorable.

The activity variance is $25,000 Favorable. The revenue variance is $2,000 Unfavorable.

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? The revenue variance is $2,000 Favorable. The activity variance is $25,000 Favorable. The activity variance is $25,000 Unfavorable. The revenue variance is $2,000 Unfavorable.

15,000 U

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 _____ ____

15,000 Unfavorable

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 _____ ______

difference between what revenue should have been at the actual level of activity and the actual revenue

A revenue variance is the ______. difference between what revenue should have been at the actual level of activity and the actual revenue actual total revenue earned difference between total revenue in the planning budget and actual total revenue 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

A spending variance is the ______. difference between the budgeted cost of the item and the actual cost of the item projected amount to be spent difference between what a cost should have been at the actual level of activity and the actual amount of the cost actual amount spent

difference between what a cost should have been at the actual level of activity and the actual amount of the cost

A spending variance is the ______. difference between what a cost should have been at the actual level of activity and the actual amount of the cost projected amount to be spent difference between the budgeted cost of the item and the actual cost of the item actual amount spent

$11,600 and favorable

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? $11,600 and favorable $87,000 and unfavorable $11,600 and unfavorable $4,400 and favorable

$11,600 and favorable -- Flexible budget expense: $16,000/4000 = $4 per unit x 2,900 units = 11,600... since the flexible budget expense < planning budget expense, the variance is favorable

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 $87,000 and unfavorable $11,600 and favorable $11,600 and unfavorable

Variance Analysis

Companies use the _____ _____ cycle to evaluate and improve

Flexible

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

Non profit orgs

Nonprofit organizations: 1. usually have significant funding sources other than sales 2. may have revenue sources that are fixed

activity

One option to generate a favorable ______ variance for net operating income is to increase the number of clients. activity revenue and spending

b,c,d

Options to generate a favorable revenue and spending variance include ______. increase the number of clients increase operating efficiency protecting the selling price reduce the prices of inputs

a,b,c

Options to generate a favorable revenue and spending variance include ______. reduce the prices of inputs protecting the selling price increase operating efficiency increase the number of clients

Static

Planning budgets are sometimes called ______ budgets. static flexible

2,050 $380,000/1,900 = $200 per client visit. $410,000/200 = 2050

Revenue on the planning budget is expected to be $380,000 for 1,900 client visits. The revenue on the flexible budget is $410,000, showing that there were actually ______ client visits. 1,950 2,000 2,050

Flexible

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

Activity

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

activity

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

activity

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 activity revenue

spending

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

revenue

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.

Performance

The flexible budget ______ report combines activity and revenue and spending variances.

usually receive significant funding from sources other than sales

The prominent difference between performance reports in nonprofit and for-profit organizations is that nonprofit organizations rarely have any fixed costs generally do not compute revenue and spending variances usually receive significant funding from sources other than sales

actual cost is less than what the cost should have been at the actual level of activity

The spending variance is labeled as favorable when the ______. actual cost is less than what the cost should have been at the actual level of activity actual cost is less than what the cost should have been at the planned level of activity actual cost is more than what the cost should have been at the actual level of activity amount spent is less than what was spent last period

begins with the preparation of performance reports

The variance analysis cycle ______. 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

net income is higher than expected but all or most expense variances are unfavorable

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 net income is lower than expected but all or most expense variances are favorable there are no revenue or expense variances

net income is higher than expected but all or most expense variances are unfavorable

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

affects variable costs only

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