CH 9 and 10 Managerial
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
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 U
A company's cost of supplies for when 5,000 units are sold is $7,500 of fixed costs plus $1.25 variable cost per unit. What is the increase in the total cost of supplies if 350 more units are sold than expected?
437.50
Which of the following are used to calculate the standard quantity per unit of direct materials?
Allowance for waste and spoilage Direct materials requirements per unit of finished product
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.
When using a standard cost system, BLANK
an undue emphasis on labor efficiency variances can create pressure to build excess inventory. the information in the variance reports may be too old to be useful.
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
Revenues and costs are adjusted as the level of activity changes on a(n) BLANK budget.
flexible
Nonprofit organizations BLANK
may have revenue sources that are fixed usually have significant funding sources other than sales
Variances are more accurate when using BLANK
multiple cost drivers
A cost center's performance report does not include BLANK
net operating income revenue
A budget that is prepared before the beginning of the period for a specific level of activity is called a BLANK budget.
planning
The variance analysis cycle begins with the BLANK
preparation of performance reports
The difference between the amount of an input used and the amount that should have been used, all evaluated at the standard price for the input, is called a(n) BLANK variance
quantity
The difference between the standard and the actual direct labor wages per hour is reflected in the labor BLANK variance.
rate
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) BLANK variance.
revenue
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) BLANK variance.
spending
The amount of direct-labor hours that should be used to produce one unit of finished goods is the hours per unit
standard
The labor efficiency variance is the difference between actual hours used and standard hours allowed multiplied by the BLANK hourly rate.
standard
When calculating the labor rate variance, multiply the actual hours worked times the labor rate and compare it to the actual hours worked times the labor rate
standard and actual
Material requirements plus an allowance for normal inefficiencies are added together to determine the per unit of output for direct materials.
standard quantity
SH
standard rate x units made
The variance analysis cycle begins with BLANK
the preparation of performance reports
The same basic formulas used for materials and labor are used to analyze BLANK portion of manufacturing overhead.
the variable
If the actual cost is greater than what the cost should have been, the variance is labeled as BLANK
unfavorable
SQ
units made x standard rate
The prominent difference between performance reports in nonprofit and for-profit organizations is that nonprofit organizations BLANK
usually receive significant funding from sources other than sales
The same basic formulas used for materials and labor are used to analyze the portion of manufacturing overhead.
variable
When preparing a flexible budget, the level of activity affects BLANK costs only
variable
When comparing the static planning budget to actual activity, a problem that arises when actual activity is higher than budgeted activity is that BLANK
net income is higher than expected but all or most expense variances are unfavorable
Options to generate a favorable revenue and spending variance include BLANK
protecting the selling price increase operating efficiency reduce the prices of inputs
Most companies compute the material price variance when materials are BLANK and the material quantity variance when materials are BLANK
purchased, used
an unchanged planning budget is known as a(n) BLANK planning budget.
static
Companies use the BLANK BLANK cycle to evaluate and improve performance
variance analysis
Fancy Nails' budgeted revenue is $20 per manicure. The planning budget for June was based on 2,400 manicures. During June, the actual revenue was $49,750 for 2,500 manicures. The revenue variance for June is Blank______.
$250 U
Labor Rate Variance
(AH*AR)-(AH*SR)
labor efficiency variance
(AH*SR)-(SH*SR)
Materials Price Variance
(AQ*AP)-(AQ*SP)
Materials Quantity Variance
(AQ*SP)-(SQ*SP)
One option to generate a favorable BLANK variance for net operating income is to increase the number of clients.
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) BLANK
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) BLANK 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) BLANK variance.
activity
A flexible budget performance report combines the BLANK
activity variances with the revenue and spending variances
The spending variance is labeled as favorable when the BLANK
actual cost is less than what the cost should have been at the actual level of activity
A price variance is the difference between the BLANK
actual price and the standard price multiplied by the actual amount of the input
what are standards
benchmarks for measuring performance set for each major production input or task compared to the actual quantities and costs of inputs
A quantity variance is BLANK
calculated using the standard price of input
A revenue variance is the BLANK
difference between what revenue should have been at the actual level of activity and the actual revenue
Performance reports for cost centers BLANK
do not include revenues or net income
When actual revenue BLANK what the revenue should have been, the variance is labeled favorable
exceeds
The standard hours per unit includes both direct and indirect labor hours.
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.
false
Using multiple cost drivers on a flexible budget report will generally BLANK
increase accuracy
Standard costs are a key element in the by approach utilized by some companies.
management by exception
A cost center's performance report does not include BLANK
net operating income
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 Favorable. The revenue variance is $2,000 Unfavorable.
Variable Overhead Efficiency Variance
The difference between the actual level of activity (direct labor-hours, machine-hours, or some other base) and the standard activity allowed, multiplied by the variable part of the predetermined overhead rate.
The materials price variance is generally calculated at the time materials are purchased because BLANK
it allows materials to be carried in the inventory accounts at standard cost it simplifies bookkeeping management can generate more timely variance reports
SR(AH - SH) is the formula for the BLANK variance
labor efficiency
