Cost Accounting Chapter 7 & 8

The flexible budget contains: A) budgeted amounts for actual output B) budgeted amounts for planned output C) actual costs for actual output D) actual costs for planned output

A) budgeted amounts for actual output

An unfavorable efficiency variance for direct manufacturing labor indicate that: A) work was efficiently scheduled B) machines were not properly maintained C) poor production performance D) Both A and B

B) machines were not properly maintained

A budget can do all of the following EXCEPT:

determine actual profitability

An unfavorable variance:

may suggest investigation is needed

Operating budgets include all of following EXCEPT:

the budgeted balance sheet

Operating decisions primarily deal with:

the use of scarce resources

The variable overhead flexible budget variance can be further subdivided into the: A) price variance and the efficiency variance B) static budget variance and sales volume variance C) spending variance and the efficiency variance D) sales volume variance and the spending variance

C) spending variance and the efficiency variance

A variance is: A) the gap between an actual result and a benchmark amount B) the required number of inputs for one standard output C) the difference between an actual result and a budgeted amount D) the difference between a budgeted amount and a standard amount

C) the difference between an actual result and a budgeted amount

A favorable price variance for direct manufacturing labor might indicate that: A) employees over paid more than planned B) budgeted price standards are too tight C) under skilled employees are being hired D) an efficient labor force

C) under skilled employees are being hired

The following items are the same for the flexible budget and the master budget EXCEPT for: A) variable cost per unit B) total fixed costs C) units sold D) sales price per unit

C) units sold

For calculating the costs of products and services, a standard costing system: A) only requires a simple recording system B) uses standard costs to determine the cost of products C) does not have to keep track of actual costs D) All of above

D) All of above

The manufacturing overhead costs budget includes budgeted amounts for: A) indirect materials B) indirect manufacturing labor C) depreciation on equipment D) All of above

D) All of above

Variable overhead costs: A) never have any unused capacity B) have no production volume variance C) allocated are always the same as the flexible budget amount D) all of above

D) all of above

The variances that should be investigated by mgmt include: A) only unfavorable variances B) only favorable variances C) all variances, both favorable and unfavorable D) both favorable and unfavorable variances considered significant in amount for the company

D) both favorable and unfavorable variances considered significant in amount for the company

Budgeted manufacturing overhead costs include all types of factory expenses EXCEPT: A) fixed items such as depreciation of manufacturing machinery B) variable items such as plant supplies C) indirect labor such as the salary of the plant supervisor D) direct labor and direct materials

D) direct labor and direct materials

The fixed overhead cost variance can be further subdivided into the: A)price variance and the efficiency variance B) spending variance and flexible budget variance C) production volume variance and the efficiency variance D) flexible budget variance and the production volume variance

D) flexible budget variance and the production volume variance

Variable overhead costs include: A) plant leasing costs B) the plant manager's salary C) depreciation on plant equipment D) machine maintenance

D) machine maintenance

Direct material purchases equal: A) production needs B) production needs plus target ending inventories C) production needs plus beginning inventories D) production needs plus target ending inventories less beginning inventories

D) production needs plus target ending inventories less beginning inventories

An unfavorable sales volume variance could result from: A) decreased demand for the product B) competitors taking market share C) customer dissatisfaction with the product D)All of above

D)All of above

One of the primary reasons for using cost variances is:

for financial control of operating activities and understanding why variances arise

Financing decisions primarily deal with:

how to obtain funds to acquire resources

The order to follow when preparing the operating budget is:

revenues budget, production budget, and direct manufacturing labor costs budget

An unfavorable variance indicates that:

the actual amount decreased operating income relative to the budgeted amount

Rolling budgets help mgmt to:

deal with 5 yr time frame

A favorable price variance for direct materials indicates that:

A lower price than planned was paid for materials

For variable manufacturing overhead, there is no: A) spending variance B) efficiency variance C) flexible budget variance D) production volume variance

D) production volume variance

A favorable efficiency variance for direct manufacturing labor indicates that: A) a lower wage rate than planned was paid for direct labor B) a higher wage rate than planned was paid for direct labor C) less direct manufacturing labor hours were used during production than planned for actual output D) more direct manufacturing labor hours were used during production than planned for actual output

C) less direct manufacturing labor hours were used during production than planned for actual output

A favorable variance indicates that: A) budgeted costs are less than actual costs B) actual revenues exceed budgeted revenues C) the actual amount decreased operating income relative to the budgeted amount D) All of above

actual revenues exceed budgeted revenues

A budget:

all of above

Budgeting provides all of the following EXCEPT:

an ethical framework for decision making

The flexible budget variance for direct cost inputs can be further subdivided into a:

price variance and an efficiency variance

Effective planning of variable overhead costs include all of the following EXCEPT: A) choosing the appropriate level of capacity B) eliminating nonvalue added costs C) redesigning products to use fewer resources D) redesigning the plant layout for more efficient processing

A) choosing the appropriate level of capacity

Typically, managers have the LEAST control over: A) direct material price variance B) direct material efficiency variance C) machine maintenance D) the scheduling of production

A) direct material price variance

Effective planning of fixed overhead costs include all of the following EXCEPT: A) planning day to day operational decisions B) eliminating nonvalue added costs C) planning to be efficient D) choosing the appropriate level of capacity

A) planning day to day operational decisions

The variable overhead flexible budget variance measures the difference between: A) actual variable overhead costs and the static budget for variable overhead costs B) actual variable overhead costs and the flexible budget for variable overhead costs C) the static budget for variable overhead costs and the flexible budget for variable overhead costs D) None

B) actual variable overhead costs and the flexible budget for variable overhead costs

Management by exception is the practice of concentrating on: A) the master budget B) areas not operating as anticipated C) favorable variances D) unfavorable variances

B) areas not operating as anticipated

For fixed manufacturing overhead, there is no: A) spending variance B) efficiency variance C) flexible budget variance D) production volume variance

B) efficiency variance

Fixed overhead costs include: A) the cost of sales commissions B) property taxes paid on plant facilities C) energy costs D) indirect materials

B) property taxes paid on plant facilities

An unfavorable fixed overhead spending variance indicates that: A) There was more excess capacity than planned B) the price of fixed overhead items cost more than budgeted C) the fixed overhead cost allocation base was not used efficiently D) the denominator level was more than planned

B) the price of fixed overhead items cost more than budgeted

When machine hours are used as an overhead cost allocation base, the most likely cause of a favorable variable overhead spending variance is: A) excessive machine breakdowns B) the production scheduler efficiently scheduled jobs C) a decline in the cost of energy D) strengthened demand for the product

C) a decline in the cost of energy

The major challenge when planning fixed overhead is: A) calculating total costs B) calculating the cost allocation rate C) choosing the appropriate level of capacity D) choosing the appropriate planning period

C) choosing the appropriate level of capacity

The cost of goods sold budget requires all of the following budgets EXCEPT: A) direct material cost budget B) manufacturing overhead cost budget C) distribution cost budget D) direct manufacturing labor cost budget

C) distribution cost budget

The variance that LEAST affects cost control is the: A) flexible budget variance B) direct material price variance C) sales volume variance D) direct manufacturing labor efficiency variance

C) sales volume variance

A master budget:

is an aid to coordinating what needs to be done to implement a plan