Exam 3 questions (multiple choice and t/f)

An unfavorable activity variance for revenue indicates the actual activity was less than expected when the static planning budget was developed

True

T/F: A quantity standard indicates how much output should be used to make a unit of product or provide a unit of service

True

T/F: Differences between the static planning budget and the flexible budget show what should have happened because the actual activity differed from what had been planned

True

T/F: If the actual hourly rate is greater than the standard hourly rate, the labor rate variance is labeled unfavorable (U)

True

T/F: Material price variances are often isolated at the time materials are purchased, rather than when they are placed into production, to facilitate earlier recognition of variances

True

T/F: The labor efficiency variance is labelled favorable (F) if the actual hours used are less than the standard hours allowed for the actual output

True

T/F: The variable overhead efficiency variance does not actually measure how efficiently variable manufacturing overhead resources were used

True

T/F: To help assess how well a manager has controlled costs, actual costs should be compared to what the costs should have been for the actual level of activity

True

T/F: When more hours of labor time are necessary to complete a job than a standard allows, the labor efficiency variance is unfavorable

True

T/F: When the activity measure is the number of units sold, the revenue variance is favorable if the average actual selling price is greater than expected

True

An unfavorable materials quantity variance indicates that: a. actual usage of material exceeds the standard material allowed for actual output b. standard material allowed for actual output exceeds the actual usage of material c. actual material price exceeds the standard price d. standard material price exceeds actual price

A

In a flexible budget, what will happen to fixed costs as the activity level increases? a. the total fixed costs will not change b. the fixed cost per unit will remain unchanged c. the total fixed costs will increase d. fixed costs are not included in a flexible budget

A

Variable manufacturing overhead is applied to products on the basis of standard direct-labor-hours. If the labor efficiency variance is favorable, the variable overhead efficiency variance will be: a. favorable b. unfavorable c. zero d. either favorable or unfavorable

A

A budget that is based on the actual level of a period is known as a: a. continuous budget b. flexible budget c. static planning budget d. master budget

B

If variable manufacturing overhead is applied based on direct labor hours and the variable overhead rate variance is favorable: a. the actual variable overhead rate exceeded the standard rate b. the standard variable overhead rate exceeded the actual rate c. the actual direct labor-hours exceeded the standard direct labor-hours allowed for the actual output d. the standard direct labor-hours allowed for the actual output exceeded the actual hours

B

The production department should generally be responsible for materials price variances that resulted from: a. purchases made in uneconomical lot-sizes b. rush orders arising from poor scheduling c. purchase of the wrong grade of materials d. changes in the market prices of raw materials

B

Poorly trained workers could have an unfavorable effects on which of the following variances: Labor rate. materials quantity a. Yes Yes b. Yes No c. No. Yes d. Yes No

C

When using a flexible budget, a decrease in activity within the relevant range: a. decreases variable cost per unit b. increases variable cost per unit c. decreases total costs d. increases total costs

C

A favorable labor rate variance indicates that: a. actual hours exceed standard hours b. standard hours exceed actual hours c. the actual rate exceeds the standard rate d. the standard rate exceeds the actual rate

D

Which of the following may appear on a flexible budget performance report: a. an unfavorable activity variance b. a favorable revenue variance c. an unfavorable spending variance d. all of the above may appear on a flexible budget performance report

D

T/F: A flexible budget performance report contains activity variances, but not revenue or spending variances

False

T/F: A revenue variance is unfavorable if the revenue in the static planning budget is less than the revenue in the flexible budget

False

T/F: A spending variance is the difference between the amount of the cost in the static planning budget and the amount of the cost in the flexible budget

False

T/F: Actual costs are determined by plugging the actual level of activity for the period into the cost formulas used in flexible budgets

False

T/F: An activity variance is the difference between an actual revenue or cost and the revenue or cost in the flexible budget that is adjusted for the actual level of activity of the period

False

T/F: An unfavorable materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period

False

T/F: Comparing a static planning budget to actual costs is a good way to assess whether variable costs are under control

False

T/F: If skilled workers with high hourly rates of pay are given duties that require little skill and call for lower hourly rates of pay, this will result in a favorable labor rate variance

False

T/F: If variable manufacturing overhead is applied based on direct-labor-hours, it is impossible to have a favorable labor rate variance and unfavorable variable overhead rate variance for the same period

False

T/F: In general, the production manager is responsible for the materials price variance

False