ACC Exam 3

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 $ BLANK BLANK

15000 U

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.

2,050

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

Efficiency

The difference between the actual level of activity and the standard activity allowed for the actual output x the variable part of the predetermined overhead rate is the variable overhead variance.

Efficiency

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

True or false: The labor rate variance measures the productivity of direct labor.

False

Standard costs are a key element in the BLANK by BLANK approach utilized by some companies

management; exception

A cost center's performance report does not include ______.

net operating income

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

planning

The difference between the actual price paid for the material and what should have been paid according to the standard is reflected in the direct materials BLANK variance.

price

The difference between the actual materials used in production and the standard amount allowed for the actual output is reflected in the materials BLANK variance.

quantity

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

A cost center's performance report does not include ______.

revenue net operating income

The labor efficiency variance is the difference between actual hours used and standard hours allowed multiplied by the ______ hourly rate.

standard

When the actual cost incurred exceeds the standard cost allowed for the actual level of output, the spending variance is ______.

unfavorable

True or false: The standard hours per unit includes both direct and indirect labor hours.

False (only direct)

The amount of direct-labor hours that should be used to produce one unit of finished goods is the BLANK hours per unit.

Standard

Which of the following statements are true?

Standard cost reports may be too outdated to be useful. Managers should not use standards to assign blame.

The materials price variance is calculated using the ______ quantity of the input purchased.

actual

Using multiple cost drivers on a flexible budget report will generally ______.

increase accuracy

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

The material variance terms price and quantity are replaced with the terms BLANK and BLANK when computing direct labor variances.

Rate & Hours

A benchmark used in measuring performance is called a(n) BLANK.

Standard

Material requirements plus an allowance for normal inefficiencies are added together to determine the BLANK BLANK of a direct material per unit of output.

Standard Quantity

When using a standard cost system, ______.

the information in the variance reports may be too old to be useful. an undue emphasis on labor efficiency variances can create pressure to build excess inventory.

The terms price and quantity are used when computing direct BLANK variance, while the terms rate and hours are used when computing direct BLANK variances.

Materials & Labor

Which of the following statements are true?

Standards provide information for measuring performance. When actual results depart significantly from the standard, the reasons why should be investigated.

Most companies compute the material price variance when materials are ______ and the material quantity variance when materials are ______.

purchased & used

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 material quantity variance reflects the difference between the BLANK quantity of materials used in production and the BLANK quantity allowed for the actual output.

Actual & Standard

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

A price variance is the difference between the ______.

actual price and the standard price multiplied by the actual amount of the input

The flexible budget performance report consists of ______.

revenue and spending variances the planning budget, flexible budget and actual results activity variances

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

Advantages to using a standard cost system include ______.

standard costs can simplify bookkeeping standards can provide benchmarks for individuals to judge their own performance

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.

$125 U

A planning budget called for 500 units to be produced and total direct labor cost of $7,500. Actual production was 600 units and actual direct labor cost was $9,300. The spending variance is:

$300 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

The standard cost for ______ manufacturing overhead is computed the same way as the standard cost for direct labor.

Variable

Companies use the BLANK BLANK cycle to evaluate and improve performance.

Variance Analysis

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 variance analysis cycle ______.

begins with the preparation of performance reports

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

A revenue variance is the ______.

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

Planning budgets are sometimes called ______ budgets.

static

The same basic formulas used for materials and labor are used to analyze ______ portion of manufacturing overhead.

the variable

Variances are more accurate when using ______.

multiple cost drivers

A flexible budget shows ______.

what variable costs should have been at the actual level of activity what fixed costs should have been at the actual level of activity what revenue should have been at the actual level of activity

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 ______.

250 U

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

Flexible

The difference between the standard and the actual direct labor hourly rates is reflected in the BLANK BLANK variance.

Labor Rate

The materials price variance is the difference between the actual price of materials ______.

and the standard price for materials with the difference multiplied by the actual quantity of materials

The variable overhead BLANK variance measures activity differences and the variable BLANK overhead variance measures cost differences.

efficiency; rate

When actual revenue ______ what the revenue should have been, the variance is labeled favorable.

exceeds

The materials price variance is generally calculated at the time materials are purchased because ______.

management can generate more timely variance reports it allows materials to be carried in the inventory accounts at standard cost it simplifies bookkeeping

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

performance

Nonprofit organizations ______.

usually have significant funding sources other than sales may have revenue sources that are fixed

The prominent difference between performance reports in nonprofit and for-profit organizations is that nonprofit organizations ______.

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

The standard rate per unit that a company expects to pay for variable overhead equals the ______.

variable portion of the predetermined overhead rate

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.

Standards are ______.

set for each major production input or task benchmarks for measuring performance compared to the actual quantities and costs of inputs