ACC Chapter 9

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

flexible

Planning budgets are sometimes called ______ budgets. static flexible

static

Standard cost variance accounts begin and end each accounting period with a balance of _____________

zero

Based on the following information, calculate the amount of overhead applied when using a standard costing system. Budgeted variable overhead $200,000 Budgeted fixed overhead $150,000 Estimated total machine-hours 25,000 Standard machine-hours for actual production 20,000 Actual machine-hours used 20,500 Multiple choice question. $164,000 $280,000 $287,000 $160,000

$280,000

Based on the following information, the amount of overhead applied when using a standard cost system equals $ . (Enter your answer as a whole number.) Budgeted variable overhead $100,000 Budgeted fixed overhead $50,000 Estimated total machine-hours 20,000 Standard machine-hours for actual production 18,000 Actual machine-hours used 17,500

135,000

The accounting equation is: = ________ +_________ Stockholders' Equity.

Assets=Liabilities + Stockholder's equity

Which of the following statements are true? Multiple select question. Fixed costs are applied to work in process like they are variable costs. Within the relevant range of activity, increases or decreases in activity change fixed costs. Fixed costs are proportional to activity. Treating fixed costs as variable is necessary for product costing.

Fixed costs are applied to work in process like they are variable costs. Treating fixed costs as variable is necessary for product costing.

T/F In a standard cost system overhead is applied using the standard hours allowed for the actual production.

TRUE

Which statement regarding variable overhead variance analysis is true? Variable overhead variances are easy to interpret. Efficient use of variable overhead results in a favorable variable overhead efficiency variance. The variable overhead efficiency variance uses exactly the same inputs as the direct labor efficiency variance. The variable overhead efficiency is calculated by multiplying the variance in the labor hours with the variable portion of the predetermined overhead rate.

The variable overhead efficiency is calculated by multiplying the variance in the labor hours with the variable portion of the predetermined overhead rate.

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

actual

The calculation of the budget variance uses ______ overhead. actual variable budgeted variable actual fixed budgeted fixed

actual fixed budgeted fixed

The materials price variance is the difference between the actual price of materials ______. times the actual quantity of materials and the standard price of materials times the standard quantity allowed for production and the standard price for materials with the difference multiplied by the standard quantity of material allowed and the standard price for materials with the difference multiplied by the actual quantity of materials

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

The Variance analysis cycle______. includes the investigation of all variances is used to assign blame for poor performance begins with the preparation of performance reports begins with the preparation of the budget

begins with the preparation of performance reports

Standards are ______. Multiple select benchmarks for measuring performance compared to the actual quantities and costs of inputs set for each major production input or task rarely used outside of management accounting

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

The difference between the actual fixed overhead and the planned fixed overhead is called the ______ variance.

budget

Graphic analysis of fixed overhead offers insight into the fixed overhead ______. budget variance only budget and volume variances volume variance only

budget and volume variances

A revenue variance is the ______. actual total revenue earned difference between the actual total revenue and what the total revenue should have been, given the actual level of activity for the period difference between what a cost should have been at the actual level of activity and the actual amount of the cost difference between total revenue in the planning budget and actual total revenue

difference between the actual total revenue and what the total revenue should have been, given the actual level of activity for the period

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

efficiency

In a standard cost system, ______. every unit of output is charged with the same amount of overhead cost the overhead cost assigned to a unit of output is dependent upon time time required for processing

every unit of output is charged with the same amount of overhead cost

If overhead is overapplied, the total of the standard cost overhead variances is _________

favorable

When using Excel to record transactions, all _________ variances are recorded without parentheses and all ________ variances are recorded with parentheses

favorable, unfavorable

Favorable variances ______ retained earnings and unfavorable variances ______ retained earnings.. decrease, increase increase, decrease

increase, decrease

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

increased accuracy

When direct labor is used as the overhead allocation base, the variable overhead efficiency variance ______. explains how efficiently variable overhead resources were used cannot be calculated will always be unfavorable is favorable when the direct labor efficiency variance is favorable

is favorable when the direct labor efficiency variance is favorable

When direct labor is used as the overhead allocation base, the variable overhead efficiency variance ______. will always be unfavorable explains how efficiently variable overhead resources were used cannot be calculated is favorable when the direct labor efficiency variance is favorable

is favorable when the direct labor efficiency variance is favorable

The materials price variance is generally calculated at the time materials are purchased because ______. Multiple select question. GAAP requires variances to be recognized when they are incurred it simplifies bookkeeping it allows materials to be carried in the inventory accounts at standard cost management can generate more timely variance reports

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

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

planning

(Actual cost per unit - standard cost per unit) × actual quantity = the materials _______ variance.

price

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

purchased, used

The difference between the actual amount of materials used in production and the standard amount of materials allowed for the actual output, multiplied by the standard price per unit of materials is the materials ________ variance

quantity

The difference between the standard and the actual direct labor wages per hour is reflected in the labor _______ variance.

rate

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

rate, hours

The difference between the actual total revenue and what the total revenue should have been, given the actual level of activity for the period is called a(n) ______ variance.

revenue

Fancy Nail's monthly rent is $2,500. The company's static budget for March was based on the activity level of 2,000 manicures. Total sales was budgeted at $40,000 and nail technician wages (a variable cost based on the number of manicures) was budgeted at $20,000. Actual manicures in March totaled 2,200. Assuming no other expenses, Fancy Nails' flexible budget will show ______. rent expense of $2,750 sales of $44,000 net operating income of $19,500 wages of $20,000

sales of $44,000 net operating income of $19,500 $44,000 - $22,000 - $2,500 = $19,500 $20 per manicure ($40,000 ÷ 2,000) × 2,200 = $44,000

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.

spending

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

standard

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

standard

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

standard

STP Inc. has a variable overhead rate variance of $4,000 U, a variable overhead efficiency variance of $1,500 F, a fixed overhead budget variance of $2,000 F and a fixed overhead volume variance of $10,000 U. From the information, it can be determined that overhead was ______. overapplied underapplied neither underapplied nor overapplied

underapplied

The same basic formulas used for materials and labor are used to analyze ______ portion of manufacturing overhead. neither the variable nor fixed both the variable and fixed the fixed the variable

variable

The same basic formulas used to analyze direct materials and direct labor are used to analyze the _______ portion of manufacturing overhead.

variable

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

variable

The standard rate per unit that a company expects to pay for variable overhead equals the _____. total predetermined overhead rate variable portion of actual overhead the company expects to incur total actual overhead the company expects to incur variable portion of the predetermined overhead rate

variable portion of the predetermined overhead rate

Companies use the _______ ________ cycle to evaluate and improve performance.

variance analysis

If the planned budget revenue for 5,000 units is $120,000, the flexible budget revenue for 4,500 units is ______. $120,000 $118,000 $108,000 $180,000

$108,000 $120,000 ÷ 5,000 = $24 per unit × 4,500 = $108,000

The volume variance is the difference between ______ fixed overhead. actual and budgeted actual and applied budgeted and applied

budgeted and applied

The accounts impacted by closing standard cost variance clearing accounts are ______. Multiple select question. cost of goods sold retained earnings raw materials inventory cash

cost of goods sold retained earnings

Budgeted fixed overhead - Fixed overhead applied to work in process is the calculation of the ______ variance. budget volume fixed overhead

volume

In a standard costing system, variable and fixed overhead are applied to production using the ______ hours allowed for the ______ production. actual, standard standard, standard actual, actual standard, actual

standard, actual

An unchanged planning budget is known as a(n) _______ planning budget.

static

A price variance is the difference between the ______. standard quantity allowed and the actual quantity used multiplied by the standard price standard quantity allowed and the actual quantity used multiplied by the actual price actual price and the standard price multiplied by the actual amount of the input actual price and the standard price multiplied by the standard amount allowed

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

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

material, labor

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

standard

The ______ _______ per unit defines the amount of direct materials that should be used for each unit of finished product, including an allowance for normal inefficiencies, such as scrap and spoilage.

standard quantity

In a standard cost system, overhead is applied on the basis of the _______ hours allowed for the _______ output of the period.

standard, actual

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

multiple cost drivers

Which of the following are used to calculate the standard quantity per unit of direct materials? Multiple select question. Freight and transportation costs. Direct materials requirements per unit of finished product. Allowance for normal scrap and spoilage.

Direct materials requirements per unit of finished product. Allowance for normal scrap and spoilage.

T/F The labor rate variance measures the productivity of direct labor. True false question.

False

Select all that apply Which of the following statements are true? Multiple select question. Treating fixed costs as if they are variable can lead to bad decisions. Changes in activity have no impact on actual fixed costs within the relevant range. A fixed overhead volume variance results from treating fixed manufacturing costs as if they are variable. In absorption costing, fixed manufacturing costs are applied to production in large chunks, rather than on a per unit basis.

Treating fixed costs as if they are variable can lead to bad decisions. Changes in activity have no impact on actual fixed costs within the relevant range. A fixed overhead volume variance results from treating fixed manufacturing costs as if they are variable.

The material quantity variance measures the difference between the _______ quantity of materials used in production and the _________ quantity of materials allowed for the actual output, multiplied by the standard price per unit of materials.

actual, standard

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

affects variable costs only

Volume variance = ______. actual fixed overhead - budgeted fixed overhead actual fixed overhead - fixed overhead applied to production budgeted fixed overhead - fixed overhead applied to work in process standard fixed overhead applied to production - actual fixed overhead applied to production

budgeted fixed overhead - fixed overhead applied to work in process

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

difference between the actual amount of the cost and how much a cost should have been, given the actual level of activity

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 the actual amount of the cost and how much a cost should have been, given the actual level of activity actual amount spent

difference between the actual amount of the cost and how much a cost should have been, given the actual level of activity

When 100% peak effort from the most skilled and efficient workers is assumed, the direct labor hours required per unit is being set using _______ standards.

ideal