Managerial Accounting: CHPT 7 & 8

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This variance is the difference involving spending more or using more than the standard amount.

unfavorable variance

When is the labor rate variance favorable?

when the actual price is less than the standard price

The most common budget is prepared for a quarter.

False

Which is not a section of the cash budget?

allowance for uncollectible accounts

Which of the following is true in a bottom-up budgeting approach?

Departments determine their needs and relate them to the overall goals

Hiring too many workers is a possible cause of an unfavorable labor rate variance.

False

The budgeted balance sheet is the starting point in preparing financial budgets.

False

The master budgeting approach requires management to justify all its expenditures.

False

A possible reason for a direct labor time variance would be less qualified workers.

True

The variable overhead efficiency variance is caused by the difference between which of the following?

actual and standard allocation base

8. This standard is set at a level that may be reached with reasonable effort.

attainable standard

Which approach is most likely to result in employee buy-in to the budget?

bottom-up approach

A flexible budget ________.

predicts estimated revenues and costs at varying levels of production

7. Which of the following is an operating budget?

production budget

What are some possible reasons for a material price variance?

substandard material

What is the main difference between static and flexible budgets?

the variable costs are adjusted in a flexible budget

Which of the following includes only financial budgets?

cash budget, budgeted balance sheet, capital asset budget

What are some possible reasons for a labor rate variance?

hiring of less qualified workers

Which of the following is a possible cause of an unfavorable labor efficiency variance?

hiring substandard workers

Which of the operating budgets is prepared first?

sales budget

The variance overhead rate is caused by the sum of the actual and standard allocation base.

False

The flexible budget evaluates the results of operations at the actual level of activity.

True

The units required in production each period are computed by which of the following methods?

adding budgeted sales to the desired ending inventory and subtracting beginning inventory

Which of the following is not an operating budget?

cash budget

Which of the following is a possible cause of an unfavorable material price variance?

purchasing higher-quality material

When is the material price variance favorable?

when the actual price is less than the standard price

When is the direct labor time variance favorable?

when the actual quantity used is less than the standard quantity

When is the material quantity variance favorable?

when the actual quantity used is less than the standard quantity


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