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General ledger accounts for variances are classified as


A) permanent accounts.
B) temporary accounts.
C) real accounts.
D) retained earnings.

E) A) and B)
F) None of the above

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Direct materials (DM) efficiency variances are recorded


A) when materials are purchased.
B) during production.
C) when units are sold.
D) at the same time as direct materials (DM) price variances.

E) B) and C)
F) A) and D)

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Describe what the DL Price Variance and DL Efficiency Variance reflect and what questions each should address.

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The DL Price Variance reflects the diffe...

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Which of the following statements is true regarding budgets?


A) Actual numbers should never be compared to budgets, since budgets are simply estimates.
B) Variances resulting from comparison of actual and budgeted amounts will always require management to take corrective action.
C) Management should set expectations high and unattainable so that employees will be motivated to reach the goals set.
D) Managers use variance analysis to compare actual outcomes to the budget to evaluate performance and solve issues that caused the variances.

E) B) and D)
F) B) and C)

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Which of the following depicts how organizations use budgets and variance analysis to attain their goals?


A) Troubleshoot and Plan ? Benchmark and Control ? Evaluate Performance and Motivate
B) Motivate and Benchmark ? Plan and Control ? Evaluate Performance and Troubleshoot
C) Plan and Control ? Evaluate Performance and Benchmark ? Motivate and Troubleshoot
D) Plan and Control ? Evaluate Performance and Troubleshoot ? Motivate and Benchmark

E) A) and D)
F) B) and C)

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Cosmo Cookie Creations had the following variable cost data for the past month: Cosmo Cookie Creations had the following variable cost data for the past month: What is Cosmo Cookie's Flexible Budget Variance and Sales Activity Variance? A) $600, unfavorable and $300, favorable B) $600, unfavorable and $300, unfavorable C) $600, favorable and $300, favorable D) $600, favorable and $300, unfavorable What is Cosmo Cookie's Flexible Budget Variance and Sales Activity Variance?


A) $600, unfavorable and $300, favorable
B) $600, unfavorable and $300, unfavorable
C) $600, favorable and $300, favorable
D) $600, favorable and $300, unfavorable

E) B) and C)
F) A) and D)

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The direct labor (DL) price variance reflects the difference between the


A) standard direct labor cost for the actual direct labor hours used and the direct labor hours that were expected to use for the actual production.
B) actual direct labor rate and the standard direct labor rate for all of the direct labor hours used.
C) actual direct labor rate applied to the actual labor hours and the standard direct labor rate applied to the standard direct labor hours.
D) standard direct labor rate applied to the actual labor hours and the actual direct labor rate applied to the standard direct labor hours.

E) B) and C)
F) A) and C)

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The sales price variance is computed as the


A) (Actual sales price per unit - Budgeted sales price per unit) x Actual volume sold.
B) (Actual volume - Budgeted volume) x Budgeted sales price.
C) (Actual sales price per unit - Budgeted sales price per unit) x Budgeted volume sold.
D) (Actual volume - Budgeted volume) x Actual sales price.

E) All of the above
F) A) and C)

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Standards should be reviewed and updated


A) throughout the year, every time conditions and assumptions change.
B) only if variances are significant and indicate a change is required.
C) at the end of each period, once variances are known.
D) at the beginning of each year, in anticipation of what the variances will be for the year.

E) C) and D)
F) B) and C)

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When should a flexible budget be used instead of the master budget?


A) When actual sales volume equals the master budget sales volume
B) When actual sales volume approximates the master budget sales volume
C) When actual sales volume differs from the master budget sales volume
D) When the actual sales revenue differs from the master budget sales revenue

E) B) and C)
F) None of the above

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A comprehensive, organization-wide budget that requires inputs from many sources Throughout the company is a(n)


A) cash budget.
B) operational budget.
C) master budget.
D) financial budget.

E) C) and D)
F) B) and D)

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Match the following term with its appropriate definition by including the correct letter in the blank next to the term. -Motivate


A) schedule for production, labor purchases and manufacturing overhead
B) differences between actual and budgeted outcomes
C) approved budgeted numbers
D) logical, systematic identification of sources of problems to fix them and avoid recurrence
E) assess work effort to achieve benchmarks
F) activities to prevent deviations from budget
G) inspire employees to unleash their potential

H) D) and F)
I) E) and G)

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Maya Industries has the following actual and master budget information for its two product lines: Maya Industries has the following actual and master budget information for its two product lines: Compute the Sales Quantity Variances for the Gadgets, Gizmos, and in Total. Compute the Sales Quantity Variances for the Gadgets, Gizmos, and in Total.

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Sales Quantity VarianceGadgets = (Actual Volume...

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Compute the indicated amount in each of the following independent scenarios: a. Flameco, Inc. has a Master Budget Variance of $100, unfavorable and a Flexible Budget Variance of $150, favorable. What is the Sales Activity Variance for Flameco, Inc.? b. Genero Company has a Master Budget Variance of $200, favorable and a Sales Activity Variance of $130, favorable. What is the Flexible Budget Variance for Genero Company? c. Tenet Industries has a Flexible Budget Variance of $450, favorable and a Sales Activity Variance of $250, unfavorable. What is Master Budget Variance for Tenet Industries?

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a. Sales Activity Variance = Master Budg...

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Which variance captures the difference in the standard variable-MOH cost for the actual quantity of the cost driver used, compared to the cost driver quantity expected for actual units produced?


A) Variable-MOH Efficiency Variance
B) Fixed-MOH Price Variance
C) Variable-MOH Price Variance
D) Fixed-MOH Volume Variance

E) All of the above
F) C) and D)

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Which of the following would not appear as a debit entry in the Work In Process (WIP) Inventory account when manufacturing a unit of product?


A) Cost of goods manufactured (COGM)
B) Direct materials (DM) used
C) Direct labor (DL) used
D) Variable manufacturing overhead (MOH) assigned

E) B) and C)
F) B) and D)

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Memorable Moments manufactures a product that uses 2.5 standard labor hours per unit at a standard hourly rate of $12.00 per hour. If 3,000 units required 7,400 actual hours at an hourly rate of $12.40 per hour, what is the Direct Labor (DL) Price Variance and (DL) Efficiency Variance?

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Direct Labor (DL) Price Variance = (AQ x...

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Which of the following standards would be best suited to a futuristic production facility comprised of robots and drones, but lacking people?


A) Firm, yet attainable standards
B) Ideal standards
C) Realistic standards
D) Practical standards

E) B) and C)
F) A) and B)

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Which variance explains whether actual sales meant a larger or smaller portion of the total market than the plan?


A) Market size variance
B) Market share variance
C) Sales quantity variance
D) Sales mix variance

E) A) and D)
F) All of the above

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The manager of Power Industries reviewed the financial information for the year just completed. Sales volume came in lower than expected at 5,000 units, while it budgeted for sales of 5,500 units. Power's variable cost per unit (comprised of DM, DL, and variable-MOH) was $20, the unit sales price expected was $45, and fixed-MOH costs totaled $110,000. Prepare a flexible budget to determine Power's budgeted operating profit.

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