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Exam 8: Flexible Budgets and Variance Analysis

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Question 1

Multiple Choice

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The following data are for Sacramento Corporation: The static budget variance for operating income is ________.

A) $2,000 Favorable
B) $2,000 Unfavorable
C) $16,000 Favorable
D) $16,000 Unfavorable

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A

Question 2

Multiple Choice

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Efficiency is indicated by the ________ variances.

A) sales activity
B) static budget
C) flexible budget
D) strategic budget

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Question 3

Multiple Choice

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Blue Company planned to sell 35,000 units.Actual sales were 30,000 units.Based on this information,Blue Company was ________.

When should a company use an activity-based flexible budget with multiple cost drivers instead of a simple flexible budget with one cost driver?

The Long Company makes tables for which the following standards have been developed: Production of 200 tables was expected in August,but 220 tables were actually completed.Direct materials purchased and used were 2,100 pounds at an actual price of $4.40 per pound.Direct labor cost for the month was $10,620,and the actual pay per hour was $18.00.What is the standard direct labor cost for each table produced?

Which statement about "currently attainable standards" is FALSE?

The type of budget that serves as the original benchmark for evaluating performance is called a ________ budget.

Who is usually responsible for sales activity income variances?

If the sales activity variance was $8,000 Favorable and the static budget variance was $10,000 Favorable,then the flexible budget variance was ________.

One cause of a flexible budget variance for direct labor may be a difference between expected and actual hourly wage rates for factory workers.

For the current year,John Company's static budget sales were $225,000.Actual sales for the current year were $220,000.Actual sales last year were $219,000.Expected sales last year were $225,000.What is the static budget variance for sales in the current year?

The unfavorable variances resulting from ideal standards are intended to constantly remind personnel of the continuous need for improvement.

The Cheers Company makes mugs for which the following standards have been developed: Production of 400 mugs was expected in July,but 440 mugs were actually completed.Direct materials purchased and used were 2,100 ounces at an actual price of $2.20 per ounce.Direct labor cost for the month was $5,310,and the actual pay per hour was $9.00.What is the direct material quantity variance for July?

The flexible budget variance for fixed overhead costs equals the ________ variance.

Rate variances are the same as ________ variances.Efficiency variances are the same as ________ variances.

Fill in the blanks to complete the flexible budget for Meier Company. Variable costs: Fixed costs:

A static budget has multiple levels of activity.

A static budget is prepared for one expected level of activity.

Total static budget variances are equal to the sum of activity-level variances and flexible budget variances.

An expected cost is the cost that is least likely to be attained.