Budgeting and Analysis of Variances

Question 1

What is another name for a flexible budget?

A Static budget

B Fixed budget

C Variable budget

D Overhead budget

Answer 1

C

Question 2

Actual income exceeded standard income and actual cost exceeded standard cost. Are income and cost favorable or unfavorable?

Income:Cost

A. F:F

B. F:U

C. U:F

D. U:U

Answer 2

B

Question 3

What is the equation for total flexible budget variance?

A Actual income – flexible budget income (at actual quantity)

B Actual income – flexible budget income (at standard quantity)

C Flexible budget income (at actual quantity) – Actual income

D Flexible budget income (at standard quantity) – Actual income

Answer 3

A

Question 4

What does a favorable direct labor rate variance indicate?

A The total amount paid for labor is lower than budgeted

B The amount of labor used is less than budgeted

C The output per labor hour is higher than budgeted

D The hourly wage paid for labor is lower than budgeted

Answer 4

D

Question 5

A company budgeted 3,200 hours of directly labor (at actual output), but actually used 3,450 direct labor hours. The standard labor rate is $6.50/hr and the actual labor rate is $6.60/hr. What is the direct labor quantity variance?

A $1,625 F

B $1,625 U

C $1,650 F

D $1,650 U

Answer 5

B