Ch. 7

Question 1

benchmarking

Answer 1

the continuous process of comparing the levels of performance in products and services and executing activities against the best levels of performance in competing companies or in companies having similar processes

Question 2

budgeted performance (expected performance)

Answer 2

point of reference for making comparisons

Question 3

effectiveness

Answer 3

the degree to which a predetermined objective or target is met

Question 4

efficiency

Answer 4

the relative amount of inputs used to achieve a given output level

Question 5

efficiency variance (usage variance)

Answer 5

difference between actual input quantity used and budgeted input quantity allowed for actual output

Question 6

favorable variance

Answer 6

increases operating income with respect to the budgeted amount

Question 7

flexible budget

Answer 7

calculates budgeted revenues and budgeted costs based on the actual output in the budget period

Question 8

flexible-budget variance

Answer 8

difference between an actual result and the corresponding flexible budget amount

Question 9

management by exception

Answer 9

focusing management attention on ares that are not operating as expected and devoting less time to areas operating as expected

Question 10

market-share variance

Answer 10

the difference in budgeted CM for actual market size in units caused solely by actual market share being different from budgeted market share
(actual market size in units)(actual market share-budgeted market share)(budgeted CM per unit)

Question 11

market-size variance

Answer 11

(actual market size-budgeted market size)(budgeted market share)(budgeted market share)(budgeted CM per unit)

Question 12

price variance (input-price variance) (rate variance)

Answer 12

the difference between the actual price and the budgeted price multiplied by the actual input quantity

Question 13

sales-volume variance

Answer 13

difference between a flexible budget amount and the corresponding static budget amount

Question 14

selling-price variance

Answer 14

(actual selling price - budgeted selling price)(actual units sold)

Question 15

standard

Answer 15

carefully determined price, cost, or quantity that is used as a benchmark for judging performance

Question 16

standard cost

Answer 16

carefully determined price that a company expects to pay

Question 17

standard input

Answer 17

carefully determined quantity of input required for one unit of output

Question 18

standard price

Answer 18

carefully determined price that a company expects to pay its operators

Question 19

static budget (master budget)

Answer 19

based on the level of output planned at the start of the budget period

Question 20

static-budget variance

Answer 20

the difference between the actual result and the corresponding budgeted amount in the static budget

Question 21

unfavorable variance

Answer 21

decreases operating income relative to the budgeted amount

Question 22

variance

Answer 22

the difference between actual results and expected performance