CH 7 Flexible Budgets, Direct Cost Variances, Management Control

Question 1

variance

Answer 1

difference between an actual and an expected amount

Question 2

Management ba exception

Answer 2

the practice of focusing attention on areas not operating as expected

Question 3

static master budget

Answer 3

is based on the output planned at the start of the budgets period

Question 4

Static budget variance (Level o)

Answer 4

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

Question 5

Favorable variance (F)

Answer 5

has the effect of increasing operating income relative to the budget amount

Question 6

Unfavorable variance (U)

Answer 6

has the effect of decreasing operating income relative to the budget amount

Question 7

flexible Budget

Answer 7

shifts budgeted revenues and costs up and down based actual operating results

Question 8

Variances

Answer 8

may start out at Level o

this is the highest level of analysis

Question 9

Variances and Journal Entries

Answer 9

Each variance may be journalized

each variance has its own account

Question 10

Benchmarking

Answer 10

is the continuos process of comparing the levels of performance in producing products and services against the best levels of performance in competing companies