Chapter 21

Question 1

_________ budget is based on a single predicted amount of sales or other measure of activity.

Answer 1

Fixed

Question 2

Actual revenue is higher than budgeted revenue, or actual cost is lower than budgeted cost

Answer 2

Favorable variance

Question 3

Actual revenue is lower than budgeted revenue or actual cost is higher than budgeted cost

Answer 3

Unfavorable variance

Question 4

________ budget, or ________ budget, is a report based on predicted amounts of revenues and expenses corresponding to the actual level of output

Answer 4

Flexible, variable

Question 5

Sales - Total variable costs

Answer 5

Contribution margin

Question 6

Contribution margin - total fixed costs

Answer 6

Income from operations

Question 7

What is the contribution margin formula?

Answer 7

Sales - Total variable costs

Question 8

What is the income from operations formula?

Answer 8

Contribution margin - total fixed costs

Question 9

A _________ Budget Performance Report lists differences between actual performance and budgeted performance based on actual sales volumes or other activities.

Answer 9

flexible

Question 10

Higher costs are _________ (favorable/unfavorable) in a flexible budget performance report.

Answer 10

unfavorable

Question 11

The difference between the actual price and the budgeted price per unit of input is the _________ variance.

Answer 11

price

Question 12

The difference between actual quantity and budgeted quantity of input is the ________ variance.

Answer 12

quantity

Question 13

The breakdown of price and quantity variance is called ___________ __________.

Answer 13

variance analysis

Question 14

Preset costs for delivering a product or service under normal conditions

Answer 14

Standard costs

Question 15

_________ costs are established by personnel, engineering, and accounting studies using past experiences and data.

Answer 15

standard

Question 16

Management uses these costs to assess the reasonableness of actual costs incurred for producing the product or providing the service

Answer 16

standard

Question 17

Standard costs are also used because they are _________ costs.

Answer 17

anticipated

Question 18

Managers focus attention to areas where performance is reasonably close to standard

Answer 18

Management by exception

Question 19

The difference between the total budgeted overhead cost and the overhead cost that was allocated to products using the predetermined fixed overhead rate

Answer 19

Volume variance

Question 20

The combination of both overhead spending variances (variable and fixed) and the variable overhead efficiency variance

Answer 20

Controllable variance

Question 21

The difference between actual cost and standard cost, made up of a price variance and a quantity variance

Answer 21

Cost variance

Question 22

________ quantity is the input (material or labor) used to manufacture the quantity of output.

Answer 22

Actual (AQ)

Question 23

_________ quantity is the expected input for the quantity of output.

Answer 23

Standard (SQ)

Question 24

________ price is the amount paid to acquire the input (materials or labor).

Answer 24

Actual (AP)

Question 25

________ price is the expected price.

Answer 25

Standard (SP)

Question 26

(AP - SP) x AQ =

Answer 26

PV

Question 27

(AQ - SQ) x SP =

Answer 27

QV

Question 28

(AH x AR) - (AH x SR) =

Answer 28

RV

Question 29

_______ rate is found by dividing total $ by Actual Hours (AH).

Answer 29

Actual

Question 30

(AH x SR) - (SH x SR) =

Answer 30

Efficiency variance

Question 31

________ _________ is found by multiplying the total # of units produced by minutes or hours given in budgeted standards.

Answer 31

Selling hours

Question 32

Factors that may affect ________ ________ include: poorly trained employees, poor quality, poor price negotiation, or higher quality of material than needed.

Answer 32

cost variance