chapter 8

Question 1

flexible budget

Answer 1

a report showing estimates of what revenues and costs should have been, given the actual level of activity for the period

Question 2

labor efficiency variance

Answer 2

the difference between the actual hours taken to complete a task and the standard hours allowed for the actual output, multiplied by the standard hourly labor rate

Question 3

labor rate variance

Answer 3

the difference between the actual hourly labor rate and the standard rate, multiplied by the number of hours worked during the period

Question 4

management by exception

Answer 4

a management system in which actual results are compared to a budget. significant deviations from the budget are flagged as exceptions and investigated further

Question 5

materials price variations

Answer 5

the difference between the actual unit price paid for an item and the standard price, multiplied by the quantity purchased

Question 6

materials quantity variance

Answer 6

the difference between the actual quantity of materials used in production and the standard quantity allowed for the actual output, multiplied by the standard price per unit of materials

Question 7

planning budget

Answer 7

a budget created at the beg of the budgeting period that is valid only for the planned level of activity

Question 8

price variance

Answer 8

a variance that is computed by taking the difference between the actual price paid and the standard and multiplying the results by the actual quantity of the input

Question 9

quantity variance

Answer 9

a variance that is computed by taking the difference between taking the actual quantity of the input used and the amount of the input that should have been used for the actual level of output and multiplying the result by the standard price of the input

Question 10

revenue variance

Answer 10

the difference between how much the revenue should have been, given the actual level of activity, and the actual revenue for the period. a favorable (unfave) revenue variance occurs bc the rev is higher (low) than expected, given the actual level of activity for the period

Question 11

spending variance

Answer 11

the diff between how much a cost should’ve been, given the actual level of activity and the actual amount of the cost. a Fave (unfave) spending variance occurs bc the cost is lower (high) than expected given the actual level of activity for the period

Question 12

standard cost card

Answer 12

a detailed listing of the standard amounts of inputs and their costs that are required to produce one unit of a specific product

Question 13

standard cost per unit

Answer 13

the standard quantity allowed of an input per unit of a specific product, multiplied by the standard price of the input

Question 14

standard hours allowed for actual output

Answer 14

the time that should have been taken to complete the period’s output. it is computed by multiplying the actual number of units produced by the standard hours per unit

Question 15

standard hours per unit

Answer 15

the amount of direct labor time that should be required to complete a single unit of product, including allowances for breaks, machine downtime, cleanup, rejects and other normal inefficiencies

Question 16

standard price per unit

Answer 16

the price that should be paid for an input

Question 17

standard quantity allowed for actual output

Answer 17

the amount of an input that should have been used to complete the period’s output. it is computed by multiplying the actual number of units produced by the standard hours per unit

Question 18

standard quantity per unit

Answer 18

the amount og an input that should be required to complete a single unit of product, including allowances for normal waste, spoilage rejects and other normal inefficiencies

Question 19

standard rate per unit

Answer 19

the labor rate that should be incurred per hour of labor time, including employment taxes and fringe benefits

Question 20

variable overhead efficiency variance

Answer 20

the difference between the actual level of activity (dir lab-hrs, mach-hrs, or some other base) and the standard activity allowed, multiplied by the variable part of the pvh rate

Question 21

variable overhead rate

Answer 21

the diff between the actual variable overhead cost incurred during a period and the standard cost that should have been incurred based on the actual activity of the period