Chapter 8

Question 1

Benchmarking

Answer 1

Comparing processees and performance standards among competitors in the spirit of continuous improvement

Question 2

Budget report

Answer 2

Contains relevant information that compares actual results to planned activities

Question 3

Budgetary control

Answer 3

Refers to management’s use of budgets to monitor and control a company’s operations

Question 4

Controllable variance

Answer 4

The difference between actual overhead costs incurred and the budgeted overhead costs based on a flexible budget

Question 5

Cost variance

Answer 5

The difference between actual and standard costs

Question 6

Efficiency variance

Answer 6

Occurs when standard direct labor hours (the allocation base) expected for actual production differ from the actual direct labor hours used

Question 7

Favorable variance

Answer 7

When compared to budget, the actual cost or revenue contributes to a higher income. That is, actual revenue is higher than budgeted revenue, or actual cost is lower than budgeted cost

Question 8

Fixed budget (Or static budget)

Answer 8

Based on a single predicted amount of sales or other measure of activity

Question 9

Fixed budget performance report

Answer 9

Compares actual results for a budget period with the results expected under its fixed budget

Question 10

Flexible budget (Or variable budget)

Answer 10

A report based on predicted amounts of revenues and expenses corresponding to the actual level of output

Question 11

Flexible budget performance report

Answer 11

Lists differences between actual performance and budgeted performance based on actual sales volume or other activity level

Question 12

Management by exception

Answer 12

Managers focus attention on the most significant differences between actual costs and standard costs and give less attention to areas where performance is reasonably close to standard

Question 13

Overhead cost variance

Answer 13

Overhead cost variance (OCV) = Actual overhead incurred (AOI) - Standard overhead applied (SOA)

Question 14

Price variance

Answer 14

Difference between actual price per unit of input and budgeted price per unit of input

Question 15

Quantity variance

Answer 15

Difference between actual quantity of input used and budgeted quantity of input

Question 16

Spending variance

Answer 16

Occurs when management pays an amount different than the standard price to acquire an item

Question 17

Standard costs

Answer 17

Preset costs for delivering a product or service under normal conditions

Question 18

Unfavorable variance

Answer 18

When compared to budget, the actual cost or revenue contributes to a lower income; actual revenue is lower than budgeted revenue, or actual cost is higher than budgeted cost

Question 19

Variance analysis

Answer 19

The breakdown of variances in budget such as price and quantity variances

Question 20

Volume variance

Answer 20

Difference between actual volume of input and budgeted volume of input

Question 21

Jeopardy Style

Comparing processees and performance standards among competitors in the spirit of continuous improvement

Answer 21

Benchmarking

Question 22

Jeopardy Style

Contains relevant information that compares actual results to planned activities

Answer 22

Budget report

Question 23

Jeopardy Style

Refers to management’s use of budgets to monitor and control a company’s operations

Answer 23

Budgetary control

Question 24

Jeopardy Style

The difference between actual overhead costs incurred and the budgeted overhead costs based on a flexible budget

Answer 24

Controllable variance

Question 25

# Jeopardy Style The difference between actual and standard costs

Answer 25

Cost variance

Question 26

# Jeopardy Style Occurs when standard direct labor hours (the allocation base) expected for actual production differ from the actual direct labor hours used

Answer 26

Efficiency variance

Question 27

# Jeopardy Style When compared to budget, the actual cost or revenue contributes to a higher income. That is, actual revenue is higher than budgeted revenue, or actual cost is lower than budgeted cost

Answer 27

Favorable variance

Question 28

# Jeopardy Style Based on a single predicted amount of sales or other measure of activity

Answer 28

Fixed budget (Or static budget)

Question 29

# Jeopardy Style Compares actual results for a budget period with the results expected under its fixed budget

Answer 29

Fixed budget performance report

Question 30

# Jeopardy Style A report based on predicted amounts of revenues and expenses corresponding to the actual level of output

Answer 30

Flexible budget (Or variable budget)

Question 31

# Jeopardy Style Lists differences between actual performance and budgeted performance based on actual sales volume or other activity level

Answer 31

Flexible budget performance report

Question 32

# Jeopardy Style Managers focus attention on the most significant differences between actual costs and standard costs and give less attention to areas where performance is reasonably close to standard

Answer 32

Management by exception

Question 33

# Jeopardy Style Overhead cost variance (OCV) = Actual overhead incurred (AOI) - Standard overhead applied (SOA)

Answer 33

Overhead cost variance

Question 34

# Jeopardy Style Difference between actual price per unit of input and budgeted price per unit of input

Answer 34

Price variance

Question 35

# Jeopardy Style Difference between actual quantity of input used and budgeted quantity of input

Answer 35

Quantity variance

Question 36

# Jeopardy Style Occurs when management pays an amount different than the standard price to acquire an item

Answer 36

Spending variance

Question 37

# Jeopardy Style Preset costs for delivering a product or service under normal conditions

Answer 37

Standard costs

Question 38

# Jeopardy Style When compared to budget, the actual cost or revenue contributes to a lower income; actual revenue is lower than budgeted revenue, or actual cost is higher than budgeted cost

Answer 38

Unfavorable variance

Question 39

# Jeopardy Style The breakdown of variances in budget such as price and quantity variances

Answer 39

Variance analysis

Question 40

# Jeopardy Style Difference between actual volume of input and budgeted volume of input

Answer 40

Volume variance