Chapter 8: Flexible and standard cosy systems

Question 1

Static Budget

Answer 1

A budget prepared for ONLY one level of sales voles

Question 2

Budget Performance Variance

Answer 2

A report summarizing actual results, budgets amounts and differences

Question 3

Variance

Answer 3

The difference between actual AMOUNT and budgeted amount: labeled as favorable or unfavorable depending on if operating increases or decreases

Question 4

Static Budget Variance

Answer 4

The difference between actual results and the expected results in the static budget

Question 5

Flexible Budget

Answer 5

A Budget prepared for many levels of sales volume

Question 6

Flexible Budget Variance

Answer 6

The difference between actual results and the expected results for ACTUAL UNITS SOLD

Question 7

Sales Volume Variance

Answer 7

The difference between actual results and the expected results for actual units sold and the static budget

Question 8

Management by exception

Answer 8

When managers focus on results outside the accepted parameters(i.e., comparing actual results and budgeted results)

Question 9

Standard

Answer 9

The price, cost, or quantity that is expected under normal conditions

• budget amount= total amount
  standard amount= per unit amount

Question 10

DM cost

Answer 10

Responsibility: Purchasing Manager

-Material quality and cost

Question 11

DM efficiency

Answer 11

Responsibility: Production Manager

-using standard material; not wasteful

Question 12

DL cost

Answer 12

Responsibility: Human Resources Manager

-are workers paid more than expected?

Question 13

DL efficiency

Answer 13

Responsibility: Production Manager

-production level, time and training

Question 14

VOH

Answer 14

Responsibility: Production Manager

-Allocated hours - efficiency