Exam 2

Question 1

Static Budget

Answer 1

Master budget, planned at start of period around single output level.

Question 2

Static Budget Variance

Answer 2

Difference between actual result and static budget amount.

Question 3

Flexible Budget

Answer 3

Budgeted revenues and costs based on ACTUAL output in budget period. Prepared at end of period.

Question 4

Sales Volume Variance

Answer 4

Difference between flexible budget and static budget.

Question 5

Flexible Budget Variance

Answer 5

Difference between actual result and flexible budget amount.

Question 6

Selling Price Variance

Answer 6

(Actual Price - Budgeted Price) x Actual Units Sold

Question 7

Efficiency Variance

Answer 7

(Actual Q of Input Used - Budget Q of Input for Actual Output) x Budget Price of Input

Question 8

Variance levels

Answer 8

1. Static
2. Flexible Budget and Sales Volume
3. Selling Price, Direct Materials, Direct Man. Labor, Variable Man. Overhead, Direct Man. Overhead

Question 9

Unfavorable variances are always _______. Favorable balances are always _______.

Answer 9

Debits; Credits

Question 10

Benchmarking

Answer 10

Comparing performance to best performance of similar companies.

Question 11

Most decisions on _____________ are maid before the budget period.

Answer 11

Fixed overhead

Question 12

Only ___________ costs are prorated.

Answer 12

unavoidable

Question 13

__________ inefficiencies are written off in that period.

Answer 13

Avoidable

Question 14

There is no _________ variance for fixed overhead costs.

Answer 14

Efficiency; these costs are unaffected by output because they are fixed.

Question 15

Fixed overhead spending variance is the same as _____________________________.

Answer 15

Fixed overhead flexible budget variance.

Question 16

Production volume variance

Answer 16

Budgeted fixed overhead - fixed overhead allocated ( budget rate is the constant)

Question 17

Relevant costs and revenues

Answer 17

Expected future costs and revenues.

Question 18

Sunk cost

Answer 18

Past cost, unavoidable.

Question 19

Incremental costs

Answer 19

Additional cost incurred for an activity.

Question 20

What are the two main strategies?

Answer 20

Product differentiation and cost leadership

Question 21

What are the four components the balanced scorecard focuses on?

Answer 21

Financial, Customer, Internal Business Processes, Learning & Growth

Question 22

Strategy map focal point vs trigger point:

Answer 22

Focal point have arrows going in, trigger point has arrows going out

Question 23

Strategy map orphan objective:

Answer 23

an objective that only has weak ties to other objectives

Question 24

Revenue Effect of Growth =

Answer 24

(Actual units sold CY - Actual Units sold PY ) x Selling $P in PY

Question 25

Growth component

Answer 25

change in Operating Income from change in Q sold from year to year

Question 26

Price Recovery Component

Answer 26

Change in Operating Income from prices of inputs and outputs

Question 27

Productivity Component

Answer 27

Change in costs attributed to change in efficiency of inputs used per output

Question 28

Cost of Unused Capacity =

Answer 28

Cost of Capacity committed to at beginning of year - Manufacturing resources using during the year

Question 29

Value added cost

Answer 29

If removed, would decrease the value or perceived value of a product

Question 30

Locked-in cost

Answer 30

Not yet incurred, but will happen due to future decisions already made

Question 31

Product Life Cycle

Answer 31

From R&D to after customer service ends

Question 32

Throughput margin

Answer 32

The only true VC are direct materials.