Exam 3 questions Flashcards
The individual generally responsible for the direct-material price variance is the:
purchasing manager
When is the material price variance unfavorable?
when the actual price paid is greater than the standard price
Which of the following is a predetermined estimated cost that can be used in the calculation of a variance?
standard cost
A manufacturing firm would begin preparation of its master budget by constructing a:
sales budget
A company’s plan for the acquisition of long-lived assets, such as buildings and equipment, is commonly called a:
capital budget
Which budgets evaluate the results of operations at the actual level of activity?
flexible budget
A company’s plan for the issuance of stock or incurrence of debt is commonly called a:
financial budget
In an activity-based flexible budget, each overhead item has the same cost driver, identified by flexible overhead budget for that cost item. T or F?
False
The units required in production each period are computed by which of the following methods?
adding budgeted sales to the desired ending inventory and subtracting beginning inventory
The activity-based flexible budget provides a more accurate benchmark against which to compare actual costs than does a conventional flexible budget. T or F?
True
This variance is the difference involving spending more or using more than the standard amount.
unfavorable variance
The direct materials budget is prepared using which budget’s information?
production budget
A company’s expected receipts from sales and planned disbursements to pay bills is commonly called a:
cash budget
The difference between the actual price and the standard price, multiplied by the actual quantity of materials purchased, is the
direct materials price variance
Which system(s) use a predetermined overhead rate?
both normal and standard costing
When is the material quantity variance favorable?
when the actual quantity used is less than the standard quantity
Which of the following is a possible cause of an unfavorable labor efficiency variance?
hiring unqualified workers
What is the proper sequencing of the following budgets?
A Budgeted Balance Sheet
B Selling and Administrative Budget
C Sales Budget
D Budgeted Income Statement
C, B, D, A
Which of the following should have the strongest cause and effect relationship with overhead costs?
cost drivers
What are some reasons for a material quantity variance?
more qualified workers
The comprehensive set of budgets that serves as a company’s overall financial plan is commonly known as:
the master budget
When is the materials price variance favorable?
when the actual price is less than the standard price
What is the primary difference between a static budget and a flexible budget?
The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels
Which department would normally begin an investigation regarding an unfavorable materials price variance?
the purchasing department
With respect to overhead, what is the difference between normal costing and standard costing?
use of standard hours versus actual hours
A budget serves as a benchmark against which
actual results can be compared
Which of the following could be found on a flexible overhead budget?
all of the listed choices are correct
The _________________ department would generally begin an initial investigation of an unfavorable material price variance, and the _______________department would generally begin an initial investigation of an unfavorable materials quantity variance.
purchasing; production
A static budget:
is based on one anticipated activity level
Flexible budgets reflect a company’s anticipated costs based on variations in:
activity levels
Variances are computed by taking the difference between the product cost and standard cost. T or F?
false
