Exam 3 questions

Question 1

The individual generally responsible for the direct-material price variance is the:

Answer 1

purchasing manager

Question 2

When is the material price variance unfavorable?

Answer 2

when the actual price paid is greater than the standard price

Question 3

Which of the following is a predetermined estimated cost that can be used in the calculation of a variance?

Answer 3

standard cost

Question 4

A manufacturing firm would begin preparation of its master budget by constructing a:

Answer 4

sales budget

Question 5

A company’s plan for the acquisition of long-lived assets, such as buildings and equipment, is commonly called a:

Answer 5

capital budget

Question 6

Which budgets evaluate the results of operations at the actual level of activity?

Answer 6

flexible budget

Question 7

A company’s plan for the issuance of stock or incurrence of debt is commonly called a:

Answer 7

financial budget

Question 8

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?

Answer 8

False

Question 9

The units required in production each period are computed by which of the following methods?

Answer 9

adding budgeted sales to the desired ending inventory and subtracting beginning inventory

Question 10

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?

Answer 10

True

Question 11

This variance is the difference involving spending more or using more than the standard amount.

Answer 11

unfavorable variance

Question 12

The direct materials budget is prepared using which budget’s information?

Answer 12

production budget

Question 13

A company’s expected receipts from sales and planned disbursements to pay bills is commonly called a:

Answer 13

cash budget

Question 14

The difference between the actual price and the standard price, multiplied by the actual quantity of materials purchased, is the

Answer 14

direct materials price variance

Question 15

Which system(s) use a predetermined overhead rate?

Answer 15

both normal and standard costing

Question 16

When is the material quantity variance favorable?

Answer 16

when the actual quantity used is less than the standard quantity

Question 17

Which of the following is a possible cause of an unfavorable labor efficiency variance?

Answer 17

hiring unqualified workers

Question 18

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

Answer 18

C, B, D, A

Question 19

Which of the following should have the strongest cause and effect relationship with overhead costs?

Answer 19

cost drivers

Question 20

What are some reasons for a material quantity variance?

Answer 20

more qualified workers

Question 21

The comprehensive set of budgets that serves as a company’s overall financial plan is commonly known as:

Answer 21

the master budget

Question 22

When is the materials price variance favorable?

Answer 22

when the actual price is less than the standard price

Question 23

What is the primary difference between a static budget and a flexible budget?

Answer 23

The static budget is prepared for a single level of activity, while a flexible budget is adjusted for different activity levels

Question 24

Which department would normally begin an investigation regarding an unfavorable materials price variance?

Answer 24

the purchasing department

Question 25

With respect to overhead, what is the difference between normal costing and standard costing?

Answer 25

use of standard hours versus actual hours

Question 26

A budget serves as a benchmark against which

Answer 26

actual results can be compared

Question 27

Which of the following could be found on a flexible overhead budget?

Answer 27

all of the listed choices are correct

Question 28

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.

Answer 28

purchasing; production

Question 29

A static budget:

Answer 29

is based on one anticipated activity level

Question 30

Flexible budgets reflect a company’s anticipated costs based on variations in:

Answer 30

activity levels

Question 31

Variances are computed by taking the difference between the product cost and standard cost. T or F?

Answer 31

false