Final Ch. 23

Question 1

Static budget

Answer 1

A budget prepared for only one level of sales volume.

Question 2

Variance

Answer 2

The difference between an actual amount and the budgeted amount; labeled as favorable if it increases operating income and unfavorable if it decreases operating income.

Question 3

Static budget variance

Answer 3

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

Question 4

Flexible budget

Answer 4

A budget prepared for various levels of sales volume

Question 5

Flexible budget variance

Answer 5

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

Question 6

Sales volume variance

Answer 6

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

Question 7

Standard

Answer 7

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

Question 8

Standard cost system

Answer 8

An accounting system that uses standards for product costs- DM, DL, and MOH.

Question 9

Cost variance

Answer 9

Measures how well the business keeps unit costs of material and labor inputs within standards

Question 10

Efficiency variance

Answer 10

Measures how well the business uses its materials or Human Resources

Question 11

Management by exception

Answer 11

When managers concentrate on results that are outside the accepted parameters