Managerial Accounting: Ch 21

Question 1

performance report

Answer 1

shows budgeted amounts, actual amounts, and variances

Question 2

fixed budget performance report

Answer 2

report that compares actual results with the results expected under a fixed budget

Question 3

flexible budget performance report

Answer 3

compares actual performance and budgeted performance based on actual activity level

Question 4

variance

Answer 4

the difference between actual and budgeted amounts

Question 5

favorable variances

Answer 5

if it causes actual operating income to be higher than the budget

Question 6

unfavorable variance

Answer 6

if it causes actual operating income to be less than the budget

Question 7

management by exception

Answer 7

managers investigate those budget variances that are large either in terms of dollars or percent of the budgeted amount

Question 8

ideal standards

Answer 8

based on perfect or ideal conditions and they discourage inefficiencies and push employees to strive for perfection which is helpful in lean production systems

Question 9

practical standards

Answer 9

based on currently attainable conditions and are more reflective of reality and more likely to motivate employees since they are more attainable.

Question 10

DM variance =

Answer 10

dm price variance + dm quantity variance

Question 11

DL variance =

Answer 11

dl rate variance + dl efficiency variance