Week 11 - Flexible Budget and Variance

Question 1

Variance Analysis

Answer 1

actual and budget results are compared

Question 2

static budget

Answer 2

using budgeted selling prices, costs and budgeted sales volume

Question 3

flexible budget

Answer 3

prepared using budgeted selling prices and costs and ACTUAL sales volume

Question 4

Flexible budget variances

Answer 4

comparing info from static budget, flexible budget and actual budget

Question 5

sales volume variance

Answer 5

difference between static budget and flexible budget

Question 6

The variable-cost portion of the flexible budget variance is known as the:
Select one:
a. flexible revenue variance
b. cost variance 
c. price variance
d. sales-volume variance

Answer 6

b

Question 7

If the actual labour rate is less than the budgeted labour rate, the labour cost variance will be unfavourable.
Select one:
True
False

Answer 7

False

Question 8

Variance analysis is a control process, also known as:
Select one:
a. Flexible budgeting 
b. Management by exception
c. A feedback loop
d. Static budgeting

Answer 8

C

Question 9

A static budget is prepared using:
Select one:
a. the sum of selling-price and flexible budget variances
b. the difference between the selling-price and flexible budget variances
c. the difference between the sales-volume and flexible budget variances
d. the sum of the sales-volume and flexible budget variances

Answer 9

d

Question 10

The revenue portion of the flexible budget variance is known as the:
Select one:
a. flexible revenue variance 
b. price variance
c. cost variance
d. sales-volume variance

Answer 10

B

Question 11

If the static budget variance is $2,000 F, and the flexible-budget variance is $2,200 U, what is the sales-volume variance?
Select one:
a. $200 F
b. $4,200 F
c. $4,200 U 
d. $200 U

Answer 11

B

Question 12

A flexible budget is prepared using:
Select one:
a. budgeted selling prices, budgeted costs, and actual sales volume
b. actual selling prices, budgeted costs, and actual sales volume
c. budgeted selling prices, budgeted costs, and budgeted sales volume
d. actual selling prices, actual costs and actual sales volume

Answer 12

a

Question 13

Suppose a hotel’s actual housekeeping cost per room and budgeted housekeeping cost per room were both $20. The actual quantity of rooms sold was 50 greater than the budgeted quantity of rooms sold. What is the housekeeping cost quantity variance?
Select one:
a. $2,000 U
b. $1,000 F 
c. $0
d. $1,000 U

Answer 13

D
Cost Variance = (Actual Quantity × Budgeted Cost) − (Budgeted Quantity × Budgeted Cost)

OR

(Actual Quantity – Budgeted Quantity) × Budgeted Cost = 50 × $20 = $1,000 U