Act 620 Questions Test 2 Ch 7

Front 1

another word for the master budget is the

Back 1

static budget

Front 2

the number of units manufacuted is the cost driver for

Back 2

DM DML and VMOH

Front 3

the master budget is based on

Back 3

the level of output planned at teh start of the budget period

Front 4

the static budget variance is the

Back 4

difference between the actual result an dthe correponding budgeted amount in the static budget

Front 5

The Income Statement is composed of and is which column in the Analysis

Back 5

Revenues
Variable Costs
Contribution Margin
Fixed Costs
Operating income

Is the Acutal Results Column

Front 6

The income statement is composed of and is which column in the Analysis

Back 6

Revenues
Variable Costs
Contribution Margin
Fixed Costs
Operating income

Is the Acutal Results Column

Front 7

The income statement is composed of and is which column in the Analysis

Back 7

Revenues
Variable Costs
Contribution Margin
Fixed Costs
Operating income

Is the Acutal Results Column

Front 8

The five columns in the lvel two analysis from left to right are

Back 8

Actual results, Flexible Budget Variances, Flexible Budget, Sales Volume Variances, Static Budget

Front 9

the Flexible budget calculates the

Back 9

budgeted revenues and budgeted costs based on the actual levels of output in the budgeted period

Front 10

What changes from column three to column five

Back 10

column five uses the planned output and column five uses the actual output

Front 11

What are the three steps to developing the flexible budget

Back 11

Identify the actual qty output
Calculate the flexible budget for revenues based on the budgeted selling price and actual qty of output
calculate the flexible budget costs based on budgeted variable cost per unit, actual qty of output and budgeted fixed costs

Front 12

the flexible budget variance is the difference between

Back 12

an actual result and the corresponding flexible budgeted amount based on the actual output level in the budgeted period

Front 13

the sales volume variance is the

Back 13

difference between a flexible budget amount and the corresponding static budget amount

Front 14

reasons for unfavorable sales volume variance

Back 14

demand is not growing at the rate anticipated
competitors are taking away market shares
did not adapt to changes in demand
budgeted sales targets were set without analysis of market conditions
quality problems developed that led to customer dissatisfaction

Front 15

the variance in flexible budget variance might be caused by

Back 15

using greater quantities of inputs
higer prices per unit for inputs, labor and DM

Front 16

to calculate price and efficiency variances managers need to obtain

Back 16

budgeted input prices and budgeted input quantities

Front 17

the three main sources for budgeted price and input quantities are

Back 17

actual input data from past periods
data from other companies that have similar processes
standards develloped by the company

Front 18

a standard input is

Back 18

a carfully determined quantity of input required for one unit of output

Front 19

a standard price is

Back 19

a carefully determined price tha ta compny expects to pay for a unit of input

Front 20

a standard cost is

Back 20

a carefully determied cost of a unit of output

Front 21

Standard cost per output unit for each variable direct cost input is calcualted by

Back 21

multiplying the standard input allowed for one output unit by standard price per input unit

Front 22

a price variance is the

Back 22

differnc between actual price and budgeted price multiplied by the actual input qty

Front 23

a price variance is also called a

Back 23

rate variance

Front 24

an efficiency variance is the

Back 24

difference between actual costs incurred (actual input qty times actual price) and the flexible budget (budgeted input qty allowed for actual output times budgeted price)

Front 25

Price variance is calclated how

Back 25

(actual price of input - budgeted price of input) x Actual qty of input

Front 26

Possible reasons for DM price variance could be

Back 26

DM prices were different than planned
changed to lower price supplier
obtained larger qtys than budgeted, received discount
Industry conditions affected supply of DM
DM prices were arbitrarily set without careful analysis
Better prices to accept lower qty merchandise
Purchaser accepted higher prices because he was accepting kickbacks

Front 27

efficiency variance is calculated how

Back 27

(actual qty of input used- Budgeted qty of input allowed for actual output) x Budgeted price of input

Front 28

efficency variances could be caused by

Back 28

hiring of unskilled workers
ineffective work schedules
improper maintenance of machihnes
budgeted time standards were set without careful consideration

Front 29

in the journal entries for standard costs unfavorable variances are always

Back 29

debits

Front 30

To record DM purchased journal entries are

Back 30

Direct Materials Control (DEBIT)
Direct Materials Price Variance
Accounts Payable Control (Credit)

Front 31

To record DM used the journal entries are

Back 31

WIP Control (DEBIT)
DM effiency Variance
Direct Materials Control (CREDIT)

Front 32

To record liability for DL costs

Back 32

WIP control (DEBIT)
DML labor price variance
DML labor efficency variance
wages payable control (CREDIT)

Front 33

at the end of the year variance accounts are written off to _____ if they are immaterial in amount.

Back 33

COGS

Front 34

To write off the diredct cost variance accounts to COGS the jounal entries would be

Back 34

COGS (DEBIT)
DM price variance
DM efficiency variance
DML price varaince
DML efficiency variance

Front 35

if there is inventory at the end of the year the variances are prorated between

Back 35

COGS and various inventory accounts

Front 36

If there is inventory at the end of the year the variance accounts are

Back 36

NOT written off to COGS, and instead prorated between COGS and various inventory accouts

Front 37

If Flexible budget sales > Master Budget sales:

Back 37

-Volume variance for sales revenue is favorable.
-Volume variance for variable production costs is unfavorable. This does not imply anything about how well costs have been controlled.

Front 38

If Flexible budget sales < Master Budget sales:

Back 38

-Volume variance for sales revenue is unfavorable.
-Volume variance for variable production costs is favorable. This does not imply anything about how well costs have been controlled.

Front 39

Volume Variance (Sales Revenue) =

Back 39

(flexible budget sales volume in units) - (master budget sales volume in units) x sales price

Front 40

Volume Variance (Sales Revenue) =

Back 40

(flexible budget sales volume in units) - (master budget sales volume in units)x sales price

Front 41

Volume Variance (variable prod costs) =

Back 41

(flexible budget sales volume in units) x (master budget sales volume in units) x Unit Cost

Front 42

volume variances are also known as

Back 42

Activity variances

Front 43

Sales Price Variance (SPV) =

Back 43

(actual selling price) - Budgeted Selling price) actual units sold

Front 44

Variable manufacturing variances =

Back 44

Actual variable cost
– Flex Budget variable cost.

Front 45

Fixed manufacturing Variances =

Back 45

Actual fixed cost – Flex Budget fixed cost

Front 46

Volume (Activity) variances are variances that deal with

Back 46

changes in output.

Front 47

Flexible budget variances are variances that deal with

Back 47

how efficiently you use inputs, and are thus more relevant to cost control.

Front 48

a profit variance analysis is also called a

Back 48

Level 2 Analysis

Front 49

A standard is

Back 49

a benchmark or norm for measuring performance. It is a budget for one unit

Front 50

Quantity standards indicate

Back 50

how much of a cost element should be used in manufacturing a unit of product.

Front 51

Cost standards indicate what

Back 51

the cost of the direct labor or direct material input should be per unit of input.

Front 52

AQ =

Back 52

Actual Quantity of Inputs

Front 53

AP =

Back 53

Actual Input Price

Front 54

SP =

Back 54

Standard Input Price

Front 55

SQ =

Back 55

Standard Quantity of Inputs Allowed for Actual Production - the amount of input we should have used for the actual production which took place at the standard input price

Front 56

a gallon of paint or a yard of fabric required for making a unit would be a(n)

Back 56

standard input