Deck 12: Flexible Budgets, Direct Cost Variances and Management Control

Question 1

Managers focus on the most significant deviations (often the largest variances).This is called:

A)target costing.
B)target pricing.
C)variance analysis.
D)management by exception.

Answer 1

D

Question 2

A variance is the difference between the actual cost for the current and previous year.

Answer 2

False

Question 3

If actual costs are much higher than budgeted,the variances indicate that _________ action is needed.

A)immediate
B)management
C)long-term
D)corrective

Answer 3

D

Question 4

The principles of __________ analysis,such as monitoring the achievement of targets,can also help to achieve social and environmental goals.

A)activity
B)cost
C)profit
D)variance

Question 5

One advantage of using standard times to develop a budget is they are simple to compile,are based solely on the past actual history,and do not require expected future changes to be taken into account.

Question 6

All budgets are based on standard costs.

Question 7

Managers can learn to budget more accurately by identifying errors in their budgeting logic.

Question 8

Which of the following reflects the static-budget variance?
Variant question

A)The difference between the static-budget amount and the sales volume variance
B)The difference between the budget amount in the static budget and the amount in the flexible budget
C)The difference between an actual result and the budget amount in the static budget
D)The difference between an actual result and the flexible budget amount

Question 9

When budgets are not achieved,the variances may signal that the company should consider a change in:

A)strategy.
B)pricing.
C)costing.
D)staff.

Question 10

In a(n)__________ standard there is no allowance for wastage or labour inefficiency.

A)ideal
B)practical
C)theoretical
D)actual

Question 11

Importantly,not all variances need to be:

A)calculated.
B)investigated.
C)labelled.
D)known.

Question 12

When budgets are not achieved,what may signal that the company should consider a change in strategy?
Variant question

A)Flowcharts
B)Benchmarks
C)Variances
D)Management reports

Question 13

The essence of variance analysis is to capture a departure from what was expected.

Question 14

The master budget is:

A)developed at the end of the period.
B)based on the actual level of output.
C)a static budget.
D)a flexible budget.

Question 15

What is a variance?
Variant question

A)The required number of inputs for one standard output
B)The gap between an actual result and a benchmark amount
C)The difference between an actual result and a budgeted amount
D)The difference between a budgeted amount and a standard amount

Question 16

_____________ standards provide realistic expectations which make them more appropriate for planning,but ideal standards can stretch employees to continue to improve.

A)Absolute
B)Theoretical
C)Actual
D)Practical

Question 17

In order to predict costs,it is important to have standard prices for each:

A)input.
B)variance.
C)output.
D)target.

Question 18

What does a favourable variance indicate?
Variant question

A)Actual revenues exceed budgeted revenues
B)The actual amount decreased operating profit relative to the budgeted amount
C)Budgeted costs are less than actual costs
D)All of these answers are correct.

Question 19

What does an unfavourable variance indicate?
Variant question

A)The actual amount decreased operating profit relative to the budgeted amount
B)Actual costs are less than budgeted costs
C)Actual revenues exceed budgeted revenues
D)All of these answers are correct.

Question 20

Management by exception is the practice of concentrating on areas not operating as anticipated (such as a cost overrun)and placing less attention on areas operating as anticipated.

Question 21

Answer the following questions using the information below:
Bland Corporation used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit.
$$\begin{array} { l r r } & \text { Actual } & \text { Budgeted } \\\text { Units sold } & 184000 \text { units } & 180000 \text { units } \\\text { Variable costs } & \$ 901600 & \$ 864000 \\\text { Fixed costs } & \$ 190000 & \$ 200000\end{array}$$

-What is the static-budget variance of operating profit?

A)$12 400 unfavourable
B)$7600 unfavourable
C)$12 400 favourable
D)$7600 favourable

Question 22

Answer the following questions using the information below:
V8 Engineering Pty used the following data to evaluate their current operating system.The company sells items for $14.50 each and had used a budgeted selling price of $15 per unit.
$$\begin{array} { l r r } & \text { Actual } & \text { Budgeted } \\\text { Units sold } & 206000 \text { units } & 200000 \text { units } \\\text { Variable costs } & \$ 965000 & \$ 950000 \\\text { Fixed costs } & \$ 53000 & \$ 50000\end{array}$$

-What is the static-budget variance of operating profit?

A)$31 000 unfavourable
B)$28 000 favourable
C)$28 000 unfavourable
D)$26 000 favourable

Question 23

Answer the following questions using the information below:
V8 Engineering Pty used the following data to evaluate their current operating system.The company sells items for $14.50 each and had used a budgeted selling price of $15 per unit.
$$\begin{array} { l r r } & \text { Actual } & \text { Budgeted } \\\text { Units sold } & 206000 \text { units } & 200000 \text { units } \\\text { Variable costs } & \$ 965000 & \$ 950000 \\\text { Fixed costs } & \$ 53000 & \$ 50000\end{array}$$

-What is the static-budget variance of variable costs?

A)$13 000 unfavourable
B)$15 000 favourable
C)$13 000 favourable
D)$15 000 unfavourable

Question 24

Answer the following questions using the information below:
Barossa Valley Wines used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit.
$$\begin{array} { l r r } & \text { Actual } & \text { Budgeted } \\\text { Units sold } & 495000 \text { units } & 500000 \text { units } \\\text { Variable costs } & \$ 1250000 & \$ 1500000 \\\text { Fixed costs } & \$ 925000 & \$ 900000\end{array}$$

-What is the static-budget variance of operating profit?

A)$175 000 favourable
B)$325 000 unfavourable
C)$195 000 unfavourable
D)$225 000 favourable

Question 25

Some of the individual variances are favourable (F)and some variances are unfavourable (U).

Question 26

Answer the following questions using the information below:
Barossa Valley Wines used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit.
$$\begin{array} { l r r } & \text { Actual } & \text { Budgeted } \\\text { Units sold } & 495000 \text { units } & 500000 \text { units } \\\text { Variable costs } & \$ 1250000 & \$ 1500000 \\\text { Fixed costs } & \$ 925000 & \$ 900000\end{array}$$

-What is the static-budget variance of revenues?

A)$50 000 favourable
B)$50 000 unfavourable
C)$5000 unfavourable
D)$5000 favourable

Question 27

The master budget is one type of flexible budget.

Question 28

For ____________ items,a favourable variance occurs when actual revenues exceed budgeted revenues.

A)cost
B)estimated
C)budgeted
D)revenue

Question 29

The master budget is called a static budget because it is developed around a several planned output levels and the standard costs found in the standard cost sheet.

Question 30

Answer the following questions using the information below:
Barossa Valley Wines used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit.
$$\begin{array} { l r r } & \text { Actual } & \text { Budgeted } \\\text { Units sold } & 495000 \text { units } & 500000 \text { units } \\\text { Variable costs } & \$ 1250000 & \$ 1500000 \\\text { Fixed costs } & \$ 925000 & \$ 900000\end{array}$$

-What is the static-budget variance of variable costs?

A)$200 000 favourable
B)$250 000 unfavourable
C)$250 000 favourable
D)$50 000 unfavourable

Question 31

A favourable variance should be ignored by management.

Question 32

By definition,___________ costs are not determined by sales volume.

A)estimated
B)fixed
C)variable
D)total

Question 33

Answer the following questions using the information below:
Bland Corporation used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit.
$$\begin{array} { l r r } & \text { Actual } & \text { Budgeted } \\\text { Units sold } & 184000 \text { units } & 180000 \text { units } \\\text { Variable costs } & \$ 901600 & \$ 864000 \\\text { Fixed costs } & \$ 190000 & \$ 200000\end{array}$$

-What is the static-budget variance of revenues?

A)$40 000 favourable
B)$4000 unfavourable
C)$40 000 unfavourable
D)$4000 favourable

Question 34

The only difference between the static budget and flexible budget is that the static budget is prepared using planned output.

Question 35

The static-budget variance can be subdivided into the flexible-budget variance and the sales-volume variance.

Question 36

Answer the following questions using the information below:
V8 Engineering Pty used the following data to evaluate their current operating system.The company sells items for $14.50 each and had used a budgeted selling price of $15 per unit.
$$\begin{array} { l r r } & \text { Actual } & \text { Budgeted } \\\text { Units sold } & 206000 \text { units } & 200000 \text { units } \\\text { Variable costs } & \$ 965000 & \$ 950000 \\\text { Fixed costs } & \$ 53000 & \$ 50000\end{array}$$

-What is the static-budget variance of revenues?

A)$13 000 favourable
B)$6000 favourable
C)$13 000 unfavourable
D)$90 000 favourable

Question 37

Unfavourable variances occur when costs are higher,or revenues lower,than budget.

Question 38

For revenue items,a favourable variance occurs when actual revenues exceed budgeted revenues.

Question 39

Answer the following questions using the information below:
Bland Corporation used the following data to evaluate their current operating system.The company sells items for $10 each and used a budgeted selling price of $10 per unit.
$$\begin{array} { l r r } & \text { Actual } & \text { Budgeted } \\\text { Units sold } & 184000 \text { units } & 180000 \text { units } \\\text { Variable costs } & \$ 901600 & \$ 864000 \\\text { Fixed costs } & \$ 190000 & \$ 200000\end{array}$$

-What is the static-budget variance of variable costs?

A)$40 000 favourable
B)$37 600 unfavourable
C)$2400 unfavourable
D)$2400 favourable

Question 40

The static budget,or master budget,is based on the level of output planned at the end of the budget period before actual sales are known.

Question 41

Answer the following questions using the information below:
As part of the budgeting process,Garden Gnomes Incorporated had developed the following static budget for the third quarter.Garden Gnomes is in the process of preparing the flexible budget and understanding the results.The actual information relates to the third quarter.
$\begin{array}{lrlr}&\text { Actual } & \text { Flexible } & \text { Static } \\&\text { Results } & \text { Budget } & \text { Budget }\\\text { Sales volume (in units) } & 13000 & \underline{\quad\quad} & 12000 \\& & & \\\text { Sales revenues } & \$ 257500 & \$ &\$ 250000 \\\text { Variable costs } & 154000 & \$\underline{\quad\quad} &\underline{180000} \\ & & & \\\text { Contribution margin } & 103500 & \$ & 70000 \\& & & \\\text { Fixed costs } & 50500 & \$\underline{\quad\quad} & 49500 \\\text { Operating profit } & \$ 53000 & \$\underline{\quad\quad} & \$ 20500\end{array}$


-The flexible budget will report ________ for the fixed costs.

A)$49 500 favourable
B)$1000 unfavourable
C)$49 500
D)$50 500

Question 42

What might be unfavourable flexible-budget variance for variable costs the result of?
Variant question

A)Using more input quantities than were budgeted
B)Paying higher prices for inputs than were budgeted
C)Selling output at a higher selling price than budgeted
D)Both A and B are correct.

Question 43

Answer the following questions using the information below:
As part of the budgeting process,Lillee's Petanque Company developed the following static budget for August.Lillee is in the process of preparing the flexible budget and understanding the results.The actual results are for the month of August.
$\begin{array}{lrlr}&\text { Actual } & \text { Flexible } & \text { Static } \\&\text { Results } & \text { Budget } & \text { Budget }\\\text { Sales volume (in units) } & 20000 &\underline{\quad\quad} & 25000 \\& & & \\\text { Sales revenues } & \$ 1000000 & \$ & \$ 1250000 \\\text { Variable costs } & \underline{512000} & \$ \underline{\quad\quad}& \underline{600000} \\& & & \\ \text { Contribution margin } & 488000 & \$ & 650000 \\& & &\\\text { Fixed costs } & 458000 & \$ \underline{\quad\quad}& 450000 \\\text { Operating profit } & \$ 30000 & \$ \underline{\quad\quad}& \$ 200000\end{array}$

-The flexible budget will report ________ for variable costs.

A)$640 000
B)$600 000
C)$480 000
D)$512 000

Question 44

To prepare budgets based on actual data from past periods is preferred since past inefficiencies are excluded.

Question 45

Answer the following questions using the information below:
As part of the budgeting process,Garden Gnomes Incorporated had developed the following static budget for the third quarter.Garden Gnomes is in the process of preparing the flexible budget and understanding the results.The actual information relates to the third quarter.
$\begin{array}{lrlr}&\text { Actual } & \text { Flexible } & \text { Static } \\&\text { Results } & \text { Budget } & \text { Budget }\\\text { Sales volume (in units) } & 13000 & \underline{\quad\quad} & 12000 \\& & & \\\text { Sales revenues } & \$ 257500 & \$ &\$ 250000 \\\text { Variable costs } & 154000 & \$\underline{\quad\quad} &\underline{180000} \\ & & & \\\text { Contribution margin } & 103500 & \$ & 70000 \\& & & \\\text { Fixed costs } & 50500 & \$\underline{\quad\quad} & 49500 \\\text { Operating profit } & \$ 53000 & \$\underline{\quad\quad} & \$ 20500\end{array}$


-The flexible-budget variance for variable costs is:

A)$21 000 favourable.
B)$41 000 unfavourable.
C)$13 583 unfavourable.
D)$41 000 favourable.

Question 46

An unfavourable variance is conclusive evidence of poor performance.

Question 47

Regier Company had planned for operating profit of $10 million in the master budget but actually achieved operating profit of only $7 million.

A)The flexible-budget variance for operating profit is $3 million favourable.
B)The static-budget variance for operating profit is $3 million unfavourable.
C)The flexible-budget variance for operating profit is $3 million unfavourable.
D)The static-budget variance for operating profit is $3 million favourable.

Question 48

Answer the following questions using the information below:
As part of the budgeting process,Garden Gnomes Incorporated had developed the following static budget for the third quarter.Garden Gnomes is in the process of preparing the flexible budget and understanding the results.The actual information relates to the third quarter.
$\begin{array}{lrlr}&\text { Actual } & \text { Flexible } & \text { Static } \\&\text { Results } & \text { Budget } & \text { Budget }\\\text { Sales volume (in units) } & 13000 & \underline{\quad\quad} & 12000 \\& & & \\\text { Sales revenues } & \$ 257500 & \$ &\$ 250000 \\\text { Variable costs } & 154000 & \$\underline{\quad\quad} &\underline{180000} \\ & & & \\\text { Contribution margin } & 103500 & \$ & 70000 \\& & & \\\text { Fixed costs } & 50500 & \$\underline{\quad\quad} & 49500 \\\text { Operating profit } & \$ 53000 & \$\underline{\quad\quad} & \$ 20500\end{array}$


-More insight into the static-budget variance can be gained by subdividing it into:

A)a cost hierarchy.
B)the flexible-budget variance and the sales-volume variance.
C)the sales-mix variance and the sales-quantity variance.
D)the market-share variance and the market-size variance.

Question 49

Answer the following questions using the information below:
As part of the budgeting process,Garden Gnomes Incorporated had developed the following static budget for the third quarter.Garden Gnomes is in the process of preparing the flexible budget and understanding the results.The actual information relates to the third quarter.
$\begin{array}{lrlr}&\text { Actual } & \text { Flexible } & \text { Static } \\&\text { Results } & \text { Budget } & \text { Budget }\\\text { Sales volume (in units) } & 13000 & \underline{\quad\quad} & 12000 \\& & & \\\text { Sales revenues } & \$ 257500 & \$ &\$ 250000 \\\text { Variable costs } & 154000 & \$\underline{\quad\quad} &\underline{180000} \\ & & & \\\text { Contribution margin } & 103500 & \$ & 70000 \\& & & \\\text { Fixed costs } & 50500 & \$\underline{\quad\quad} & 49500 \\\text { Operating profit } & \$ 53000 & \$\underline{\quad\quad} & \$ 20500\end{array}$


-The flexible budget will report ________ for variable costs.

A)$175 000
B)$195 000
C)$13 583
D)$154 000

Question 50

Answer the following questions using the information below:
As part of the budgeting process,Lillee's Petanque Company developed the following static budget for August.Lillee is in the process of preparing the flexible budget and understanding the results.The actual results are for the month of August.
$\begin{array}{lrlr}&\text { Actual } & \text { Flexible } & \text { Static } \\&\text { Results } & \text { Budget } & \text { Budget }\\\text { Sales volume (in units) } & 20000 &\underline{\quad\quad} & 25000 \\& & & \\\text { Sales revenues } & \$ 1000000 & \$ & \$ 1250000 \\\text { Variable costs } & \underline{512000} & \$ \underline{\quad\quad}& \underline{600000} \\& & & \\ \text { Contribution margin } & 488000 & \$ & 650000 \\& & &\\\text { Fixed costs } & 458000 & \$ \underline{\quad\quad}& 450000 \\\text { Operating profit } & \$ 30000 & \$ \underline{\quad\quad}& \$ 200000\end{array}$

-The flexible-budget variance for variable costs is:

A)$32 000 unfavourable.
B)$32 000 favourable.
C)$120 000 unfavourable.
D)$120 000 favourable.

Question 51

The __________ budget uses the expected per unit costs found in the standard cost sheet,so the only difference to the static budget is that it is based on the actual sales volume.

A)cost
B)flexible
C)direct materials
D)direct labour

Question 52

Which of the following is TRUE about a flexible budget?
Variant question

A)It is developed at the end of the period
B)It is based on the budgeted level of output
C)It provides favourable operating results
D)It is another name for management by exception

Question 53

Ballarat Box Corporation currently produces cardboard boxes in an automated process.Expected production per month is 20 000 units,direct-material costs are $0.60 per unit,and manufacturing overhead costs are $9000 per month.Manufacturing overhead is allocated based on units of production.What is the flexible budget for 10 000 and 20 000 units,respectively?

A)$10 500;$16 500
B)$10 500;$21 000
C)$15 000;$21 000
D)None of these answers are correct.

Question 54

Answer the following questions using the information below:
As part of the budgeting process,Garden Gnomes Incorporated had developed the following static budget for the third quarter.Garden Gnomes is in the process of preparing the flexible budget and understanding the results.The actual information relates to the third quarter.
$\begin{array}{lrlr}&\text { Actual } & \text { Flexible } & \text { Static } \\&\text { Results } & \text { Budget } & \text { Budget }\\\text { Sales volume (in units) } & 13000 & \underline{\quad\quad} & 12000 \\& & & \\\text { Sales revenues } & \$ 257500 & \$ &\$ 250000 \\\text { Variable costs } & 154000 & \$\underline{\quad\quad} &\underline{180000} \\ & & & \\\text { Contribution margin } & 103500 & \$ & 70000 \\& & & \\\text { Fixed costs } & 50500 & \$\underline{\quad\quad} & 49500 \\\text { Operating profit } & \$ 53000 & \$\underline{\quad\quad} & \$ 20500\end{array}$


-The PRIMARY reason for high actual operating profits was:

A)lower sales volume than planned.
B)higher sales volume than planned.
C)the variable-cost variance.
D)increased fixed costs.

Question 55

Which of the following variances LEAST affects cost control?
Variant questi

A)Direct-material-price variance
B)sales-volume variance
C)Flexible-budget variance
D)Direct manufacturing labour efficiency variance

Question 56

Answer the following questions using the information below:
As part of the budgeting process,Lillee's Petanque Company developed the following static budget for August.Lillee is in the process of preparing the flexible budget and understanding the results.The actual results are for the month of August.
$\begin{array}{lrlr}&\text { Actual } & \text { Flexible } & \text { Static } \\&\text { Results } & \text { Budget } & \text { Budget }\\\text { Sales volume (in units) } & 20000 &\underline{\quad\quad} & 25000 \\& & & \\\text { Sales revenues } & \$ 1000000 & \$ & \$ 1250000 \\\text { Variable costs } & \underline{512000} & \$ \underline{\quad\quad}& \underline{600000} \\& & & \\ \text { Contribution margin } & 488000 & \$ & 650000 \\& & &\\\text { Fixed costs } & 458000 & \$ \underline{\quad\quad}& 450000 \\\text { Operating profit } & \$ 30000 & \$ \underline{\quad\quad}& \$ 200000\end{array}$

-The PRIMARY reason for low operating profits was:

A)increased fixed costs.
B)the variable-cost variance.
C)a poor management accounting system.
D)lower sales volume than planned.

Question 57

Answer the following questions using the information below:
As part of the budgeting process,Lillee's Petanque Company developed the following static budget for August.Lillee is in the process of preparing the flexible budget and understanding the results.The actual results are for the month of August.
$\begin{array}{lrlr}&\text { Actual } & \text { Flexible } & \text { Static } \\&\text { Results } & \text { Budget } & \text { Budget }\\\text { Sales volume (in units) } & 20000 &\underline{\quad\quad} & 25000 \\& & & \\\text { Sales revenues } & \$ 1000000 & \$ & \$ 1250000 \\\text { Variable costs } & \underline{512000} & \$ \underline{\quad\quad}& \underline{600000} \\& & & \\ \text { Contribution margin } & 488000 & \$ & 650000 \\& & &\\\text { Fixed costs } & 458000 & \$ \underline{\quad\quad}& 450000 \\\text { Operating profit } & \$ 30000 & \$ \underline{\quad\quad}& \$ 200000\end{array}$

-The flexible budget will report ________ for the fixed costs.

A)$360 000
B)$450 000
C)$458 000
D)$572 500

Question 58

Answer the following questions using the information below:
As part of the budgeting process,Garden Gnomes Incorporated had developed the following static budget for the third quarter.Garden Gnomes is in the process of preparing the flexible budget and understanding the results.The actual information relates to the third quarter.
$\begin{array}{lrlr}&\text { Actual } & \text { Flexible } & \text { Static } \\&\text { Results } & \text { Budget } & \text { Budget }\\\text { Sales volume (in units) } & 13000 & \underline{\quad\quad} & 12000 \\& & & \\\text { Sales revenues } & \$ 257500 & \$ &\$ 250000 \\\text { Variable costs } & 154000 & \$\underline{\quad\quad} &\underline{180000} \\ & & & \\\text { Contribution margin } & 103500 & \$ & 70000 \\& & & \\\text { Fixed costs } & 50500 & \$\underline{\quad\quad} & 49500 \\\text { Operating profit } & \$ 53000 & \$\underline{\quad\quad} & \$ 20500\end{array}$


-The variance that is BEST for measuring operating performance is the:

A)flexible-budget variance.
B)sales-volume variance.
C)selling-price variance.
D)static-budget variance.

Question 59

Sunshine Coast Corporation currently produces sun hats in an automated process.Expected production per month is 20 000 units,direct material costs are $3.00 per unit,and manufacturing overhead costs are $46 000 per month.Manufacturing overhead is allocated based on units of production.What is the flexible budget for 10 000 and 20 000 units,respectively?

A)$53 000;$83 000
B)$53 000;$106 000
C)$76 000;$106 000
D)None of these answers are correct.

Question 60

All of the following are needed to prepare a flexible budget EXCEPT determining the:

A)budgeted variable cost per output unit.
B)budgeted fixed costs.
C)actual quantity of output units.
D)actual selling price per unit.

Question 61

The flexible-budget variance may be the result of inaccurate forecasting of units sold.

Question 62

Answer the following questions using the information below:
Some of Bondi Appliances financial data has been misplaced.Use the following information to replace the lost data:
$\begin{array}{|c|c|c|c|c|c|}\hline &\text { Actual } & \text { Flexible-Budget } & \text { Flexible } & \text { Sales-Volume } & \text { Static } \\&\text { Results } & \text { Variances } & \text { Budget } & \text { Variances } & \text { Budget }\\\hline \text { Units sold } & 225000 & & 225000 & & 206250 \\\hline \text { Revenues } & \$ 84160 & \$ 2000 \mathrm{~F} & \text { (A) } & \$ 2800 \mathrm{U} & (B)\\\hline \begin{array}{l}\text { Variable } \\\text {costs }\end{array} & \text { (C) } & \$ 400 \mathrm{U} & \$ 31720 & \$ 4680 \mathrm{~F} & \$ 36400 \\\hline \text { Fixed costs } & \$ 16560 & \$ 1720 \mathrm{~F} & \$ 18280 & 0 & \$ 18 280\\\hline \begin{array}{l}\text { Operating } \\\text { profit }\end{array} & \$ 354 & \text { (D) } & 332160 & \text { (E) } & \$20280\\\hline\end{array}$


-What is the total sales-volume variance (E)?

A)$7480 favourable
B)$1880 favourable
C)$2800 unfavourable
D)$7480 unfavourable

Question 63

Cost control is the focus of the sales-volume variance.

Question 64

Answer the following questions using the information below:
Some of Bondi Appliances financial data has been misplaced.Use the following information to replace the lost data:
$\begin{array}{|c|c|c|c|c|c|}\hline &\text { Actual } & \text { Flexible-Budget } & \text { Flexible } & \text { Sales-Volume } & \text { Static } \\&\text { Results } & \text { Variances } & \text { Budget } & \text { Variances } & \text { Budget }\\\hline \text { Units sold } & 225000 & & 225000 & & 206250 \\\hline \text { Revenues } & \$ 84160 & \$ 2000 \mathrm{~F} & \text { (A) } & \$ 2800 \mathrm{U} & (B)\\\hline \begin{array}{l}\text { Variable } \\\text {costs }\end{array} & \text { (C) } & \$ 400 \mathrm{U} & \$ 31720 & \$ 4680 \mathrm{~F} & \$ 36400 \\\hline \text { Fixed costs } & \$ 16560 & \$ 1720 \mathrm{~F} & \$ 18280 & 0 & \$ 18 280\\\hline \begin{array}{l}\text { Operating } \\\text { profit }\end{array} & \$ 354 & \text { (D) } & 332160 & \text { (E) } & \$20280\\\hline\end{array}$


-What is the total static-budget variance?

A)$5200 favourable
B)$1880 favourable
C)$3320 favourable
D)$1880 unfavourable

Question 65

Explain the difference between a static budget and a flexible budget.Explain what is meant by a static-budget variance and a flexible-budget variance.
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Question 66

Answer the following questions using the information below:
Tiger O'Reilly planned to use $85 of material per unit but actually used $82 of material per unit,and planned to make 1200 units but actually made 1000 units.
The sales-volume variance is:

A)$2400 favourable.
B)$2000 favourable.
C)$17 000 unfavourable.
D)$14 000 unfavourable.

Question 67

Answer the following questions using the information below:
Bradpon Incorporated planned to use $37.50 of material per unit but actually used $36.75 of material per unit,and planned to make 1800 units but actually made 1600 units.
The flexible-budget variance is:

A)$7500 unfavourable.
B)$7500 favourable.
C)$1200 unfavourable.
D)$1200 favourable.

Question 68

Answer the following questions using the information below:
Some of Bondi Appliances financial data has been misplaced.Use the following information to replace the lost data:
$\begin{array}{|c|c|c|c|c|c|}\hline &\text { Actual } & \text { Flexible-Budget } & \text { Flexible } & \text { Sales-Volume } & \text { Static } \\&\text { Results } & \text { Variances } & \text { Budget } & \text { Variances } & \text { Budget }\\\hline \text { Units sold } & 225000 & & 225000 & & 206250 \\\hline \text { Revenues } & \$ 84160 & \$ 2000 \mathrm{~F} & \text { (A) } & \$ 2800 \mathrm{U} & (B)\\\hline \begin{array}{l}\text { Variable } \\\text {costs }\end{array} & \text { (C) } & \$ 400 \mathrm{U} & \$ 31720 & \$ 4680 \mathrm{~F} & \$ 36400 \\\hline \text { Fixed costs } & \$ 16560 & \$ 1720 \mathrm{~F} & \$ 18280 & 0 & \$ 18 280\\\hline \begin{array}{l}\text { Operating } \\\text { profit }\end{array} & \$ 354 & \text { (D) } & 332160 & \text { (E) } & \$20280\\\hline\end{array}$


-What is the total flexible-budget variance (D)?

A)$680 favourable
B)$0
C)$3320 favourable
D)$120 unfavourable

Question 69

The CEO of Gold Coast Sun Umbrellas Company has come to you for help.Use the following data to prepare a flexible budget for possible sales/production levels of 10 000,11 000,and 12 000 units.Show the contribution margin at each activity level.
_____________________________________________________________________________________________
$$\begin{array} { l l } \text { Sales price } & \$ 24 \text { per unit } \\\text { Variable costs: } & \\\text { Manufacturing } & \$ 12 \text { per unit } \\\text { Administrative } & \$ 3 \text { per unit } \\\text { Selling } & \$ 1 \text { per unit } \\\text { Fixed costs: } & \\\text { Manufacturing } & \$ 60000 \\\text { Administrative } & \$ 20000\end{array}$$
_____________________________________________________________________________________________

Question 70

Answer the following questions using the information below:
Bradpon Incorporated planned to use $37.50 of material per unit but actually used $36.75 of material per unit,and planned to make 1800 units but actually made 1600 units.
The sales-volume variance is:

A)$1200 favourable.
B)$7500 unfavourable.
C)$7500 favourable.
D)$1200 unfavourable.

Question 71

Answer the following questions using the information below:
Some of Bondi Appliances financial data has been misplaced.Use the following information to replace the lost data:
$\begin{array}{|c|c|c|c|c|c|}\hline &\text { Actual } & \text { Flexible-Budget } & \text { Flexible } & \text { Sales-Volume } & \text { Static } \\&\text { Results } & \text { Variances } & \text { Budget } & \text { Variances } & \text { Budget }\\\hline \text { Units sold } & 225000 & & 225000 & & 206250 \\\hline \text { Revenues } & \$ 84160 & \$ 2000 \mathrm{~F} & \text { (A) } & \$ 2800 \mathrm{U} & (B)\\\hline \begin{array}{l}\text { Variable } \\\text {costs }\end{array} & \text { (C) } & \$ 400 \mathrm{U} & \$ 31720 & \$ 4680 \mathrm{~F} & \$ 36400 \\\hline \text { Fixed costs } & \$ 16560 & \$ 1720 \mathrm{~F} & \$ 18280 & 0 & \$ 18 280\\\hline \begin{array}{l}\text { Operating } \\\text { profit }\end{array} & \$ 354 & \text { (D) } & 332160 & \text { (E) } & \$20280\\\hline\end{array}$


-What are the actual variable costs (C)?

A)$31 320
B)$32 120
C)$27 040
D)$36 400

Question 72

The flexible budget uses the expected per unit costs found in the standard cost sheet;so the only difference to the static budget is that it is based on the actual sales volume.

Question 73

Answer the following questions using the information below:
Some of Bondi Appliances financial data has been misplaced.Use the following information to replace the lost data:
$\begin{array}{|c|c|c|c|c|c|}\hline &\text { Actual } & \text { Flexible-Budget } & \text { Flexible } & \text { Sales-Volume } & \text { Static } \\&\text { Results } & \text { Variances } & \text { Budget } & \text { Variances } & \text { Budget }\\\hline \text { Units sold } & 225000 & & 225000 & & 206250 \\\hline \text { Revenues } & \$ 84160 & \$ 2000 \mathrm{~F} & \text { (A) } & \$ 2800 \mathrm{U} & (B)\\\hline \begin{array}{l}\text { Variable } \\\text {costs }\end{array} & \text { (C) } & \$ 400 \mathrm{U} & \$ 31720 & \$ 4680 \mathrm{~F} & \$ 36400 \\\hline \text { Fixed costs } & \$ 16560 & \$ 1720 \mathrm{~F} & \$ 18280 & 0 & \$ 18 280\\\hline \begin{array}{l}\text { Operating } \\\text { profit }\end{array} & \$ 354 & \text { (D) } & 332160 & \text { (E) } & \$20280\\\hline\end{array}$


-What amounts are reported for revenues in the flexible budget (A)and the static budget (B),respectively?

A)$84 960;$88 960
B)$84 960;$83 360
C)$82 160;$84 960
D)$82 160;$79 360

Question 74

Answer the following questions using the information below:
Tiger O'Reilly planned to use $85 of material per unit but actually used $82 of material per unit,and planned to make 1200 units but actually made 1000 units.
The flexible-budget variance is:

A)$3000 favourable.
B)$2400 favourable.
C)$14 000 unfavourable.
D)$16 400 unfavourable.

Question 75

Answer the following questions using the information below:
Tiger O'Reilly planned to use $85 of material per unit but actually used $82 of material per unit,and planned to make 1200 units but actually made 1000 units.
The flexible-budget amount is:

A)$98 400
B)$85 000
C)$96 000
D)$82 000

Question 76

Answer the following questions using the information below:
Bradpon Incorporated planned to use $37.50 of material per unit but actually used $36.75 of material per unit,and planned to make 1800 units but actually made 1600 units.
The flexible-budget amount is:

A)$60 000.
B)$1200.
C)$67 500.
D)$58 800.

Question 77

More insight into the sales-volume variance can be gained by subdividing it into:

A)the market-share variance and the market-size variance.
B)a cost hierarchy.
C)the sales-mix variance and the sales-quantity variance.
D)the flexible-budget variance and the market-size variance.

Question 78

Answer the following questions using the information below:
Wagga Wagga Printing Incorporated planned to use $12 of material per unit but actually used $14 of material per unit,and planned to make 1000 units but actually made 1200 units.
The flexible-budget variance is:

A)$6000 favourable.
B)$2400 unfavourable.
C)$4800 favourable.
D)$5000 unfavourable.

Question 79

A flexible budget is calculated at the start of the budget period.

Question 80

Answer the following questions using the information below:
Wagga Wagga Printing Incorporated planned to use $12 of material per unit but actually used $14 of material per unit,and planned to make 1000 units but actually made 1200 units.
The sales-volume variance is:

A)$2400 favourable.
B)$1200 unfavourable.
C)$6000 favourable.
D)$5000 unfavourable.