Question 1

An unfavorable flexible budget variance in operating income might be due to a(n):

Accepted Answer

The answer of An unfavorable flexible budget variance in operating...

Question 2

A favorable sales volume variance in sales revenue suggests a(n):

Accepted Answer

A favorable sales volume variance means that sales volume is higher than expected, which could be due to an increase in demand or successful marketing efforts resulting in increased customer purchases. Therefore, the answer is an increase in volume.

Question 3

Western Outfitters Mountain Sports projected 2011 sales of 75,000 units at a unit sale price of $12.00. Actual 2011 sales were 72,000 units at $14.00 per unit. Variable costs were budgeted at $4.00 per unit; actual amount was $4.75 per unit. Budgeted fixed costs totaled $375,000, while actual fixed costs amounted to $400,000. What is the sales volume variance for total revenue?

Accepted Answer

D) Calculations: (75,000 × $12) - (72,000 × $12) = $36,000

Question 4

Global Engineering's actual operating income for the current year is $50,000. The flexible budget operating income for actual volume achieved is $40,000, while the static budget operating income is $53,000. What is the sales volume variance for operating income?

Accepted Answer

C) Calculations: $53,000 - $40,000 = $13,000

Question 5

Shirt Fantasy produces and sells two types of tee shirts Fancy and Plain. Shirt Fantasy provides the following data:
 $$\begin{array} { | l | l | l | } 
\hline & \text { Budpgt } & \text { Actual } \
\hline \text { Unit sales price-Fancy } & \$ 24 & \$ 25 \
\hline \text { Unit sales price-Plain } & \$ 18 & \$ 17 \
\hline \text { Unit siles-Fancy } & 1,300 & 1,250 \
\hline \text { Unit sales-Plain } & 900 & \$ 75 \
\hline
\end{array}$$ 
-
Using the format below, compute the flexible budget variance for Fancy tee shirts for sales revenue only.

Accepted Answer

The answer of Shirt Fantasy produces and sells two types...

Question 6

An unfavorable flexible budget variance in variable expenses suggests a(n):

Accepted Answer

An unfavorable flexible budget variance in variable expenses means that actual variable expenses were higher than what was planned in the flexible budget. This could be due to an increase in variable expenses per unit, such as higher labor or material costs. It is not necessarily related to changes in price or volume, which would affect the revenue or contribution margin portion of the flexible budget. A decrease in fixed costs would not directly impact variable expenses.

Question 7

Western Outfitters Mountain Sports projected 2011 sales of 75,000 units at a unit sale price of $12.00. Actual 2011 sales were 72,000 units at $14.00 per unit. Variable costs were budgeted at $4.00 per unit; actual amount was $4.75 per unit. Budgeted fixed costs totaled $375,000 while actual fixed costs amounted to $400,000. What is the flexible budget variance for variable expenses?

Accepted Answer

B) Calculations: 72,000 ($4.75 - $4.00) = $54,000

Question 8

A favorable flexible budget variance in sales revenues suggests a(n):

Accepted Answer

The answer of A favorable flexible budget variance in sales...

Question 9

Onyx Company prepared a static budget at the beginning of the month. At the end of the month, the company is analyzing actual results versus budget using flexible budget methodology. Data are as follows:
Static budget: Sales volume: 1,000 units Price: $70 per unit
Variable expense: $32 per unit Fixed expenses: $37,500 per month
Operating income: $500
Actual results: Sales volume: 990 units Price: $74 per unit
Variable expense: $35 per unit Fixed expenses: $33,000 per month
Operating income: $5,610
Using the format below, please prepare an income statement performance report:

Accepted Answer

This question is not available in MyAccountingLab.

Question 10

Western Outfitters Mountain Sports projected 2011 sales of 75,000 units at a unit sale price of $12.00. Actual 2011 sales were 72,000 units at $14.00 per unit. Variable costs were budgeted at $4.00 per unit; actual amount was $4.75 per unit. Budgeted fixed costs totaled $375,000 while actual fixed costs amounted to $400,000. What is the flexible budget variance for operating income?

Accepted Answer

B) Calculations:
(72,000 × $14.00) - (72,000 × $4.75) - $400,000 = $266,000
(72,000 × $12.00) - (72,000 × $4.00) - $375,000 = $201,000
$266,000 - $201,000 = $65,000

Question 11

A favorable sales volume variance in variable expenses suggests a(n):

Accepted Answer

The answer of A favorable sales volume variance in variable...

Question 12

A standard cost is a carefully predetermined cost that usually is expressed on a per-unit basis.

Accepted Answer

A standard cost is a predetermined cost that is expressed on a per-unit basis and is used as a benchmark for evaluating actual costs.

Question 13

An unfavorable sales volume variance in operating income suggests a(n):

Accepted Answer

An unfavorable sales volume variance means the actual sales volume was lower than the expected sales volume. This could be due to a decrease in volume, not an increase. The decrease in revenue from the lower volume would result in a decrease in operating income. The other options (increase in volume, increase in variable expenses per unit, decrease in fixed costs) would not result in an unfavorable sales volume variance in operating income.

Question 14

A company is analyzing month-end results compared to both static and flexible budgets. This month the actual sales volume was lower than projected in the static budget. What kind of variance would that produce?

Accepted Answer

A lower than projected sales volume means there was a shortfall in revenue compared to the static budget. This produces an unfavorable sales volume variance for sales revenues.

Question 15

A standard cost system helps management set performance standards.

Accepted Answer

A standard cost system involves setting predetermined costs for materials, labor, and overhead. These predetermined costs serve as performance standards that can be used to evaluate actual costs and identify areas where performance can be improved. Hence, a standard cost system helps management set performance standards.

Question 16

Western Outfitters Mountain Sports projected 2011 sales of 75,000 units at a unit sale price of $12.00. Actual 2011 sales were 72,000 units at $14.00 per unit. Variable costs were budgeted at $4.00 per unit; actual amount was $4.75 per unit. Budgeted fixed costs totaled $375,000 while actual fixed costs amounted to $400,000. What is the sales volume variance for operating income?

Accepted Answer

B) Calculations:
(75,000 × $12) - (75,000 × $4.00) - $375,000 = $225,000
(72,000 × $12) - (72,000 × $4.00) - $375,000 = $201,000
$225,000 - $201,000 = $24,000

Question 17

Tiger's Golf Center reported actual operating income for the current year of $60,000. The flexible budget operating income for actual volume achieved is $55,000, while the static budget operating income is $58,000. What is the flexible budget variance for operating income?

Accepted Answer

A) Calculations: $60,000 - $55,000 = $5,000

Question 18

Standard cost is a budget for a single unit of materials, labor or overhead.

Accepted Answer

Standard cost is a budgeted or estimated cost for a single unit of materials, labor or overhead. It serves as a benchmark against which actual costs can be compared in order to identify any variances and take corrective action if necessary.

Question 19

Shirt Fantasy produces and sells two types of tee shirts Fancy and Plain. Shirt Fantasy provides the following data:
  $\begin{array}{|l|r|r|} 
\hline& \text { Budget } & \text { Actual } \
\hline \text { Unit sales price- Fancy } & \$ 24 & \$ 25 \
\hline \text { Unit sales price-Plain } & \$ 18 & \$ 17 \
\hline \text { Unit sales-Fancy } & 1,300 & 1,250 \
\hline \text { Unit sales-Plain } & 900 & 875 \
\hline
\end{array}$ 
-
Using the format below, compute the flexible budget variance for Plain tee shirts for sales revenue only.
 $\begin{array}{|c|c|c|c|c|c|}
\hline & \text { Actual } & \begin{array}{l}
\text { Flexible } \
\text { Budget }
\end{array} & \text { Flexible } & \text { Sales Volume } & \text { Static } \
\hline & \text { Results } & \text { Variance } & \text { Budget } & \text { Variance } & \text { Budget } \
\hline \text { Units/volume } & 875 & & & & 900 \
\hline \text { Sales revenue } & & & & & \ 
\hline
\end{array}$

Accepted Answer

The answer of Shirt Fantasy produces and sells two types...

Question 20

Standard costs help motivate employees by serving as benchmarks against which their performance is measured.

Accepted Answer

Standard costs provide a clear target for employees to strive towards and can help them understand what is expected of them. When employees know what they are working towards, they are more likely to be motivated and focused on achieving their goals. Additionally, measuring performance against standard costs can help identify areas for improvement and encourage continuous improvement.

Quiz 23: Flexible Budgets and Standard Costs

An unfavorable flexible budget variance in operating income might be due to a(n) :

A favorable sales volume variance in sales revenue suggests a(n) :

Global Engineering's actual operating income for the current year is $50,000. The flexible budget operating income for actual volume achieved is $40,000, while the static budget operating income is $53,000. What is the sales volume variance for operating income?

An unfavorable flexible budget variance in variable expenses suggests a(n) :

A favorable flexible budget variance in sales revenues suggests a(n) :

A favorable sales volume variance in variable expenses suggests a(n) :