Question 1

An unfavorable sales volume variance in operating income suggests a(n)________.
A)increase in number of actual units sold when compared to the expected number of units sold
B)decrease in number of actual units sold when compared to the expected number of units sold
C)increase in variable cost per unit
D)decrease in fixed costs

Accepted Answer

An unfavorable sales volume variance in operating income suggests a decrease in the number of actual units sold when compared to the expected number of units sold. This means that the business did not meet its sales targets, resulting in lower revenues and lower operating income.

Question 2

Setting standard costs is a function of the company's production department and does not require input from other departments.

Accepted Answer

Setting standard costs should involve input from other departments such as purchasing, accounting, and sales to ensure that the costs are realistic and achievable.

Question 3

Mountain Sports Equipment Company projected sales of 82,000 units at a unit sales price of $12 for the year.Actual sales for the year were 76,000 units at $14.00 per unit.Variable costs were budgeted at $3 per unit,and the actual amount was $6 per unit.Budgeted fixed costs totaled $376,000,while actual fixed costs amounted to $410,000.What is the sales volume variance for total revenue?
A)$80,000 favorable
B)$80,000 unfavorable
C)$72,000 unfavorable
D)$72,000 favorable

Accepted Answer

C)Flexible budget sales = 76,000 × $12 = $912,000
Static budget sales = 82,000 × $12 = $984,000
Sales volume variance for 11ea8a42_4fa8_5d19_8b44_5f11c7274bd1_TB5024_00

Question 4

McGrath's produces and sells two types of t-shirts-Fancy and Plain.The company provides the following data:
  
Compute the flexible budget variance for Fancy t-shirts for sales revenue.

Accepted Answer

The answer of McGrath's produces and sells two types of...

Question 5

Which of the following best describes a standard?
A)a sales price,cost,or quantity that is expected under normal conditions
B)costs incurred to produce a product
C)budgeted amount for total product cost
D)actual sales price,cost,or quantity

Accepted Answer

A standard is a expected value for a sales price, cost, or quantity that is considered normal or achievable under usual conditions. It serves as a benchmark for performance evaluation and cost control purposes.

Question 6

Standard costs are developed by the cooperative effort of purchasing,production,human resources,and accounting personnel.

Accepted Answer

Standard costs are usually developed by a team effort involving various departments such as purchasing, production, human resources, and accounting to ensure that the costs represent an accurate estimation of the resources required to produce a good or service.

Question 7

A standard is a sales price,cost,or quantity that is expected under normal conditions.

Accepted Answer

A standard in the context of accounting and finance refers to a benchmark or norm for measuring performance. Standards related to sales price, cost, or quantity are indeed expected values under normal conditions, used for budgeting, planning, and variance analysis.

Question 8

Underwater Sports Equipment Company projected sales of 78,000 units at a unit sales price of $12 for the year.Actual sales for the year were 76,000 units at $15 per unit.Variable costs were budgeted at $3 per unit,and the actual amount was $6 per unit.Budgeted fixed costs totaled $385,000,while actual fixed costs amounted to $446,000.What is the flexible budget variance for variable costs?
A)$234,000 unfavorable
B)$228,000 unfavorable
C)$228,000 favorable
D)$234,000 favorable

Accepted Answer

B)Flexible budget variance for variable costs = 76,000 × ($6 - $3)= $228,000 unfavorable

Question 9

Complete the following table:

Accepted Answer

The answer of Complete the following table:
 ...

Question 10

A company is setting its direct materials and direct labor standards for its leading product.Direct materials cost from the supplier are $5 per square foot,net of purchase discount.Freight-in amounts to $0.40 per square foot.Basic wages of the assembly line personnel are $17 per hour.Payroll taxes are approximately 22% of wages.Benefits amount to $4 per hour.How much is the direct materials cost standard per square foot?
A)$5.40
B)$5.00
C)$21.00
D)$26.00

Accepted Answer

A)Direct materials cost standard (per square foot)= Cost per square foot + Freight-in cost
Direct materials cost standard (per square foot)= $5.00 + $0.40 = $5.40

Question 11

Developing efficiency standards based on best practices is called benchmarking.

Accepted Answer

Benchmarking involves comparing an organization's processes or performance to industry best practices in order to identify areas for improvement and develop efficiency standards.

Question 12

Top managers of Marshall Industries predicted annual sales of 23,600 units of its Product at a unit price of $5.00.Actual sales for the year were 22,800 units at $5.50 each.Variable costs were budgeted at $2.45 per unit,and actual variable costs were $2.40 per unit.Actual fixed costs of $45,000 exceeded budgeted fixed costs by $2,000.Prepare Marshall's flexible budget performance report.

Accepted Answer

The answer of Top managers of Marshall Industries predicted annual...

Question 13

Global Engineering's actual operating income for the current year is $57,000.The flexible budget operating income for actual sales volume is $32,000,while the static budget operating income is $56,000.What is the sales volume variance for operating income?
A)$24,000 favorable
B)$1,000 unfavorable
C)$24,000 unfavorable
D)$1,000 favorable

Accepted Answer

C)Sales volume variance for operating income = Flexible budget operating income - Static budget operating income
Sales volume variance for operating 11ea8a42_4fa8_3607_8b44_95d8846b2dbe_TB5024_00

Question 14

Western Outfitters projected sales of 79,000 units for the year at a unit sales price of $12.00.Actual sales for the year were 71,000 units at $18.00 per unit.Variable costs were budgeted at $4.25 per unit,and the actual variable cost was $4.80 per unit.Budgeted fixed costs totaled $378,000 while actual fixed costs amounted to $410,000.What is the flexible budget variance for operating income?
A)$172,250 unfavorable
B)$354,950 favorable
C)$354,950 unfavorable
D)$386,950 favorable

Accepted Answer

B)
 11ea8a42_4fa8_5d1a_8b44_2f6a3aaf59e1_TB5024_00

Question 15

A standard cost system is an accounting system that uses standards for product costs.

Accepted Answer

A standard cost system uses predetermined standards for costs such as materials, labor, and overhead, which are then compared to actual costs to identify variances and analyze cost performance.

Question 16

Companies conduct time-and-motion studies and use benchmarks from other companies when developing standards.

Accepted Answer

Companies commonly use time-and-motion studies and benchmarking to develop standards and improve efficiency.

Question 17

In a standard costing system,each input of direct materials,direct labor,and manufacturing overhead has a cost standard and an efficiency standard.

Accepted Answer

In a standard costing system, each input has both a cost standard and an efficiency standard. This allows for comparison between planned and actual costs and helps identify areas for improvement in the production process.

Question 18

City Golf Center reported actual operating income for the current year as $66,000.The flexible budget operating income for actual volume is $56,000,while the static budget operating income is $59,000.What is the flexible budget variance for operating income?
A)$10,000 favorable
B)$10,000 unfavorable
C)$3,000 unfavorable
D)$3,000 favorable

Accepted Answer

A)Flexible budget variance for operating income = Actual operating income - Expected operating income in the flexible 11ea8a42_4fa8_5d18_8b44_fbd65b0f5b0b_TB5024_00

Question 19

Mermaid Outfitters projected sales of 76,000 units for the year at a unit sales price of $15.00.Actual sales for the year were 73,000 units at $15.00 per unit.Variable costs were budgeted at $4.25 per unit,and the actual variable cost was $4.80 per unit.Budgeted fixed costs totaled $377,000,while actual fixed costs amounted to $400,000.What is the sales volume variance for operating income?
A)$30,900 unfavorable
B)$32,250 unfavorable
C)$32,250 favorable
D)$63,150 unfavorable

Accepted Answer

B)
 11ea8a42_4fa8_842b_8b44_2f181f30d835_TB5024_00

Question 20

A favorable sales volume variance in variable costs suggests a(n)________.
A)increase in number of actual units sold when compared to the expected number of units sold
B)decrease in number of actual units sold when compared to the expected number of units sold
C)increase in variable cost per unit
D)decrease in fixed costs

Accepted Answer

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

Quiz 23: Flexible Budgets and Standard Cost Systems

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

Setting standard costs is a function of the company's production department and does not require input from other departments.

McGrath's produces and sells two types of t-shirts-Fancy and Plain.The company provides the following data: Compute the flexible budget variance for Fancy t-shirts for sales revenue.

Which of the following best describes a standard?