Deck 5: Managing the Budget - Variance Analysis

Question 1

Which of the following questions is variance analysis concerned with?

A) Is financial performance better than, equal to, or worse than expected?
B) By how much do actual expenses vary from the budget?
C) Is the amount of variance a matter of concern, and if so, what is the cause of the difference?
D) Can the cause be controlled?
E) All of these are correct.

Answer 1

E

Question 2

Variance analysis can identify the amount of a price, efficiency, or intensity variance, but it cannot pinpoint its cause(s).

Answer 2

True

Question 3

Variance analysis can pinpoint the cause of price, efficiency, and intensity variances.

Answer 3

False

Question 4

An increase in the time to complete an activity would create an unfavorable intensity variance.

Question 5

An increase in the time to complete an activity would create an unfavorable efficiency variance.

Question 6

An increase in number of activities to complete a good or service would create an unfavorable intensity variance.

Question 7

In health care, department managers are generally not responsible for unfavorable volume variances.

Question 8

Department managers should generally be held accountable for unfavorable efficiency variances.