Question 1

Kevin Jarvis is the controller of Bitterroot Industries.Kevin prepared the following budgeted income statement at various levels of sales.After careful review of the budgeted income statements, and after discussions with the sales and production managers, the CEO determines that the best alternative is to base the budget on a sales volume of 30,000 units.  Actual results for the year were 28,000 units, reflected in the following income statement:  What is the sales volume variance for direct labor?

Accepted Answer

The answer of Kevin Jarvis is the controller of Bitterroot...

Question 2

The actual sales volume is 69,000 units and the budgeted sales volume is 70,000 units.If the actual sales price is $6 and the budgeted sales price is $6.50, what is the sales volume variance for sales revenue?

Accepted Answer

Sales volume variance = (Actual sales volume - Budgeted sales volume) x Budgeted sales price= (69,000 - 70,000) x $6.50= -$6,500 unfavorable

Question 3

Kevin Jarvis is the controller of Bitterroot Industries.Kevin prepared the following budgeted income statement at various levels of sales.After careful review of the budgeted income statements, and after discussions with the sales and production managers, the CEO determines that the best alternative is to base the budget on a sales volume of 30,000 units.  Actual results for the year were 28,000 units, reflected in the following income statement:  What is the flexible budget variance for variable overhead?

Accepted Answer

Flexible budget variance for variable overhead = Actual variable overhead - Flexible budget variable overhead
= $129,600 - $124,000
= $5,600 unfavorable.

Question 4

The sales volume variance is the difference between

Accepted Answer

The sales volume variance measures the difference between the static budget (based on expected sales volume) and the flexible budget (adjusted for actual sales volume but using budgeted prices and costs).

Question 5

The sales volume variance reflects

Accepted Answer

The sales volume variance reflects the difference between the actual number of units sold and the number of units assumed in the static budget. It measures the impact of changes in sales volume on the company's profitability. It does not indicate how efficiently or effectively the company operated, nor does it reflect the amount of resources actually used.

Question 6

Kevin Jarvis is the controller of Bitterroot Industries.He prepared the following budgeted income statement at various levels of sales.After careful review, and after discussions with the sales and production managers, the CEO determines that the best alternative is to base the budget on a sales volume of 30,000 units.  Actual results for the year were 28,000 units, reflected in the following income statement:  What is the flexible budget variance for direct material?

Accepted Answer

The answer of Kevin Jarvis is the controller of Bitterroot...

Question 7

The flexible budget variance is the difference between

Accepted Answer

The flexible budget variance is the difference between the flexible budget and actual results. This variance shows how well the company's actual revenue and expenses, based on actual activity levels, compare to what they should have been based on the flexible budget. The static budget variance is the difference between the static budget and actual results. The actual quantity and budgeted quantity are part of the production volume variance, and the actual price and standard price are part of the price variance.

Question 8

Kevin Jarvis is the controller of Bitterroot Industries.Kevin prepared the following budgeted income statement at various levels of sales.After careful review of the budgeted income statements, and after discussions with the sales and production managers, the CEO determines that the best alternative is to base the budget on a sales volume of 30,000 units.  Actual results for the year were 28,000 units, reflected in the following income statement:  What is the flexible budget variance for direct labor?

Accepted Answer

The flexible budget variance for direct labor can be calculated as follows:
Flexible budget for direct labor at actual sales volume of 28,000 units = $448,000
Actual direct labor cost = $462,000
Flexible budget variance = Actual cost - Flexible budget = $462,000 - $448,000 = $14,000 unfavorable. Therefore, the correct answer is B. 
Given that the actual sales volume was 28,000 units, the company should have prepared a flexible budget based on this volume instead of the budgeted volume of 30,000 units. This would have allowed the company to have a more accurate budget and to compare actual results with a budget based on the same volume.

Question 9

The sales volume variance is influenced most heavily by actions of the

Accepted Answer

The sales volume variance is directly related to the efforts of the sales and marketing personnel, who are responsible for generating sales and increasing market share. The budget committee and executives of the company may set goals and provide resources, but it is the operations personnel who implement plans and the sales and marketing personnel who drive the actual sales results. Therefore, their actions have the greatest impact on the sales volume variance.

Question 10

The flexible budget variance for materials has which of the following two components?

Accepted Answer

The flexible budget variance for materials has two components, direct materials price variance and direct materials quantity variance. Direct materials price variance is the difference between the actual price paid for materials and the standard price for materials, multiplied by the actual quantity used. Direct materials quantity variance is the difference between the actual quantity of materials used and the standard quantity of materials allowed for the actual output, multiplied by the standard price per unit of materials.

Question 11

Kevin Jarvis is the controller of Bitterroot Industries.Kevin prepared the following budgeted income statement at various levels of sales.After careful review of the budgeted income statements, and after discussions with the sales and production managers, the CEO determines that the best alternative is to base the budget on a sales volume of 30,000 units.  Actual results for the year were 28,000 units, reflected in the following income statement:  What is the sales volume variance for direct material?

Accepted Answer

The answer of Kevin Jarvis is the controller of Bitterroot...

Question 12

Which of the following variances would not be investigated by a manager following the management by exception principle?

Accepted Answer

The answer of Which of the following variances would not...

Question 13

The static budget sales revenue is $69,000 and the flexible budget sales revenue is $70,000.If the actual sales price is $6 and the budgeted sales price is $6.50, what is the sales volume variance?

Accepted Answer

The sales volume variance is calculated by comparing the flexible budget to the static budget. Here, the flexible budget sales revenue ($70,000) is higher than the static budget sales revenue ($69,000), indicating a favorable variance of $1,000.

Question 14

The flexible budget variance reflects

Accepted Answer

The flexible budget variance measures the difference between the actual results and the flexible budget, which is adjusted for the actual level of activity. It reflects how efficiently the company operated in producing a given sales volume.

Question 15

The flexible budget variance is influenced most heavily by actions of the

Accepted Answer

The flexible budget variance measures the difference between actual results and the budgeted amounts based on the actual level of activity. Therefore, it is mainly influenced by the actions of the operations personnel who are responsible for carrying out the activities and operations of the company. Sales personnel and executives may have an impact on the budget, but they are not directly responsible for executing the day-to-day activities that affect the flexible budget variance. The budget committee may have some influence, but ultimately it is the operations personnel who have the greatest impact on the flexible budget variance.

Question 16

The sales volume variance helps managers understand

Accepted Answer

The sales volume variance measures the impact of actual sales volume differing from budgeted sales volume, resulting in a difference in total revenue. Therefore, it helps managers understand the impact of greater actual sales over budgeted sales due to selling more units.

Question 17

The difference between static budget revenue and flexible budget revenue is referred to as the

Accepted Answer

The difference between static budget revenue and flexible budget revenue is referred to as the sales volume variance. This variance occurs because the actual number of units sold differs from the expected number of units sold as per the static budget.

Question 18

The direct materials price variance is calculated using which three amounts?

Accepted Answer

The direct materials price variance is calculated using the actual quantity purchased, actual price paid, and standard price paid. The standard quantity purchased is not used in calculating the direct materials price variance as it is only used in calculating the direct materials quantity variance.

Question 19

The algebraic equation for the direct materials price variance is

Accepted Answer

The direct materials price variance is calculated by multiplying the difference between the actual purchase price (AP) and the standard purchase price (SP) by the actual quantity of materials purchased (AQpurch). Therefore, the correct equation is Direct materials price variance = AQpurch × (AP - SP).

Question 20

The difference between actual units sold and the original budgeted units to be sold is the reason for which variance?

Accepted Answer

The sales volume variance measures the difference between actual units sold and the budgeted units at the actual selling price. It helps identify the impact of selling a different number of units than expected on the overall revenue.

Quiz 6: Performance Evaluation: Variance Analysis

The actual sales volume is 69,000 units and the budgeted sales volume is 70,000 units.If the actual sales price is $6 and the budgeted sales price is $6.50, what is the sales volume variance for sales revenue?

The sales volume variance is the difference between

The sales volume variance reflects

The flexible budget variance is the difference between

The sales volume variance is influenced most heavily by actions of the

The flexible budget variance for materials has which of the following two components?

Which of the following variances would not be investigated by a manager following the management by exception principle?

The static budget sales revenue is $69,000 and the flexible budget sales revenue is $70,000.If the actual sales price is $6 and the budgeted sales price is $6.50, what is the sales volume variance?

The flexible budget variance reflects

The flexible budget variance is influenced most heavily by actions of the

The sales volume variance helps managers understand

The difference between static budget revenue and flexible budget revenue is referred to as the

The direct materials price variance is calculated using which three amounts?

The algebraic equation for the direct materials price variance is

The difference between actual units sold and the original budgeted units to be sold is the reason for which variance?