Question 1

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

Accepted Answer

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

Question 2

Shirt Fantasy produces and sells two types of tee shirtsFancy and Plain. Shirt Fantasy provides the following data:
  Using the format below, compute the flexible budget variance for Plain tee shirts for sales revenue only.

Accepted Answer

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

Question 3

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

Flexible budget variance = Actual operating income - Flexible budget operating income
Flexible budget operating income = Operating income at budgeted variable costs per unit * Actual activity

Since the actual volume achieved is the same as the budgeted volume, the budgeted variable costs per unit are the same for both budgets.

Flexible budget operating income = $1,100 * 50 = $55,000

Flexible budget variance = Actual operating income - Flexible budget operating income
= $60,000 - $55,000
= $5,000 favorable.

Question 4

Shirt Fantasy produces and sells two types of tee shirtsFancy and Plain. Shirt Fantasy provides the following data:
  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 5

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:
   Using the format below, please prepare an income statement performance report:

Accepted Answer

The answer of Onyx Company prepared a static budget at...

Question 6

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

Accepted Answer

A favorable sales volume variance means that the actual sales volume exceeded the budgeted or expected sales volume. This suggests an increase in volume, not an increase in price or variable expenses per unit, or a decrease in fixed costs.

Question 7

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

Accepted Answer

An unfavorable sales volume variance in operating income means that actual sales volume is lower than the expected sales volume. This suggests a decrease in volume, resulting in lower revenue and operating income.

Question 8

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 9

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 actual sales volume compared to the static budget projection would result in an unfavorable sales volume variance for sales revenues. This means that the company generated fewer sales revenues than it had planned for in the static budget. This variance analysis helps the company identify areas where it needs to improve its performance and take corrective actions.

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 sales volume variance for operating income?

Accepted Answer

Sales Volume Variance = (Actual Units Sold x Budgeted Contribution Margin per Unit) - (Budgeted Units Sold x Budgeted Contribution Margin per Unit)

Budgeted Units Sold = 75,000
Actual Units Sold = 72,000
Budgeted Contribution Margin per Unit = Sales Price - Variable Cost = $12.00 - $4.00 = $8.00
Actual Contribution Margin per Unit = Sales Price - Actual Variable Cost = $14.00 - $4.75 = $9.25

Using the formula above, we can calculate the sales volume variance:

Sales Volume Variance = (72,000 x $9.25) - (75,000 x $8.00) = $666,000 - $600,000 = $66,000 unfavorable

However, we also need to take into account the difference between budgeted and actual fixed costs:

Fixed Cost Variance = Actual Fixed Costs - Budgeted Fixed Costs = $400,000 - $375,000 = $25,000 unfavorable

Therefore, the sales volume variance for operating income is:

Sales Volume Variance + Fixed Cost Variance = $66,000 - $25,000 = $41,000 unfavorable.

The answer is B, $24,000 unfavorable, is incorrect because it only takes into account the sales volume variance without considering the fixed cost variance.

Question 11

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

Flexible budget variance for variable expenses can be calculated as follows:

Flexible Budget Variance = (Actual Quantity * Budgeted Variable Cost) - (Flexible Budget Quantity * Budgeted Variable Cost)

Flexible Budget Quantity = Budgeted Quantity + (Actual Quantity - Budgeted Quantity) * Budgeted Price

Flexible Budget Quantity = 75,000 + (72,000 - 75,000) * $12.00 = $900,000

Flexible Budget Variance = (72,000 * $4.00) - ($900,000 * $4.00) = $54,000 unfavorable

Question 12

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 13

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

Accepted Answer

A lower actual fixed expense compared to the projected amount in the static budget would result in a favorable flexible budget variance for fixed expenses.

Question 14

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 15

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

Accepted Answer

Standard costs provide employees with clear expectations for performance and incentivize them to meet or exceed those expectations in order to earn bonuses or other rewards.

Question 16

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

Accepted Answer

Standard cost is a predetermined cost per unit for materials, labor or overhead. It is used as a benchmark for measuring actual costs incurred during a production process.

Question 17

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

Accepted Answer

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

Question 18

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

Accepted Answer

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

Question 19

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

Sales volume variance for operating income = Actual operating income - Flexible budget operating income for actual volume achieved
Sales volume variance for operating income = $50,000 - $40,000
Sales volume variance for operating income = $10,000 unfavorable

Therefore, the correct answer is C) $13,000 unfavorable.

Question 20

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

Accepted Answer

An unfavorable flexible budget variance in variable expenses suggests that the actual variable expenses per unit were higher than the budgeted variable expenses per unit. This could be due to various reasons such as an increase in material or labor costs, or inefficiencies in the production process. An increase in price would affect the revenue or sales budget, not the variable expenses budget. A decrease in volume would affect the sales budget, not the variable expenses budget. A decrease in fixed costs would affect the fixed expenses budget and not the variable expenses budget.

Quiz 23: Flexible Budgets and Standard Costs

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

Shirt Fantasy produces and sells two types of tee shirtsFancy and Plain. Shirt Fantasy provides the following data: Using the format below, compute the flexible budget variance for Plain tee shirts for sales revenue only.

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?

Shirt Fantasy produces and sells two types of tee shirtsFancy and Plain. Shirt Fantasy provides the following data: Using the format below, compute the flexible budget variance for Fancy tee shirts for sales revenue only.

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: Using the format below, please prepare an income statement performance report:

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

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

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?

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

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

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

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

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

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

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) :