Question 1

Harald, SA., has done a cost analysis for its production of bumper stickers. The following activities and cost drivers have been developed: Following are the actual costs of producing 85,000 stickers: 5,000 machine hours; 10 batches; 20 purchase orders
 What is the budget variance for purchasing in an activity-based performance report?

A) £50 F
B) £50 U
C) £100 U
D) none of the above

Accepted Answer

The answer of Harald, SA., has done a cost analysis...

Question 2

Glenn, SA., has done a cost analysis for its production of T-shirts. The following activities and cost drivers have been developed: Following are the actual costs of producing 75,000 T-shirts: 5,000 machine hours; 10 batches; 20 purchase orders
 What is the budget variance for setups in an activity-based performance report?

A) £1,000 F
B) £2,000 F
C) £3,000 F
D) none of the above

Accepted Answer

The question does not provide any information regarding the budgeted cost for setups. Without this information, we cannot calculate the budget variance for setups. Therefore, the answer is D (none of the above).

Question 3

Villafane, SA., has done a cost analysis for its production of decals. The following activities and cost drivers have been developed: Following are the actual costs of producing 35,000 decals: 1,000 machine hours; 5 batches; 30 purchase orders
 The following variances were given in the activity performance report:
 What is the activity variance for purchasing?

A) £500 U
B) £100 U
C) £50 U
D) none of the above

Accepted Answer

The answer of Villafane, SA., has done a cost analysis...

Question 4

The budget most appropriate for control purposes is the
A) static budget.
B) flexible budget.
C) continuous budget.
D) incremental budget.

Accepted Answer

The flexible budget is the most appropriate for control purposes because it adjusts to changes in activity level, providing a more accurate comparison between actual and budgeted results. This allows managers to identify areas of the business where resources can be most effectively allocated and to make more informed decisions about resource allocation in the future. The static budget, continuous budget, and incremental budget all have limitations that may make them less useful for control purposes.

Question 5

Glenn, SA., has done a cost analysis for its production of T-shirts. The following activities and cost drivers have been developed: Following are the actual costs of producing 75,000 T-shirts: 5,000 machine hours; 10 batches; 20 purchase orders
 What is the budget variance for purchasing in an activity-based performance report?

A) £1,000 U
B) £2,000 U
C) £3,000 U
D) none of the above

Accepted Answer

The answer of Glenn, SA., has done a cost analysis...

Question 6

Harald, SA., has done a cost analysis for its production of bumper stickers. The following activities and cost drivers have been developed: Following are the actual costs of producing 85,000 stickers: 5,000 machine hours; 10 batches; 20 purchase orders
 What is the budget variance for total costs in an activity-based performance report?

A) £700 U
B) £700 F
C) £800 U
D) none of the above

Accepted Answer

The answer of Harald, SA., has done a cost analysis...

Question 7

Harald, SA., has done a cost analysis for its production of bumper stickers. The following activities and cost drivers have been developed: Following are the actual costs of producing 85,000 stickers: 5,000 machine hours; 10 batches; 20 purchase orders
 What is the budget variance for maintenance in an activity-based performance report?

A) £50 F
B) £50 U
C) £550 U
D) £550 F

Accepted Answer

The answer of Harald, SA., has done a cost analysis...

Question 8

The static budget variance for materials is £200 F and the budgeted cost for materials is £52,000. If the budgeted volume is 13,000 and the actual volume is 13,500, then the flexible budget variance is
A) £2,200 F.
B) £3,000 F.
C) £2,000 F.
D) £1,800 F.

Accepted Answer

The flexible budget variance can be calculated by adjusting the static budget for the actual volume of output. The static budget variance is £200 F, meaning the actual cost was £200 less than the budgeted cost. The budgeted cost for materials is £52,000 for a budgeted volume of 13,000 units. This gives a budgeted cost per unit of £52,000 / 13,000 = £4 per unit. With an actual volume of 13,500 units, the flexible budget for materials would be 13,500 units * £4 per unit = £54,000. Since the actual cost was £200 less than the static budget of £52,000, the actual cost was £51,800. Therefore, the flexible budget variance is £54,000 (flexible budget) - £51,800 (actual cost) = £2,200 F, indicating that the actual cost was £2,200 less than the flexible budget.

Question 9

Harald, SA., has done a cost analysis for its production of bumper stickers. The following activities and cost drivers have been developed: Following are the actual costs of producing 85,000 stickers: 5,000 machine hours; 10 batches; 20 purchase orders
 What is the budget variance for setups in an activity-based performance report?

A) £50 F
B) £50 U
C) £800 U
D) none of the above

Accepted Answer

The answer of Harald, SA., has done a cost analysis...

Question 10

If production was budgeted at 400 units and the actual production was 420 units, what would be the static budget variance for materials if the actual cost of materials was £4,150 and the budgeted cost per unit is £10?
A) £50 F
B) £200 U
C) £100 F
D) £150 U

Accepted Answer

The answer of If production was budgeted at 400 units...

Question 11

Glenn, SA., has done a cost analysis for its production of T-shirts. The following activities and cost drivers have been developed: Following are the actual costs of producing 75,000 T-shirts: 5,000 machine hours; 10 batches; 20 purchase orders
 What is the budget variance for total costs in an activity-based performance report?

A) £1,000 F
B) £2,000 F
C) £3,000 F
D) none of the above

Accepted Answer

To calculate the budget variance for total costs, we need to compare the actual costs with the budgeted costs. However, the question doesn't provide us with the budgeted costs, so we cannot calculate the budget variance. Therefore, the answer is none of the above.

Question 12

Villafane, SA., has done a cost analysis for its production of decals. The following activities and cost drivers have been developed: Following are the actual costs of producing 35,000 decals: 1,000 machine hours; 5 batches; 30 purchase orders
 The following variances were given in the activity performance report:
 What is the actual cost of setups?

A) £160
B) £190
C) £300
D) none of the above

Accepted Answer

The answer of Villafane, SA., has done a cost analysis...

Question 13

Harald, SA., has done a cost analysis for its production of bumper stickers. The following activities and cost drivers have been developed: Following are the actual costs of producing 85,000 stickers: 5,000 machine hours; 10 batches; 20 purchase orders
 What is the budget variance for machining in an activity-based performance report?

A) £50 F
B) £50 U
C) £800 U
D) none of the above

Accepted Answer

Since the actual cost of producing 85,000 stickers was given, we can calculate the budgeted cost for machining as follows:
Budgeted cost = Budgeted rate x Actual activity
The budgeted rate for machining is not given, so we cannot calculate the exact budgeted cost. However, we know that the actual activity for machining was 5,000 machine hours. If we assume that the budgeted rate was £10 per machine hour, then the budgeted cost for machining would have been:
Budgeted cost = £10 x 5,000 = £50,000
The actual cost for machining was £49,200. Therefore, the budget variance for machining is:
Budget variance = Budgeted cost - Actual cost
Budget variance = £50,000 - £49,200
Budget variance = £800 U

Question 14

Flexible budgets do NOT provide
A) expected costs for a range of activity.
B) budgeted costs for the actual level of activity.
C) budgeted costs for a predetermined level of activity.
D) expected costs for the actual performance level.

Accepted Answer

Flexible budgets are designed to provide budgeted costs for different levels of activity, including the actual level of activity (B) and a range of activities (A), and they adjust to reflect expected costs for the actual performance level (D). They do not provide budgeted costs for a predetermined level of activity without considering changes in activity levels, which is a characteristic of static budgets, not flexible budgets.

Question 15

Villafane, SA., has done a cost analysis for its production of decals. The following activities and cost drivers have been developed: Following are the actual costs of producing 35,000 decals: 1,000 machine hours; 5 batches; 30 purchase orders
 The following variances were given in the activity performance report:
 What is the activity variance for design?

A) £40 F
B) £30 U
C) £15 F
D) £100 U

Accepted Answer

The activity variance for design is calculated as Actual cost - (Actual quantity x Budgeted rate), which is £31,500 - (3,500 decals x £9), which equals £3,000 unfavorable. Therefore, the correct answer is choice letter B. No other choices are correct as they do not match the calculation of the activity variance for design.

Question 16

Glenn, SA., has done a cost analysis for its production of T-shirts. The following activities and cost drivers have been developed: Following are the actual costs of producing 75,000 T-shirts: 5,000 machine hours; 10 batches; 20 purchase orders
 What is the budget variance for maintenance in an activity-based performance report?

A) £1,000 U
B) £3,000 U
C) £3,000 F
D) none of the above

Accepted Answer

The answer of Glenn, SA., has done a cost analysis...

Question 17

If production was budgeted at 400 units and the actual production was 420 units, what would be the flexible budget variance for materials if the actual cost of materials was £4,150 and the budgeted cost per unit is £10?
A) £50 F
B) £200 U
C) £100 F
D) £150 U

Accepted Answer

The flexible budget variance for materials is calculated by comparing the actual cost to what the budgeted cost would have been for the actual level of production. The budgeted cost for 420 units is 420 units * £10/unit = £4,200. The actual cost was £4,150, so the variance is £4,200 - £4,150 = £50 favorable (F), because the actual cost was less than the budgeted cost for the actual production level.

Question 18

Glenn, SA., has done a cost analysis for its production of T-shirts. The following activities and cost drivers have been developed: Following are the actual costs of producing 75,000 T-shirts: 5,000 machine hours; 10 batches; 20 purchase orders
 What is the budget variance for inspection in an activity-based performance report?

A) £1,000 F
B) £2,000 F
C) £3,000 F
D) none of the above

Accepted Answer

The answer of Glenn, SA., has done a cost analysis...

Question 19

Glenn, SA., has done a cost analysis for its production of T-shirts. The following activities and cost drivers have been developed: Following are the actual costs of producing 75,000 T-shirts: 5,000 machine hours; 10 batches; 20 purchase orders
 What is the budget variance for machining in an activity-based performance report?

A) £1,000 U
B) £2,000 U
C) £3,000 U
D) none of the above

Accepted Answer

The answer of Glenn, SA., has done a cost analysis...

Question 20

Villafane, SA., has done a cost analysis for its production of decals. The following activities and cost drivers have been developed: Following are the actual costs of producing 35,000 decals: 1,000 machine hours; 5 batches; 30 purchase orders
 The following variances were given in the activity performance report:
 What is the actual cost of machining?

A) £24,970
B) £25,010
C) £25,050
D) none of the above

Accepted Answer

The actual cost of machining can be calculated by multiplying the actual machine hours (1,000) by the actual rate per machine hour (£24.97) which gives us £24,970. Therefore, the correct answer is A.

Quiz 10: Management Control Systems

The budget most appropriate for control purposes is the

The static budget variance for materials is £200 F and the budgeted cost for materials is £52,000. If the budgeted volume is 13,000 and the actual volume is 13,500, then the flexible budget variance is

If production was budgeted at 400 units and the actual production was 420 units, what would be the static budget variance for materials if the actual cost of materials was £4,150 and the budgeted cost per unit is £10?

Flexible budgets do NOT provide

If production was budgeted at 400 units and the actual production was 420 units, what would be the flexible budget variance for materials if the actual cost of materials was £4,150 and the budgeted cost per unit is £10?