ACC500 Managerial Accounting

| June 13, 2016

Question
ACC500 Managerial Accounting

Exam #3

Name__________________________

1) An example of a favorable variance is ________.

A) actual revenues are less than expected revenues

B) actual expenses are less than expected expenses

C) actual material prices are greater than expected material prices

D) expected labor costs are less than actual labor costs

2) Spending less than budgeted for maintenance costs will result in a(n) ________ variance. When actual revenues exceed budgeted revenues, this results in a(n) ________ variance.

A) unfavorable; unfavorable

B) unfavorable; favorable

C) favorable; unfavorable

D) favorable; favorable

3) Unfavorable variances ________ represent bad decisions made by managers.

A) always

B) sometimes

C) never

D) none of the above

4) A budget prepared for one expected level of activity is called a ________.

A) flexible budget

B) static budget

C) variable budget

D) rolling budget

5) A budget prepared for different levels of activity is called a ________.

A) rolling budget

B) operating budget

C) flexible budget

D) static budget

6) The static budget is based on the ________ level of output and the flexible budget is based on the ________ level of output.

A) actual; expected

B) expected; actual

C) expected; planned

D) actual; projected

7) To calculate the numbers in a flexible budget, managers use ________.

A) cost functions developed from regression analysis

B) flexible budget formulas

C) cost functions obtained from the high-low method

D) all of the above

8) When preparing a flexible budget income statement, ________ costs are constant at different levels of activity.

A) variable

B) step

C) contributed

D) fixed

9) Which of the following statements is FALSE?

A) Flexible budgets are prepared for a range of activity.

B) Flexible budgets are matched to actual levels of activity.

C) A flexible budget is also called a variable budget.

D) Flexible budgets are based on different assumptions about cost behavior than those used for static budgets.

10) Oroz Company had the following information available:

Expected Costs and Selling Price Based on 5,000 units:

Variable manufacturing costs per unit $32

Fixed manufacturing costs per unit $20

Selling price per unit $70

Expected production level 5,000 units

In the flexible budget at 10,000 units, what is the total manufacturing cost?

A) $250,000

B) $420,000

C) $520,000

D) $700,000

11) Perez Company had the following information available:

Expected Costs and Selling Price Based on 5,000 Units:

Variable manufacturing costs per unit $32

Fixed manufacturing costs per unit $20

Selling price per unit $70

Expected production level 5,000 units

In the flexible budget at 15,000 units, what is the total manufacturing cost?

A) $480,000

B) $580,000

C) $680,000

D) $780,000

12) Huntsman Company’s variable selling and administrative expenses are $48,000 at a production level of 6,000 units. If the production level is 8,000 units, what are the variable selling administrative expenses?

A) $48,000

B) $56,000

C) $64,000

D) $80,000

13) Which of the following is used to develop flexible budgets?

A) fixed overhead variances

B) static budget variances

C) flexible budget variances

D) cost functions

14) Margaret Duffy Company has the following information available:

Budgeted cost of direct materials at 900,000 units $900,000

Budgeted cost of direct materials at 820,000 units $820,000

Actual cost of direct materials at 820,000 units $840,000

Actual level of output(units) 820,000

Planned level of output(units) 900,000

The cost driver of product costs is units of output. What is the flexible budget variance for direct material costs?

A) $20,000 Unfavorable

B) $20,000 Favorable

C) $60,000 Favorable

D) $60,000 Unfavorable

15) Corrao Company had a static budgeted operating income of $8.6 million. Actual operating income was $6.4 million. The flexible budget operating income at the actual level of output is $7,000,000. What is the static-budget variance of operating income?

A) $1.6 million Favorable

B) $1.6 million Unfavorable

C) $2.2 million Favorable

D) $2.2 million Unfavorable

16) For the current year, LeBombard Company’s static budget sales were $225,000. Actual sales for the current year were $220,000. Actual sales last year were $219,000. Expected sales last year were $225,000. What is the static budget variance for sales in the current year?

A) $5,000 Favorable

B) $5,000 Unfavorable

C) $6,000 Favorable

D) $6,000 Unfavorable

17) Differences between the actual results and the flexible budget at the actual level of output achieved are ________ variances.

A) static budget

B) activity budget

C) flexible budget

D) operating budget

18) One variance often influences another variance. If the direct materials price variance is favorable, then it is possible that this variance will cause ________.

A) the direct materials quantity variance to be unfavorable

B) the direct labor price variance to be unfavorable

C) the direct labor price variance to be favorable

D) the direct materials quantity variance to be favorable

19) Which of the following is NOT an example of efficient performance?

A) Direct labor hours used per unit were less than expected.

B) Direct material used per unit was less than expected.

C) More outputs were achieved with less inputs than predicted.

D) More outputs were produced than expected.

20) A favorable materials price variance can affect all of the following variances except ________.

A) labor rate variance

B) labor efficiency variance

C) materials quantity variance

D) flexible budget variance for direct materials

21) Variances should be investigated if they ________.

A) are favorable

B) are unfavorable

C) are smaller than the variances in the prior period

D) exceed certain dollar amounts or percentage deviations from the budget

22) The following information is available for Munter Manufacturing Company.

–Direct materials price standard is $3.25 per pound.

–Direct materials quantity standard is six pounds per finished unit.

–Budgeted production is 25,000 finished units.

–175,000 pounds of direct materials were purchased for $525,000.

–175,000 pounds of direct materials were used in production.

–25,600 finished units of product were produced.

What is the direct materials price variance?

A) $43,750 Unfavorable

B) $43,750 Favorable

C) $350,000 Unfavorable

D) $350,000 Favorable

23) The following information is available for Maher Manufacturing Company.

–Direct materials price standard is $3.25 per pound.

–Direct materials quantity standard is six pounds per finished unit.

–Budgeted production is 25,000 finished units.

–175,000 pounds of direct materials were purchased for $525,000.

–175,000 pounds of direct materials were used in production.

–25,600 finished units of product were produced.

What is the direct materials quantity variance?

A) $21,400 Unfavorable

B) $21,400 Favorable

C) $69,550 Unfavorable

D) $69,550 Favorable

24) The following information is presented for the Marathon Manufacturing Company.

— Direct labor rate standard is $11.55.

— Direct labor efficiency standard is 2.5 hours per unit.

— Budgeted production is 1,200 units.

— Production required 2,910 direct labor hours at a cost of $33,174.

— Actual production is 1,150 units.

What is the direct labor price variance?

A) $172.50 Favorable

B) $180.00 Unfavorable

C) $436.50 Favorable

D) $435.50 Unfavorable

25) The following information is presented for the Maybeel Manufacturing Company.

— Direct labor rate standard is $11.55.

— Direct labor efficiency standard is 2.5 hours per unit.

— Budgeted production is 1,200 units.

— Production required 2,910 direct labor hours at a cost of $33,174.

— Actual production is 1,150 units.

What is the direct labor efficiency variance?

A) $404.25 Favorable

B) $404.25 Unfavorable

C) $1,039.50 Favorable

D) $1,039.50 Unfavorable

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