ACC 350 Week 8 Quiz – Strayer
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Quiz 6 Chapter 7
Flexible Budgets, Direct-Cost
Variances, and Management Control
1)
The
master budget is one type of flexible budget.
2)
A
flexible budget is calculated at the start of the budget period.
3)
Information
regarding the causes of variances is provided when the master budget is
compared with actual results.
4)
A
variance is the difference between the actual cost for the current and previous
year.
5)
A
favorable variance results when budgeted revenues exceed actual revenues.
6)
Management
by exception is the practice of concentrating on areas not operating as
anticipated (such as a cost overrun) and placing less attention on areas
operating as anticipated.
7)
The
essence of variance analysis is to capture a departure from what was
expected.
8)
A
favorable variance should be ignored by management.
9)
An
unfavorable variance may be due to poor planning rather than due to
inefficiency.
10)
The only
difference between the static budget and flexible budget is that the static
budget is prepared using planned output.
11)
The
static-budget variance can be subdivided into the flexible-budget variance and
the sales-volume variance.
12)
The
flexible-budget variance may be the result of inaccurate forecasting of units
sold.
13)
Decreasing
demand for a product may create a favorable sales-volume variance.
14)
An
unfavorable variance is conclusive evidence of poor performance.
15)
A
company would not need to use a flexible budget if it had perfect foresight
about actual output units.
16)
The
flexible-budget variance pertaining to revenues is often called a selling-price
variance.
17)
Cost
control is the focus of the sales-volume variance.
18)
The term
efficiency variance is the direct-cost portion of the flexible-budget
variance.
19)
Managers
generally have more control over efficiency variances than price
variances.
20)
To
prepare budgets based on actual data from past periods is preferred since past
inefficiencies are excluded.
21)
All
budgets are based on standard costs.
22)
A
standard is attainable through efficient operations but allows for normal
disruptions such as machine breakdowns and defective production.
23)
One
advantage of using standard times to develop a budget is they are simple to
compile, are based solely on the past actual history, and do not require
expected future changes to be taken into account.
24)
The
presumed cause of a material price variance will determine how a company
responds.
25)
The
price variance is the difference between the actual price and the budgeted
price of the input, multiplied by the actual quantity of input.
26)
For any
actual level of output, the efficiency variance is the difference between
actual quantity of input used and the budgeted quantity of input allowed to
produce actual output, multiplied by the actual price.
27)
The use
of high-quality raw materials is likely to result in a favorable efficiency
variance and an unfavorable price variance.
28)
The
direct manufacturing labor price variance is likely to be favorable if
higher-skilled workers are put on a job.
29)
Although
computed separately, price variances and efficiency variances should not be
analyzed separately from each other.
30)
A
favorable variance can be automatically interpreted as "good
news."
31)
Variances
often affect each other.
32)
If
variance analysis is used for performance evaluation, managers are encouraged
to meet targets using creativity and resourcefulness.
33)
When
using variance for performance evaluation, managers often focus on
effectiveness and efficiency as two of the common attributes used in comparing
expected results with actual results.
34)
For
critical items such as product defects, a small variance may prompt
investigation.
35)
A
particular variance generally signals one particular problem.
36)
If
budgets contain slack, cost variances will tend to be favorable.
37)
Continuous
improvement budgeted costs target price reductions and efficiency
improvements.
38)
Improvement
opportunities are easier to identify when products have been on the market for
a considerable period of time.
39)
It is
best to rely totally on financial performance measures rather than using a
combination of financial and nonfinancial performance measures.
40)
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