Multiple-Choice Questions
1. In a performance report that details the spending and efficiency variances, which of the following columns will be found?
a. A cost formula for each item
b. A budget for actual hours for each item
c. A budget of standard hours for each item
d. All of the above.
e. Only a and b.
2. The total fixed overhead variance is
a. The difference between actual and budgeted fixed overhead costs.
b. The difference between budgeted and applied fixed overhead costs.
c. The difference between budgeted fixed and variable overhead costs.
d. The difference between actual and applied fixed overhead costs.
e. None of the above.
3. The total fixed overhead variance can be expressed as the sum of
a. The spending and efficiency variances.
b. The spending and volume variances.
c. The efficiency and volume variances.
d. The flexible budget and the volume variances.
e. None of the above.
4. Because of the nature of fixed overhead items, the difference between the actual fixed overhead cost and the budgeted fixed overhead is
a. Likely to be small.
b. Likely to be large.
c. Usually a major concern.
d. Often attributable to labor inefficiency.
e. None of the above.
5. An unfavorable volume variance can occur because
a. Too much finished goods inventory was held.
b. The company overproduced.
c. The actual output was less than expected or practical capacity.
d. The actual output was greater than expected or practical capacity.
e. All of the above.
6. Responsibility for the volume variance usually is assigned to
a. The purchasing department.
b. The receiving department.
c. The shipping department.
d. The manufacturing department.
e. None of the above.
7. In activity-based budgeting, costs are classified as variable or fixed with respect to
a. The activity driver.
b. Only the units produced.
c. Only the units sold.
d. Only the direct labor hours.
e. None of the above.
8. Activity flexible budgeting makes it possible to
a. Predict what activity costs will be as activity output changes.
b. Improve traditional budgetary performance reporting.
c. Enhance the ability to manage activities.
d. All of the above.
e. Only a and c.
9. In activity-based budgeting, flexible budget formulas are created
a. Using only unit-level drivers.
b. Using only nonunit-level drivers.
c. Using both unit-level and nonunit-level drivers.
d. Using only direct labor hours.
e. All of the above.