1. Which of the following amounts of a flexible budget remain constant when the sales volume changes?

A. total variable expenses

B. total sales revenue

C. total contribution margin

D. total fixed costs

2. Which of the following amounts of a flexible budget change with changes in sales volume?

A. total fixed costs

B. total contribution margin

C. selling price per unit

D. variable expense per unit

3. Allen Manufacturing makes staplers. The budgeted selling price is $12 per stapler, the variable costs are $3 per stapler, and budgeted fixed costs are $11,000. What is the budgeted operating income for 4,200 staplers?

A. $ 12,600 B. $ 37,800 C. $ 50,400 D. $ 26,800

4. Flexible budget variance is the difference between the: A. flexible budget and static budget due to differences in fixed costs. B. expected results in the flexible budget for the units expected to be sold and the static budget. C. actual results and the expected results in the flexible budget for the actual units sold. D. flexible budget and actual amounts due to differences in volumes.

5. Onyx Company has prepared a static budget at the beginning of the month. At the end of the month, the following information has been retrieved from the records. Static budget: Sales volume: 2,000 units: Price: $50 per unit Variable expense: $12 per unit: Fixed expenses: $25,000 per month Operating income: $51,000 Actual results: Sales volume: 1,800 units: Price: $58 per unit Variable expense: $16 per unit: Fixed expenses: $35,000 per month Operating income: $40,600 Calculate the sales volume variance for variable expenses. A. $3,960 F B. $2,970 U C. $3,800 U D. $2,400 F

6. A company is analyzing its monthminus end results by comparing it to both static and flexible budgets. During the previous month, the actual variable expenses per unit were lower than the expected variable costs per unit as per the static budget. This difference results in a(n): A. unfavorable flexible budget variance for variable expenses. B. favorable flexible budget variance for variable expenses. C. unfavorable sales volume variance for variable expenses. D. favorable sales volume variance for variable expenses.

7. An unfavorable flexible budget variance in variable expenses suggests a(n): A. increase in variable expenses per unit. B. decrease in volume. C. increase in price. D. decrease in fixed costs.

8. A standard is a price, cost, or quantity that is expected under normal conditions.

True

False

9. An efficiency variance measures how well a company keeps unit prices of material and labor inputs within standards.

True

False

10. Which of the following is the correct formula to measure cost variance? A. Cost Variance = (Actual Cost + Standard Cost) + Actual Quantity B. Cost Variance = (Actual Cost + Standard Cost) / Actual Quantity C. Cost Variance = (Actual Cost - Standard Cost) x Actual Quantity D. Cost Variance = (Actual Cost - Standard Cost) - Actual Quantity

11. Which of the following formulae is the correct formula to measure the efficiency variance? A. Efficiency Variance = (Actual Quantity / Standard Quantity) x Standard Cost B. Efficiency Variance = (Actual Quantity + Standard Quantity) - Standard Cost C. Efficiency Variance = (Actual Quantity x Standard Quantity) / Standard Cost D. Efficiency Variance = (Actual Quantity - Standard Quantity) x Standard Cost

12. Which of the following will result in an unfavorable direct labor cost variance?

A. when actual direct labor hours exceed standard direct labor hours

B. when the actual direct labor rate exceeds the standard direct labor rate

C. when the actual direct labor rate is less than the standard direct labor rate

D. when actual direct labor hours are less than standard direct labor hours

13. What do cost variances measure? A. the difference between actual and standard cost B. the volume discounts companies receive when ordering materials in large quantities C. the change in costs over time D. the difference between the price the company pays and the price its competitors pay

14. Which of the following does the efficiency variance measure? A. the difference between the quantity used by the company and the quantity used by its competitors B. the difference between actual and standard quantity used C. the change in quantities used over time D. how quickly materials are processed into finished goods

15. Only unfavorable variances should be investigated, if substantial, to determine their causes.

True

False

16. A favorable direct materials cost variance occurs when the actual direct materials costs incurred is less than the standard direct materials cost.

True

False

17. What does a favorable direct materials cost variance indicate? A. The actual cost of materials purchased was less than the standard cost of materials purchased. B. The actual quantity of materials used was less than the standard quantity. C. The actual cost of materials purchased was greater than the standard cost of materials purchased. D. The actual quantity of materials used was greater than the standard quantity.

18. The total production cost flexible budget variance is obtained by adding direct labor efficiency variance and fixed overhead volume variance.

True

False

19. An unfavorable variance for an expense means more expense has been incurred than planned.

True

False

20. A favorable variance reflects a decrease in operating income.

True

False