11. The total Variable Cost and Fixed Cost variances should be determined by using a comparison of actual costs to Flexible Budget amounts, but to determine the overall difference between actual costs and the Static Budget amounts, a manager would also have to consider extra or lost Contribution Margin from the difference in Static Budget sales volume and the Flexible Budget sales volume.

True

False

12. The direct labor efficiency variance is the difference between the standard hours allowed for the output achieved and the actual hours multiplied by the actual labor rate.

True

False

13. The budget committee in most organizations consists of the CFO, Vice-President of Sales, and Vice-President of Production.

True

False

14. The manager held accountable for unfavorable material price variances would be the raw materials purchasing manager.

True

False

15. A production manager usually is responsible for both the direct materials usage variance and the direct labor efficiency variance.

True

False

16. On the cash budget, each period's ending cash balance becomes the beginning cash balance for the next period.

True

False

17. Measuring the firm's performance against established objectives is part of which of the following functions?

Planning

Staffing

Controlling

Organizing

18. X Corporation pays its salesperson $3,000 fixed salary per month plus an 8 percent sales commission on all sales the salesperson generates. The fixed salary portion is paid for in the month earned, but the sales commission portion is paid for in the month following the sales (because sales for a month are not known until the end of that month). The salesperson generated $60,000 of sales in January, and $40,000 of sales in February, and $50,000 of sales in March. The compensation expense recognized on the February income statement would be _____ while the cash paid for compensation expense in February would be _____.

$6,200; $7,800

$6,200; $7,000

$7,800; $6,200

$7,000; $6,200

$7,800; $7,000

19. V Company expected to sell 8,000 units at a price of $6 each. Instead, it sold 7,000 units at a price of $6.50 each. It hopes to sell even more next year, possibly 9,000 units. How much was the current period's sales volume variance?

$6,000

$500

$6,500

$2,500

$1,000

20. Which of the following factors would cause an unfavorable material quantity variance?

using poorly maintained machinery

using more highly skilled workers

using higher quality materials

receiving discounts for purchasing larger than normal quantities