Multiple Choice
61. Variance analysis involves the steps listed below. In which order should the steps be performed? 1 Draw conclusions and take action 2 Calculate variances 3 Choose variances for further investigation 4 Identify reasons for variances . 1, 2, 3, 4 b. 2, 3, 4, 1 c. 2,1, 4,3 d. 2, 4, 3, 1 LO 3 62. Managers should consider possible interactions between incentives and variances because: a. Research has shown that variance analysis reduces employee morale b. Activities affect more than one department and incentives in one department may cause unfavourable variances in another department. c. Rewards based on standard costs reduce organisational effectiveness. d. All of the above LO 3 63. If the conclusion from a variance analysis is that the benchmark is inappropriate then the correct management action is to: a. Write off the variance against cost of goods sold b. Do nothing c. Revise benchmark d. Replace the manager who set the benchmark LO 3 64. If a variance analysis shows that operations are better than expected, managers should: a. Do nothing b. Revise standard costs to make them harder to achieve c. Monitor quality to ensure it was maintained d. Change the accounting records so that unrealistic expectations aren't imposed in future LO 3 65. Standard cost for actual o utput is also called the : a. flexible budget b. static budget c. master budget d. quantity variance LO 4 66. Thai Connection Ltd is a travel agency. They budget monthly costs of $50,000 plus S125 per customer served. They plan to serve 550 customers per month. During June they served 580 customers. Actual costs for June were $53,000 fixed costs and S65,000 variable costs. The static budget for June is: a. Fixed Costs $50,000; Variable Costs $68,750 b. Fixed costs S50,000: Variable Costs $125 c. Fixed costs $50,000; Variable Costs $65,000 c. Fixed costs S53,000; Variable Costs $65,000 LO 4 67. Thai Connection Ltd is a travel agency. They budget monthly costs of $50,000 plus $125 per customer served. They plan to serve 550 customers per month. During June they served 580 customers. Actual costs for June were S53,000 fixed costs and $65,000 variable costs. The flexible budget for June is: a. Fixed Costs $50,000; Variable Costs S68,750 b, Fixed costs S50,000: Variable Costs $72,500 c. Fixed costs $53,000; Variable Costs $65,000 c. Fixed costs $53,000; Variable Costs $72,500 LO 4 68. Thai Connection Ltd is a travel agency. They budget monthly costs of S50,000 plus S125 per customer served. They plan to serve 550 customers per month. During June they served 580 customers. Actual costs for June were $53,000 fixed costs and S65,000 variable costs. The flexible budget variance for fixed costs in June is a. $3750 unfavourable b. $12,000 favourable c. $0 d. $3,000 unfavourable LO 4 69. Thai Connection Ltd is a travel agency. They budget monthly costs of S50,000 plus S125 per customer served. They plan to serve 550 customers per month. During June they served 580 customers. Actual costs for June were $53,000 fixed costs and S65,000 variable costs The flexible budget variance for variable costs in June is a. $3,750 favourable b. $7,500 unfavourable c. $3,750 unfavourable d. $7,500 favourable LO 4 70. Thai Connection Ltd is a travel agency. They budget monthly costs of S50,000 plus S125 per customer served. They plan to serve 550 customers per month. During June they served 580 customers. Actual costs for June were $53,000 fixed costs and S65,000 variable costs The flexible budget variance for variable costs is due to a. more customers served than expected b. lower variable costs per customer than expected c. higher fixed costs than expected d. a and b LO 4
