QUESTION 18

1. The Provence Company has the following flexible budget variances; unfavorable direct material price variance and favorable direct material quantity variance. A logical explanation for this is:

   	a.	They purchased higher quality material than budgeted.
   	b.	They purchased cheaper material than budgeted.
   	c.	They made fewer products than they budgeted for.
   	d.	All of these choices are logical explanations.

QUESTION 19

1. Which of the following is TRUE about the fixed overhead volume variance?

   	a.	It is the difference between the flexible budgeted fixed overhead and the standard fixed overhead.
   	b.	It is the difference between actual fixed overhead and flexible budgeted fixed overhead.
   	c.	If volume is lower than anticipated, the variance will be favorable.
   	d.	If volume is greater than anticipated, the variance will be unfavorable

QUESTION 20

The Kelly Company had the following flexible budget variances; favorable direct materials price variance and unfavorable direct labor efficiency variance. When investigating this variance, the accountants should speak to:

	a.	The Purchasing Department only.
	b.	The Chief Financial Officer
	c.	The Factory Supervisor only.
	d.	Both the Purchasing Department and the Factory Supervisor.

QUESTION 22

Which of the following is NOT true about the fixed overhead spending variance?

	a.	It is sometimes referred to as the fixed overhead flexible budget variance.
	b.	It can be either favorable or unfavorable.
	c.	It is the difference between the flexible budgeted fixed overhead and the standard fixed overhead.
	d.	It is the difference between actual fixed overhead and flexible budgeted fixed overhead.